Short answer questions. Answer the following questions in your own words. Feel free to look them up in the book but please re-word them in your own words to show you understand what you are saying - I advise against googling answers for this class because not all internet answers are in the same format or use the same terminology as your author, and that is why I suggest you look them up in your text or listen for the answers in the lecture videos. Always answer these types of questions in complete sentences and paragraphs. 1. Describe the accrual basis of accounting. Discuss when revenue is recorded and when expenses are recorded. 2. 3. 4. 5. 6. Describe the cash basis of accounting. Discuss when revenue is recorded and when expenses are recorded. Why do generally accepted accounting principles require the use of the accrual basis of accounting instead of the cash basis? What are prepaid expenses? Describe the adjusting entry, including the accounts for prepaid expenses. What is depreciation? Describe the adjusting entry, including the accounts for depreciation. What are unearned revenues? Describe the adjusting entry, including the accounts for unearned revenues. 7. 8. What are interim financial statements? What is a contra account? What contra account is introduced in this chapter? Why do we use this contra account?