106.Adjusting entries are
a.not
necessary if the accounting system is operating properly.
b.usually required before financial statements are prepared.
c.made whenever management desires to change an account balance.
d.made to statement of financial position accounts only.
107.Expenses incurred but
not
yet paid or recorded are called
a.prepaid expenses.
b.accrued expenses.
c.interim expenses.
d.unearned expenses.
108.An asset—expense relationship exists with
a.liability accounts.
b.revenue accounts.
c.prepaid expense adjusting entries.
d.accrued expense adjusting entries.
109.Adjusting entries can be classified as
a.postponements and advances.
b.accruals and deferrals.
c.deferrals and postponements.
d.accruals and advances.
110.Accrued revenues are
a.received and recorded as liabilities before they are earned.
b.earned and recorded as liabilities before they are received.
c.earned but
not
yet received or recorded.
d.earned and already received and recorded.
111.Prepaid expenses are
a.paid and recorded in an asset account before they are used or consumed.
b.paid and recorded in an asset account after they are used or consumed.
c.incurred but
not
yet paid or recorded.
d.incurred and already paid or recorded.
112.Accrued expenses are
a.paid and recorded in an asset account before they are used or consumed.
b.paid and recorded in an asset account after they are used or consumed.
c.incurred but
not
yet paid or recorded.
d.incurred and already paid or recorded.
113.Unearned revenues are
a.received and recorded as liabilities before they are earned.
b.earned and recorded as liabilities before they are received.
c.earned but
not
yet received or recorded.
d.earned and already received and recorded.
114.A liability—revenue relationship exists with
a.prepaid expense adjusting entries.
b.accrued expense adjusting entries.
c.unearned revenue adjusting entries.
d.accrued revenue adjusting entries.
115.Which of the following reflect the balances of prepayment accounts prior to adjustment?
a.Statement of financial position
accounts are understated and income statement accounts are understated.
b.Statement of financial position
accounts are overstated and income statement accounts are overstated.
c.Statement of financial position
accounts are overstated and income statement accounts are understated.
d.Statement of financial position
accounts are understated and income statement accounts are overstated.