Question 1

are two ways to do accounting: accrual accounting and cash-basis accounting.

Accepted Answer

Accrual accounting recognizes income and expenses when they are incurred regardless of when cash is exchanged, while cash-basis accounting recognizes income and expenses only when cash is received or paid.

Question 2

a company is using the cash-basis method of accounting, when is revenue recorded?
A) When services are rendered, even though cash may be received at a later date
B) When cash is received
C) Only when cash is received before the completion of the services
D) Only when cash is received during the completion of the services

Accepted Answer

Revenue is recorded under the cash-basis method of accounting when cash is actually received, regardless of when the services were rendered.

Question 3

Cash-basis accounting ignores all of the following except:
A) payables.
B) depreciation.
C) receivables.
D) expenses.

Accepted Answer

Cash-basis accounting recognizes expenses when they are paid, not when they are incurred, which is why it does not ignore expenses. Unlike accrual accounting, it does ignore payables, depreciation, and receivables until cash is actually exchanged.

Question 4

Under which of the following methods of accounting is revenue recorded ONLY when cash is received?
A) Cash
B) Receivable
C) Deferral
D) Accrual

Accepted Answer

The cash method of accounting records revenue only when cash is actually received, and expenses only when they are actually paid. This contrasts with the accrual method, where revenues and expenses are recorded when they are earned or incurred, regardless of when the cash transaction occurs.

Question 5

Under which of the following methods of accounting is revenue recorded when it is earned, regardless of when cash is received?
A) Deferral
B) Cash
C) Receivable
D) Accrual

Accepted Answer

The accrual method of accounting records revenue when it is earned, regardless of when the cash is actually received. This contrasts with the cash method, which records revenue only when cash is received.

Question 6

Under which of the following methods of accounting is an expense recorded when it is incurred, regardless of when cash is paid?
A) Cash
B) Accrual
C) Deferral
D) Receivable

Accepted Answer

The accrual method of accounting records expenses when they are incurred, not necessarily when cash is paid. This contrasts with the cash method, which records transactions only when cash changes hands.

Question 7

Under which of the following methods of accounting is an expense recorded ONLY when cash is paid?
A) Receivable
B) Accrual
C) Deferral
D) Cash

Accepted Answer

Under the cash method of accounting, expenses are recorded only when cash is actually paid, unlike the accrual method where expenses are recorded when they are incurred, regardless of when the cash is paid.

Question 8

Which of the following entries would be recorded ONLY if a company is using the accrual method of accounting?
A)
$$\begin{array} { | l | l | l | l | } 
\hline \text { Cash } & & 1,000 & \
\hline & \text { Accounts receivable } & & 1,000 \
\hline
\end{array}$$
B)
$$\begin{array} { | l | l | l | l | } 
\hline \text { Salary expense } & & 1,000 & \
\hline & \text { Cash } & & 1,000 \
\hline
\end{array}$$
C)
$$\begin{array} { | l | l | l | l | } 
\hline \text { Cash } & & 1,000 & \
\hline & \text { Service revenue } & & 1,000 \
\hline
\end{array}$$
D) Both A and C are correct.

Accepted Answer

The answer of Which of the following entries would be...

Question 9

Which of the following entries would be recorded if a company is using the cash-basis method of accounting?
A)
$$\begin{array} { | l | l | l | l | } 
\hline \text { Cash } & & 1,000 & \
\hline & \text { Service revenue } & & 1,000 \
\hline
\end{array}$$
B)
$$\begin{array} { | l | l | l | l | } 
\hline \text { Cash } & & 1,000 & \
\hline & \text { Accounts receivable } & & 1,000 \
\hline
\end{array}$$
C)
$$\begin{array} { | l | l | l | l | } 
\hline \text { Salary expense } & & 1,000 & \
\hline & \text { Cash } & & 1,000 \
\hline
\end{array}$$
D) Both A and C are correct.

Accepted Answer

In cash-basis accounting, revenues are recorded when cash is received, and expenses are recorded when cash is paid. Both A (recording service revenue upon receipt of cash) and C (recording salary expense when cash is paid out) are consistent with cash-basis accounting principles. B is incorrect because it involves accounts receivable, which is used in accrual accounting, not cash-basis accounting.

Question 10

Under the accrual method of accounting, service revenue is recorded at which of the following times?
A) When the services are completed
B) When payment for the services is received
C) At the end of the accounting period
D) Both A and B

Accepted Answer

Under the accrual method of accounting, revenue is recognized when earned, regardless of when payment is received. This typically occurs when the services are completed.

