Chapter 3—The Adjusting Process

TRUE/FALSE
10. Revenue recognition concept requires that the reporting of revenue be included in the period when cash
for the service is received.

ANS: F PTS: 1 DIF: Moderate OBJ: 03-01

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-02-GAAP

11. Revenues and expenses should be recorded in the same period to which they relate.

ANS: T PTS: 1 DIF: Moderate OBJ: 03-01

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-04-Cash vs. Accrual

12. The matching concept supports matching expenses with the related revenues.

ANS: T PTS: 1 DIF: Easy OBJ: 03-01

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-02-GAAP

13. Even though GAAP requires the accrual basis of accounting, some businesses prefer using the cash basis
of accounting.

ANS: T PTS: 1 DIF: Moderate OBJ: 03-01

NAT: AACSB Analytic | AICPA FN-Measurement

14. The updating of accounts is called the adjusting process.

ANS: T PTS: 1 DIF: Easy OBJ: 03-01

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-07-Adjusting Entries

15. Adjusting entries are made at the end of an accounting period to adjust accounts on the balance sheet.

ANS: F PTS: 1 DIF: Moderate OBJ: 03-02

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-07-Adjusting Entries

16. Adjusting entries affect only expense and asset accounts.

ANS: F PTS: 1 DIF: Moderate OBJ: 03-02

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-07-Adjusting Entries

17. An adjusting entry would adjust revenue so it is reported when earned and not when cash is received.

ANS: T PTS: 1 DIF: Moderate OBJ: 03-02

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-07-Adjusting Entries

18. An adjusting entry would adjust an expense account so the expense is reported when incurred.

ANS: T PTS: 1 DIF: Moderate OBJ: 03-02

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-07-Adjusting Entries
19. An adjusting entry to accrue an incurred expense will affect total liabilities.

ANS: T PTS: 1 DIF: Moderate OBJ: 03-02

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-07-Adjusting Entries