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  • Integprac1 Quiz 3

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    AMARO, BABY LIZ ANDES
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    Adjusting entries affect nominal and real accounts, and are used to apply the matching and realization principles across accounting periods. They recognize revenues before cash receipt (accruals) and expenses before cash payment (deferrals). For example, an accrued expense is an amount not paid but currently matched to earnings, while a prepaid expense is an amount paid but not yet matched to earnings. Adjusting entries prepare accounts so revenues and expenses are recorded in the appropriate period.

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    INTEGPRAC1 QUIZ 3

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    Adjusting entries affect nominal and real accounts, and are used to apply the matching and realization principles across accounting periods. They recognize revenues before cash receipt (accruals) and expenses before cash payment (deferrals). For example, an accrued expense is an amount not paid but currently matched to earnings, while a prepaid expense is an amount paid but not yet matched to earnings. Adjusting entries prepare accounts so revenues and expenses are recorded in the appropriate period.

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    111 views1 page

    Integprac1 Quiz 3

    Uploaded by

    AMARO, BABY LIZ ANDES
    Adjusting entries affect nominal and real accounts, and are used to apply the matching and realization principles across accounting periods. They recognize revenues before cash receipt (accruals) and expenses before cash payment (deferrals). For example, an accrued expense is an amount not paid but currently matched to earnings, while a prepaid expense is an amount paid but not yet matched to earnings. Adjusting entries prepare accounts so revenues and expenses are recorded in the appropriate period.

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    of 1

    1.

    Adjusting entries affect


    a. One nominal account and one real account
    b. Two nominal accounts
    c. Two real accounts
    d. No particular combination of nominal and real accounts
    2. Which of the following would not be a correct form for an adjusting entry?
    a. A debit to revenue and a credit to liability
    b. A debit to an expense and a credit to a liability
    c. A debit to a liability and a credit to a revenue
    d. A debit to an asset and a credit to a liability
    3. Which of the following best defines a prepayment and a deferral?
    a. Adjusting entries where cash flow precedes revenue or expense recognition.
    b. Adjusting entries where revenue or expense recognition precedes cash flow.
    c. Adjusting entries where cash flow and revenue or expense recognition are simultaneous.
    d. Adjusting entries where revenues or expenses are recognized in the absence of cash flow.
    4. The purpose of the adjusting entries is to
    a. Prepare revenue and expense accounts for recording the transaction of the next period.
    b. Apply the realization principle and the matching principle to transactions affecting two or more accounting periods.
    c. Adjust daily the balances in asset, liability, revenue and expense accounts for the effects of business transactions.
    d. Adjust the capital account for the revenue, expense and withdrawal transactions which occurred during the year.
    5.  Which of the following properly describes a deferral?
    a. Cash is received after revenue is earned.
    b. Cash is received before revenue is earned.
    c. Cash is paid after expense is incurred.
    d. Cash is paid at the same time period that an expense is incurred.

    6. An adjusting entry in which revenue is recognized before the related cash receipt occurs is
    a. Deferral
    b. Nominal
    c. Accrual
    d. Special item
    7. Which of the following best defines an accrual?
    a. Adjusting entries where cash flow precedes revenue or expense recognition
    b. Adjusting entries where revenue or expense recognition precedes cash flow
    c. Adjusting entries where cash flow and revenue or expense recognition are simultaneous
    d. Adjusting entries where revenue and expenses are recognized in the absence of cash flow
    8.  An accrued expense can best be described as an amount
    a. Paid and currently matched with earnings
    b. Paid and not currently matched with earnings
    c. Not paid and not currently matched with earnings
    d. Not paid and currently matched with earnings
    9.  A prepaid expense can best be described as an amount
    a. Paid and currently matched with earnings
    b. Paid and not currently matched with earnings
    c. Not paid and currently matched with earnings
    d. Not paid and not currently matched with earnings.
    10.  An accrued income can best be described as an amount
    a. Collected and currently matched with expenses
    b. Collected and not currently matched with expenses
    c. Not collected and currently matched with expenses
    d. Not collected and not currently matched with expenses

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