pa CHAP 3 QUIZZ

Unearned Revenue record revenue earn that was previously received as cash in advance

• T

• F

2. The revenue recognition principle is that expenses should be recognized in the same period that the related revenue are recognized

• T

• F

Answer explanation

The revenue recognition principle is that companies recognize revenue in the accounting period in which the performance obligation is satisfied

3. Monthly and quarterly time periods are commonly referred to as fiscal periods

• T

• F

Answer explanation

fiscal year = 12 months

3. Expense Recognition (Matching) Principle is that if revenue is deferred to a future period, the related cost generating that income should be deferred to the same future period.

• T

• F

5. Cost-less accumulated depreciation is a measurement of the current value of an asset such as equipment or a building

• T

• F

6. Depreciation is the process of allocating the cost of an asset to expense over its useful life in a rational and systematic manner

• T

• F

7. Accumulated depreciation is an asset account

• T

• F

8. A contra-asset account is an account whose balance is deducted from a related asset in the financial statements

• T

• F

9. When accrual-basis accounting is applied, adjusting entries are not necessary

• T

• F

10. Adjustments for accrued expenses are necessary to record the obligations that exist at the balance sheet date and to recognize the expenses that are applicable to the current accounting period

• T

• F