periods such as months, quarters, or years is the A. Operating cycle of a business B. Timeliness principle C. Going-concern principle D. Matching principle E. Accrual basis of accounting 2. The length of time covered by periodic financial statements and other reports is the A. Fiscal year B. Natural business year C. Accounting period D. Business cycle E. Operating cycle 3. The accounting principle that requires revenue to be reported when earned is the A. Matching principle B. Revenue recognition principle C. Timeliness principle D. Cost principle E. Going concern principle 4. The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the A. Revenue recognition principle B. Cost principle C. Cash basis of accounting D. Matching principle E. Timeliness principle 1 of 4 5. The approach to preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called A. Accrual basis accounting B. The operating cycle of a business C. Cash basis accounting D. The revenue recognition principle E. The matching principle 6. The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is A. Accrual basis accounting B. The operating cycle of a business C. Cash basis accounting D. The revenue recognition principle E. The matching principle 7. A Company received a $10,000 deposit from a customer for goods to be delivered the following month. Under the accrual and cash basis of accounting respectively the deposit would be recorded as A. Accrual Basis: a liability | Cash Basis: a liability B. Accrual Basis: a liability | Cash Basis: income C. Accrual Basis: income | Cash Basis: a liability D. Accrual Basis: income | Cash Basis: income E. Accrual Basis: an asset | Cash Basis: an asset 8. 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 statement of cash flows accounts E. Affect only equity accounts 2 of 4 9. Prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues are all examples of A. Items that require contra accounts B. Items that require adjusting entries C. Classified balance sheet accounts D. Assets E. Income statement accounts 10. The purpose of depreciation is to A. Measure the change in an asset's value B. Adjust the carrying value of an asset to market value C. Allocate the asset's cost to the periods benefiting from its use D. Recognize the reduced usefulness of an asset E. Adjust the ledger account balances for assets to equate to their current market value