Generally Accepted Accounting Principles and Balance Sheet
F151. Assets become liabilities when they expire.
F152. Revenue results from collection of accounts receivable.
F153. A company’s fiscal year must correspond to the calendar year.
T154. Accounting periods should be of equal length to facilitate comparison between periods.
T155. When there is no direct connection between revenues and costs, the costs are systematically allocated among the periods benefitted.
T156. Applying accrual accounting results in a more accurate measurement of profit for the period than does the cash basis of accounting.
F157. Adjusting entries affect cash flows in the current period.
T158. Revenue cannot be recognized unless delivery of goods has occurred or services have been rendered.
F159. Accrual accounting recognizes revenues and expenses at the point that cash changes hands.
F160. A deferral is the recognition of an expense that has arisen but has not yet been recorded.
T161. Adjusting entries are useful in apportioning costs among two or more accounting periods.
T162. An adjusting entry includes at least one balance sheet account and at least one income statement account.
T163. Recording incurred but unpaid expenses is an example of an accrual.
F164. If all transactions were originally recorded in conformity with GAAP, there would be no need for adjusting entries at the end of the period.
T165. Every adjusting entry must change both an income statement account and a balance sheet account.
F166. When the reduction in prepaid expenses is not properly recorded, this causes the asset accounts and expense accounts to be understated.
T167. Accumulated depreciation may be referred to as a contra-asset account.
T168. The adjustment to record depreciation of property and equipment consists of a debit to depreciation expense and credit to accumulated depreciation.
T169. When services are not paid for until they have been performed, the accrued expense is recorded by an adjusting entry at the end of the accounting period.
T170. The amount of
F152. Revenue results from collection of accounts receivable.
F153. A company’s fiscal year must correspond to the calendar year.
T154. Accounting periods should be of equal length to facilitate comparison between periods.
T155. When there is no direct connection between revenues and costs, the costs are systematically allocated among the periods benefitted.
T156. Applying accrual accounting results in a more accurate measurement of profit for the period than does the cash basis of accounting.
F157. Adjusting entries affect cash flows in the current period.
T158. Revenue cannot be recognized unless delivery of goods has occurred or services have been rendered.
F159. Accrual accounting recognizes revenues and expenses at the point that cash changes hands.
F160. A deferral is the recognition of an expense that has arisen but has not yet been recorded.
T161. Adjusting entries are useful in apportioning costs among two or more accounting periods.
T162. An adjusting entry includes at least one balance sheet account and at least one income statement account.
T163. Recording incurred but unpaid expenses is an example of an accrual.
F164. If all transactions were originally recorded in conformity with GAAP, there would be no need for adjusting entries at the end of the period.
T165. Every adjusting entry must change both an income statement account and a balance sheet account.
F166. When the reduction in prepaid expenses is not properly recorded, this causes the asset accounts and expense accounts to be understated.
T167. Accumulated depreciation may be referred to as a contra-asset account.
T168. The adjustment to record depreciation of property and equipment consists of a debit to depreciation expense and credit to accumulated depreciation.
T169. When services are not paid for until they have been performed, the accrued expense is recorded by an adjusting entry at the end of the accounting period.
T170. The amount of