TRUE OR FALSE 1.Many business transactions affect more than one time period. 2.Accounting time periods that are one year in length are referred to as interim periods. 3. Adjusting entries are not necessary if the trial balance debit and credit columns balances are equal. 4.Adjusting entries are not necessary if the trial balance debit and credit columns balances are equal. 5. An adjusting entry always involves two balance sheet accounts. 6. Adjusting entries are often made because some business events are not recorded as they occur. 7. Adjusting entries are recorded in the general journal but are not posted to the accounts in the general ledger. 8. Revenue received before it is earned and expenses paid before being used or consumed are both initially recorded as liabilities. 9. Accrued revenues are revenues which have been received but not yet earned. 10. Accrued revenues are revenues which have been received but not yet earned. 11. The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique. 12. Accumulated Depreciation is a liability account and has a credit normal account balance. 13. The balances of the Depreciation Expense and the Accumulated Depreciation accounts should always be the same. 14.Unearned revenue is a prepayment that requires an adjusting entry when services are performed. 15. Asset prepayments become expenses when they expire. 16. A contra asset account is subtracted from a related account in the balance sheet. 17.If prepaid costs are initially recorded as an asset, no adjusting entries will be required in the future. 18.The cost of a depreciable asset less accumulated depreciation reflects the book value of the asset. 19. Accrued revenues are revenues that have been earned and received before financial statements have been prepared. 20.Financial statements can be prepared from the information provided by an adjusted trial balance.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
TRUE OR FALSE
1.Many business transactions affect more than one time period.
2.Accounting time periods that are one year in length are referred to as interim periods.
3.
4.Adjusting entries are not necessary if the trial balance debit and credit columns balances are equal.
5. An adjusting entry always involves two
6. Adjusting entries are often made because some business events are not recorded as they occur.
7. Adjusting entries are recorded in the general journal but are not posted to the accounts in the general ledger.
8. Revenue received before it is earned and expenses paid before being used or consumed are both initially recorded as liabilities.
9. Accrued revenues are revenues which have been received but not yet earned.
10. Accrued revenues are revenues which have been received but not yet earned.
11. The book value of a
12.
13. The balances of the Depreciation Expense and the Accumulated Depreciation accounts should always be the same.
14.Unearned revenue is a prepayment that requires an adjusting entry when services are performed.
15. Asset prepayments become expenses when they expire.
16. A contra asset account is subtracted from a related account in the balance sheet.
17.If prepaid costs are initially recorded as an asset, no adjusting entries will be required in the future.
18.The cost of a depreciable asset less accumulated depreciation reflects the book value of the asset.
19. Accrued revenues are revenues that have been earned and received before financial statements have been prepared.
20.Financial statements can be prepared from the information provided by an adjusted trial balance.
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