Goals Achievement: Chapter Three
In general, accountants measure income using an approach based on:
Which concept holds that an organization's life can be divided into discrete accounting periods (months, quarters, years)?
The periodicity assumption seems practical and logical; however, it introduces allocation problems when dividing the life of a company into specific units of time.
Under the accrual basis of accounting, revenue should be recognized at the time services are rendered or when goods are sold and delivered to a customer.
Business expenses should be recognized in the same period as the revenues they helped to produce. This concept is known as the:
Adjusting entries are necessary to fulfill the goals of proper income measurement and are consistent with the cash basis of accounting.
The recording and accounting for prepaid expenses, depreciation, and similar items is consistent with the adjusting process for:
Revenues and expenses that gradually accumulate throughout an accounting period are known as:
An appropriate journal entry to record accrued interest would involve a debit to Interest Expense and a credit to:
Adjusting entries should be determined:
An adjusted trial balance is prepared by changing specific account balances in the trial balance by the amount of the adjustments from the adjusting entries.
Prepaid expenses would initially be recorded in an expense account under which adjusting entry approach?
If the income statement approach is used to record revenues received in advance of being earned, then an adjusting entry will always be necessary at the end of the accounting period.
Under the cash basis of accounting, revenues and expenses are recognized as receipts and payments occur.
Which method of accounting is theoretically preferred and used by virtually all large companies?