Question 11

Under the cash-basis method of accounting, service revenue is recorded at which of the following times?
A) When payment for the services is received
B) At the end of the accounting period
C) When the services are completed
D) At both A and B

Accepted Answer

Under the cash-basis method of accounting, revenue is recorded when cash is received, regardless of when the services are actually performed.

Question 12

Under the accrual method of accounting, an expense is recorded at which of the following times?
A) When the expense is incurred
B) When payment for the expense is made
C) At the end of the accounting period
D) At both A and C

Accepted Answer

Under the accrual method of accounting, an expense is recorded when it is incurred, regardless of when payment is made. This method matches expenses with the revenues they help to generate within the same period.

Question 13

Under the cash-basis method of accounting, an expense is recorded at which of the following times?
A) At the end of the accounting period
B) When the expense is incurred
C) When payment for the expense is made
D) At both A and B

Accepted Answer

Under the cash-basis method of accounting, an expense is recorded when payment for the expense is made, not when the expense is incurred or at the end of the accounting period.

Question 14

Which of the following are differences in the accrual method and cash-basis method of accounting?
A) Accrual accounting is required by generally accepted accounting principles.
B) Accrual accounting records expenses when incurred. Cash-basis accounting records expenses when cash is paid.
C) Accrual accounting records revenue when services are rendered. Cash-basis accounting records revenue when cash is received.
D) All of the above are true.

Accepted Answer

All of the statements provided are true differences between the accrual method and cash-basis method of accounting. Accrual accounting is indeed required by generally accepted accounting principles (GAAP), records expenses when they are incurred regardless of when cash is paid, and records revenue when services are rendered, not when cash is received. Cash-basis accounting, on the other hand, records expenses and revenue only when cash is paid or received, respectively.

Question 15

basic interim accounting period is one year.

Accepted Answer

The basic interim accounting period is typically shorter than one year, often a quarter (three months) or a month, used to provide financial information between annual reports.

Question 16

"Matching" in accounting means to make an entry in the journal.

Accepted Answer

"Matching" in accounting refers to the practice of pairing related revenues and expenses in the same period they occur, not to making an entry in the journal.

Question 17

matching principle guides accounting for expenses?identifying all expenses incurred during the period, measuring the expenses, and matching them against the revenues earned during that time period.

Accepted Answer

The matching principle in accounting dictates that expenses should be recorded during the period in which they are incurred and matched with the revenues they helped generate, ensuring accurate financial reporting and analysis.

Question 18

accrual of revenue records the cash receipt before the expense.

Accepted Answer

Accrual of revenue records the revenue when it is earned, not when the cash is received, and is unrelated to the timing of expense recognition.

Question 19

account "Prepaid insurance" is an asset account.

Accepted Answer

Prepaid insurance represents payments made for insurance coverage before the coverage period and is classified as an asset because it provides future economic benefits to the company.

Question 20

Recording the amount of earned revenue from an account that was originally recorded as unearned revenue is an example of:
A) the accounting period concept.
B) the revenue concept.
C) the matching principle.
D) all of the above.

Accepted Answer

The answer of Recording the amount of earned revenue from...

Quiz 3: The Adjusting Process

are two ways to do accounting: accrual accounting and cash-basis accounting.

a company is using the cash-basis method of accounting, when is revenue recorded?

Cash-basis accounting ignores all of the following except:

Under which of the following methods of accounting is revenue recorded ONLY when cash is received?

Under which of the following methods of accounting is revenue recorded when it is earned, regardless of when cash is received?

Under which of the following methods of accounting is an expense recorded when it is incurred, regardless of when cash is paid?

Under which of the following methods of accounting is an expense recorded ONLY when cash is paid?

Which of the following entries would be recorded ONLY if a company is using the accrual method of accounting?

Which of the following entries would be recorded if a company is using the cash-basis method of accounting?

Under the accrual method of accounting, service revenue is recorded at which of the following times?

Under the cash-basis method of accounting, service revenue is recorded at which of the following times?

Under the accrual method of accounting, an expense is recorded at which of the following times?

Under the cash-basis method of accounting, an expense is recorded at which of the following times?

Which of the following are differences in the accrual method and cash-basis method of accounting?

basic interim accounting period is one year.

"Matching" in accounting means to make an entry in the journal.

matching principle guides accounting for expenses?identifying all expenses incurred during the period, measuring the expenses, and matching them against the revenues earned during that time period.

accrual of revenue records the cash receipt before the expense.

account "Prepaid insurance" is an asset account.

Recording the amount of earned revenue from an account that was originally recorded as unearned revenue is an example of: