1. An accrued expense is one that has been incurred but not yet paid. 2. Prepaid rent is an example of a contra account and is used to record a reduction to its related account, rent expense. 3. The purpose of an unadjusted trial balance is to be sure the general ledger is in balance 4. Adjusting entries always impact the income statement and the cash account. 5. The book value of a building is equivalent to its historical cost. 6. Adjusting unearned revenues causes a liability to decline. 1. The trial balance prepared before the general ledger accounts are adjusted is called an adjusted trial balance. 8. An unadjusted trial balance shows the general ledger account balances before any adjustments have been made. 9. Each adjusting entry affects a balance sheet account and an income statement account. 10. An adjusting entry to record depreciation expense is an example of an adjustment that accrues an expense to reflect its incurrence during the accounting period even though it is not yet paid or recorded. 11. Deferred revenue and unearned revenue both refer to cash that has been received but not yet earned 12. Under the double-entry accounting system, no more than two accounts can be affected by eac transaction. 13. When a firm purchases equipment for cash, both assets and stockholders' equity increase 14. When money is borrowed, both an asset account and a revenue account are increased. 15. All accounts have normal balances on the debit side