ACG 2021 FSU Exam 2 with all Correct & 100% Verified
Answers |Latest Version |Already Graded A+
Periodicity Assumption ✔Correct Answer-Accountants divide the economic life of a business
into artificial time periods
Fiscal year ✔Correct Answer-An accounting time period that is one year long
The Revenue Recognition Principle (RRP) ✔Correct Answer-Companies recognize revenue in
the accounting period in which the performance obligation is satisfied
Expense Recognition Principle (ERP) ✔Correct Answer-Match expenses with revenues in the
period when the company makes efforts to generate those revenues
"Let the expenses follow the revenues"
Cash Basis Accounting ✔Correct Answer-Very few business use this; Revenues are recognized
only when cash is received (violates RRP), Expenses are recognized only when cash is paid
(violates (ERP), Prohibited under GAAP
Accrual Basis Accounting ✔Correct Answer-Transactions recorded in the periods in which the
events occur, Revenues are recognized (journalized) when services are performed, even if cash
was not received, Expenses are recognized when incurred, even if cash was not paid
Adjusting Entries ✔Correct Answer-Ensure that the revenue recognition and expense
recognition and expense recognition principles are followed, Are required overtime a company
prepares financial statements, Includes one income statement account and one balance sheet
account; NEVER include cash
Types of Adjusting Entries ✔Correct Answer-Deferrals and Accruals
Deferrals ✔Correct Answer-Prepaid Expenses and Unearned Revenues
Prepaid Expenses ✔Correct Answer-Assets; Expenses paid in cash and recorded as assets
before they are used or consumed
Unearned Revenue ✔Correct Answer-Liabilities; Cash received before services are performed
Accruals ✔Correct Answer-Accrued Revenues and Accrued Expenses
Accrued Revenues ✔Correct Answer-Revenues for services performed but not yet received in
cash or recorded
, Accrued Expenses ✔Correct Answer-Expenses incurred but not yet paid in cash or recorded
Trail Balance ✔Correct Answer-Each account is analyzed to determine whether it is complete
and up-to-date
Adjusting Entries for Prepaid Expenses ✔Correct Answer-Payment of cash, that is recorded as
an asset because services or benefits will be received in the future; Cash payment BEFORE
expense recorded
for Prepaid Expenses adjusting entry results in a increase (_____) to and expense account and a
decrease (____) to an asset account ✔Correct Answer-A debit; A credit
Prepayments often occur in regard to: ✔Correct Answer-Insurance*, Rent, Supplies*,
Equipment, Advertising* and Buildings
Depreciation ✔Correct Answer-Buildings, equipment and motor vehicles (long-lived assets)
are recorded as assets, rather than expense in the year acquired
Accumulated Depreciation ✔Correct Answer-Equipment is a contra asset account
Contra asset ✔Correct Answer-all of these accounts have high, low and normal balances
opposite to the account to which they relate
Adjusting Entries for Unearned Revenue ✔Correct Answer-Receipt of cash recorded as a
liability before services are performed; Cash receipt BEFORE revenue recorded
for Unearned Revenue adjusting entry results in a decrease (_____) to an liability account and a
increase (____) to an revenue account ✔Correct Answer-A debit; a credit
Unearned Revenues often occur in regard to ✔Correct Answer-Rent, Magazine subscriptions,
Airline tickets and Customer deposits
Adjusting for Accruals ✔Correct Answer-Made to record Revenues earned OR Expenses
incurred in the current accounting period that have not been recognized through daily entries
Adjusting Entries for Accrued Revenues ✔Correct Answer-Revenues for services performed
but not yet received in cash or recorded; Revenue recorded BEFORE cash receipt
Accrued revenues often occurred in regard to ✔Correct Answer-Rent, Interest and Services
performed
What are the two purposes for an Accrued revenue's adjusting entry? ✔Correct Answer-
Shows the receivable that exists and Records the revenues for services performed
Answers |Latest Version |Already Graded A+
Periodicity Assumption ✔Correct Answer-Accountants divide the economic life of a business
into artificial time periods
Fiscal year ✔Correct Answer-An accounting time period that is one year long
The Revenue Recognition Principle (RRP) ✔Correct Answer-Companies recognize revenue in
the accounting period in which the performance obligation is satisfied
Expense Recognition Principle (ERP) ✔Correct Answer-Match expenses with revenues in the
period when the company makes efforts to generate those revenues
"Let the expenses follow the revenues"
Cash Basis Accounting ✔Correct Answer-Very few business use this; Revenues are recognized
only when cash is received (violates RRP), Expenses are recognized only when cash is paid
(violates (ERP), Prohibited under GAAP
Accrual Basis Accounting ✔Correct Answer-Transactions recorded in the periods in which the
events occur, Revenues are recognized (journalized) when services are performed, even if cash
was not received, Expenses are recognized when incurred, even if cash was not paid
Adjusting Entries ✔Correct Answer-Ensure that the revenue recognition and expense
recognition and expense recognition principles are followed, Are required overtime a company
prepares financial statements, Includes one income statement account and one balance sheet
account; NEVER include cash
Types of Adjusting Entries ✔Correct Answer-Deferrals and Accruals
Deferrals ✔Correct Answer-Prepaid Expenses and Unearned Revenues
Prepaid Expenses ✔Correct Answer-Assets; Expenses paid in cash and recorded as assets
before they are used or consumed
Unearned Revenue ✔Correct Answer-Liabilities; Cash received before services are performed
Accruals ✔Correct Answer-Accrued Revenues and Accrued Expenses
Accrued Revenues ✔Correct Answer-Revenues for services performed but not yet received in
cash or recorded
, Accrued Expenses ✔Correct Answer-Expenses incurred but not yet paid in cash or recorded
Trail Balance ✔Correct Answer-Each account is analyzed to determine whether it is complete
and up-to-date
Adjusting Entries for Prepaid Expenses ✔Correct Answer-Payment of cash, that is recorded as
an asset because services or benefits will be received in the future; Cash payment BEFORE
expense recorded
for Prepaid Expenses adjusting entry results in a increase (_____) to and expense account and a
decrease (____) to an asset account ✔Correct Answer-A debit; A credit
Prepayments often occur in regard to: ✔Correct Answer-Insurance*, Rent, Supplies*,
Equipment, Advertising* and Buildings
Depreciation ✔Correct Answer-Buildings, equipment and motor vehicles (long-lived assets)
are recorded as assets, rather than expense in the year acquired
Accumulated Depreciation ✔Correct Answer-Equipment is a contra asset account
Contra asset ✔Correct Answer-all of these accounts have high, low and normal balances
opposite to the account to which they relate
Adjusting Entries for Unearned Revenue ✔Correct Answer-Receipt of cash recorded as a
liability before services are performed; Cash receipt BEFORE revenue recorded
for Unearned Revenue adjusting entry results in a decrease (_____) to an liability account and a
increase (____) to an revenue account ✔Correct Answer-A debit; a credit
Unearned Revenues often occur in regard to ✔Correct Answer-Rent, Magazine subscriptions,
Airline tickets and Customer deposits
Adjusting for Accruals ✔Correct Answer-Made to record Revenues earned OR Expenses
incurred in the current accounting period that have not been recognized through daily entries
Adjusting Entries for Accrued Revenues ✔Correct Answer-Revenues for services performed
but not yet received in cash or recorded; Revenue recorded BEFORE cash receipt
Accrued revenues often occurred in regard to ✔Correct Answer-Rent, Interest and Services
performed
What are the two purposes for an Accrued revenue's adjusting entry? ✔Correct Answer-
Shows the receivable that exists and Records the revenues for services performed
