ACCOUNTING 1. Adjusting entries: A. Affect only income statement accounts. B. Affect only balance sheet accounts. C. Affect both income statement and balance sheet accounts D. Affect only cash flow statements. 2. The principle that requires expenses to be reported in the same period as the revenues that were earned as a result of those expenses is the: A. Recognition principle. B. Cost principle. C. Cash basis of accounting D. Matching principle. 3. A company made no adjusting entry for accrued and unpaid employee wages of $3,000 on December 31. This error would: A. Understate net income by $3,000. B. Overstate net income by $3,000. C. Have no effect on net income. D. Overstate assets by $3,000. 4. The assets section of a classified balance sheet usually includes: A. Current assets, long-term assets, revenues, and intangible assets. B. Current assets, long-term investments, plant assets, and intangible assets. C. Current assets, long-term investments, plant assets, and equity. D. Current liabilities, long-term investments, plant assets, and intangible assets. 5. Compute the net income or net loss for the month ended on March 31, 2008 from the following data: Assets on March 1, 2008 $40,000 Liabilities on March 1, 2008 30,000 Capital on March 31, 2008 15,000 Additional investments by owner during year 2,000 2008 Withdrawals during year 2008 1,000 A. $3,000 B. $4,000 C. $5,000 D. $6,000