Which of the following statement about the accrual basis of accounting is false?

2.Which of these statements about the accrual basis of accounting is FALSE?a.Companies record events that change their financial statements in the period in whichevents occur, even if cash was not exchangedb.Companies recognize revenue in the period in which the performance obligation is satisfiedc.This basis is in accord with generally accepted accounting principlesd.Companies record revenue only when they receive cash, and record expense only whenthey pay out cash

3.Adjusting entries are made to ensure that:

4.Which of the following statements is incorrect concerning the adjusted trial balance?

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Managerial Accounting

Warren/Tayler

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c.The adjusted trial balance lists the account balances segregated by assets and liabilitiesd.The adjusted trial balance is prepared afer the adjusting entries have been journalized5.IFRS:

6.Which of the following statements is FALSE?a.IFRS employs the periodicity assumptionb.IFRS employs accrual accountingc.IFRS requires that revenues and costs must be capable of being measured reliablyd.IFRS uses the cash basis of accounting

7.Accrual-basis accounting:

Chapter 51.In a perpetual inventory system, a return of defective merchandise by a purchaser is recorded bycrediting:

2.The cost of goods sold is determined and recorded each time a sale occurs in:

One of the following statements about the accrual basis ofaccounting isfalse?That statement is:QuestionRecognizing Revenues and Expensesa.Events that change a company’s financial statements arerecorded in the periods in which the events occur.b.Revenue is recognized in the period in which the performanceobligation is satisfied.c.The accrual basis of accounting is in accord with generallyaccepted accounting principles.d.Revenue is recorded only when cash is received, andexpenses are recorded only when cash is paid.

3-11Adjusting EntriesEnsure that therevenue recognitionandexpenserecognitionprinciples are followed.Necessary because thetrial balance may not containup-to-dateand complete data.Requiredevery time a company prepares financialstatements.Will includeone income statement accountandonebalance sheet account.The Need for Adjusting EntriesLO 1

Adjusting entries are made to ensure that:QuestionThe Need for Adjusting Entries

3-13Illustration 3-2Categories of adjusting entries1.Prepaid Expenses.Expenses paid in cash beforethey are used or consumed.Deferrals1.Accrued Revenues.Revenues for servicesperformed but not yet receivedin cash or recorded.2.Accrued Expenses.Expenses incurred but not yetpaid in cash or recorded.2.Unearned Revenues.Cash received before servicesare performed.AccrualsTypes of Adjusting EntriesLO 1

3-14Trial Balance– Each account is analyzed to determinewhether it is complete and up-to-date.Illustration 3-3Types of Adjusting EntriesLO 1

3-15(a)Monthly and quarterly time periods.(b)Efforts (expenses) should be matchedwith results (revenues).(c)Accountants divide the economic life ofa business into artificial time periods.(d)Companies record revenues when theyreceive cash and record expenseswhen they pay out cash.(e)An accounting time period that starts onJanuary 1 and ends on December 31.(f)Companies record transactions in theperiod in which the events occur.A list of concepts is provided in the left column below, with a description of theconcept in the right column below. There are more descriptions provided thanconcepts. Match the description of the concept to the concept.1. ___ Accrual-basis accounting.2. ___Calendar year.3. ___Time period assumption.4. ___Expense recognitionprinciple.fecb1Timing ConceptsDO IT!LO 1

3-16Deferralsareexpenses or revenuesthat are recognizedat a date later than the point when cash was originallyexchanged.There aretwo types:Prepaid expensesUnearned revenuesLEARNINGOBJECTIVEPrepare adjusting entries for deferrals.2LO 2

3-17Payment of cash, that is recorded as an asset to showthe service or benefit the company will receive in thefuture.insurancesuppliesadvertisingCash PaymentExpense RecordedBEFORErentequipmentbuildingsPrepaymentsoften occur in regard to:Prepaid ExpensesLO 2

Which of the following statements is false for accrual accounting?

Which of the following statements about the accrual basis of accounting?

Which statement is true about accrual basis?