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| 1.
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Recognizing revenue when cash is received and recognizing expenses when they are paid in cash is adherence to the accrual basis of accounting. |
| | A) | True |
| | B) | False |
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| 2.
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Because of its simplicity and ease of use, most businesses keep their accounting records on the cash basis of accounting. |
| | A) | True |
| | B) | False |
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| 3.
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Cash basis accounting matches revenues and expenses and is consistent with accepted accounting principles. |
| | A) | True |
| | B) | False |
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| 4.
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The purpose of an adjusting entry in which insurance expense is debited and prepaid insurance is credited, is to remove the expired portion of the prepaid expense. |
| | A) | True |
| | B) | False |
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| 5.
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Recording amortization is a cost allocation process. |
| | A) | True |
| | B) | False |
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| 6.
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Amortization expense is an example of a contra account. |
| | A) | True |
| | B) | False |
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| 7.
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For every accrued expense there is an offsetting and equal amount of liability. |
| | A) | True |
| | B) | False |
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| 8.
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Accounts receivable represent accrued revenue. |
| | A) | True |
| | B) | False |
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| 9.
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A balance sheet prepared on one page in a vertical format that shows the assets above the liabilities and the liabilities above the owner's equity is called an account form or balance form balance sheet. |
| | A) | True |
| | B) | False |
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| 10.
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Revenue recognition and matching are two of the main features of cash basis accounting. |
| | A) | True |
| | B) | False |
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| 11.
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When cash is received in advance, the most common entry would be to credit a revenue account. |
| | A) | True |
| | B) | False |
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| 12.
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Before the adjusting entries are recorded, prepaid expense accounts are overstated and expense accounts are understated. |
| | A) | True |
| | B) | False |
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| 13.
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Before the adjusting entries for accrued revenues are recorded, assets are overstated and revenues are overstated. |
| | A) | True |
| | B) | False |
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| 14.
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Unearned revenues are also called deferred revenues. |
| | A) | True |
| | B) | False |
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| 15.
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Accumulated Amortization, Equipment is classified as an expense account. |
| | A) | True |
| | B) | False |
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| 16.
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Salaries were accrued for the last few days in March. They are now being paid in the month of April. This entry will debit Salaries Expense and credit Cash. |
| | A) | True |
| | B) | False |
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| 17.
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To record an amortization on equipment account, one should debit Amortization Expense, Equipment, and credit Equipment account. |
| | A) | True |
| | B) | False |
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| 18.
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To adjust an unearned revenue account, one should debit unearned revenue account and credit revenue account. |
| | A) | True |
| | B) | False |
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| 19.
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To record an accrued revenue, one should debit cash and credit revenue account. |
| | A) | True |
| | B) | False |
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| 20.
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To record an accrued expense account, one should debit expense and credit cash. |
| | A) | True |
| | B) | False |
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| 21.
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To adjust office supplies account, one should debit supplies expense and credit office supplies account. |
| | A) | True |
| | B) | False |
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