Which one of these statements about the accrual basis of accounting is FALSE?
This basis is in accord with generally accepted accounting principles.
Companies record revenue only when they receive cash, and record expense only when they pay out cash
Companies recognize revenue in the period in which the performance obligation is satisfied.
Companies record events that change their financial statements in the period in which events occur, even if cash was not exchanged.
What is the periodicity assumption?
The economic life of a business can be divided into artificial time periods.
The fiscal year should correspond with the calendar year.
Companies should match expenses with revenues.
Companies should recognize revenue in the accounting period in which it is earned.
Adjusting entries are made to ensure that?
balance sheet and income statement accounts have correct balances at the end of an accounting period.
All of the above.
revenues are recognized in the period in which the performance obligation is satisfied.
expenses are recognized in the period in which they are incurred.
What are Accruals?
Unearned revenues
Prepaid expenses
Accrued expenses
Accrued revenues
Which of the following statements is incorrect concerning the adjusted trial balance?
An adjusted trial balance proves the equality of the total debit balances and the total credit balances in the ledger after all adjustments are made.
The adjusted trial balance provides the primary basis for the preparation of financial statements.
The adjusted trial balance lists the account balances segregated by assets and liabilities.
The adjusted trial balance is prepared after the adjusting entries have been journalized and posted.
