Explain why.

1.A trial balance lists all the names of ledger accounts in the________ and their _________as at a particular date. The total from accounts with________ balances should tally with the total from accounts with_________ balances.

3. There are certain rules dictating the financial period that income and expenses are

to be recorded in. Income is recognized and recorded when it is earned but uncollected and expenses are recorded when they are incurred but not yet paid.

Is this correct? Explain why.

4. The financial year of a business is from Jan. 1 to Dec. 31. In Jan. 2018, it provided goods worth P125,000 to a customer. This amount should be recorded in the year 2018. In Dec. 2018, it paid P240,000 for the rent for Jan. 2019. This

expense should be recorded in the year 2019.

Is this correct? Explain why.

5. There are two main accounting theories that determine how income and expenses

are accounted for. They are the concept and the concept.

6. The financial year of a business is from Jan. 1 to Dec. 31. In preparing the income

statement for the year ended Dec. 31, 2019, the business includes the income and

expenses from Jan. to Dec. 2019 only. This practice follows the ANSWER HERE concept. An income earned in Jan. 2018 which was collected in Dec. 2017 Is recorded in 2018. This second practice follows the ANSWER HERE concept.

7. Business prepares an income statement for a financial year. The business

collected P260,000 for 13 months of rental income, but only recorded P240,000 as

rent income in the income statement. This practice complies with the ANSWERE HERE

concept.

True or False. EXPLAIN WHY.

1. Failure to record the adjusting entry for accrued salaries results in the

current years profit being overstated. TRUE. Is this correct? Explain why.

2.AS equipment is depreciated, its book value increases and its accumulated

depreciation increases. FALSE. Is this correct? Explain why.

3.An adjusting entry includes at least one balance sheet account and at least one

income statement account.

4.All decreases in owner's equity are a result of expenses. FalSe tdial hga)

5. Accounting periods should be of equal length to facilitate comparisons between

periods.

6. Failure to record the adjusting entry for depreciation will overstate assets on the

balance sheet.

7. In recording the adjusting entry for accrued salaries, all the accounts involved are

decreased.

8. The owner's personal withdrawals for the year cause a decrease in profit.

9. The expiration of usefulness of equipment during an accounting period is called

depreciation.

10. Acquiring a computer for cash is just exchanging one asset for another and will not

result in an expense even in future periods.

11. Applying accrual accounting results in a more accurate measurement of profit for

the period than does the cash basis of accounting.

12. Not all increases to cash represent revenues.

13. Adjusting entries affect cash flows in the current period

14. Accrual accounting recognizes revenues and expenses at the point that cash

changes hands.

15. A deferral is the recognition of an expense that has arisen but has not yet been

recorded.

16. Assets become liabilities when they expire.

17. When there is no direct connection between revenues and costs, the costs are

systematically allocated among the periods benefited.

18. Revenue results from collection of accounts receivable.

19. Revenue cannot be recognized unless delivery of goods has occurred or services

have been rendered.

20. Adjusting entries are useful in apportioning costs among two or more accounting

periods.

21. Recording incurred but unpaid expenses is an example of an accrual.

22. Revenue is equal to the cash received by a company during an accounting period.

23. A company's fiscal year must correspond to the calendar year.

24. If all transactions were originally recorded in conformity with GAAP, there would be

no need for adjusting entries at the end of the period.

25. The adjustment to record depreciation of property and equipment consists of a

debit to depreciation expense and a credit to accumulated depreciation.

26. When services are not paid for until after they have been performed, the accrued

expense is recorded by an adjusting entry at the end of the accounting period.

27. The adjusting entry to recognize earned commiSSion revenues not previously

recorded or billed will cause total assets to increase.

28. When the reduction in prepaid expenses is not properly recorded, this causes the

asset accounts and expense accounts to be understated.

29. Accumulated depreciation accounts may be referred to as contra-asset accounts.

30. Accounts that are partly income statement amounts and partly balance sheet

amounts are called mixed accounts.