accounting-miller-exam 2 UPDATED ACTUAL QUESTIONS AND CORRECT
ANSWERS
accrual cash comes after transaction date (example: receivables and payables)
deferral cash comes before (example: prepaid account or unearned revenue)
purpose of adjusting entries? needed at the end of each accounting period to make certain that appropriate
amounts of revenue and expenses are reported in the company's income
statement because some business activities affect the revenue and expenses of
multiple accounting periods
an adjusting entry does what? assigns revenues to the period in which they are earned and expenses to the
periods in which related goods or services are used
four general adjusting entry categories 1. converting assets to expenses
2. converting liabilities to revenue
3. accruing unpaid expenses
4. accruing uncollected revenue
in an accrual accounting system there are timing cash flows and the recognition of expenses or revenue
differences between?
two important characteristics of all adjusting entires 1. involves the recognition of either revenue or expenses
2. revenue and expenses represent changes in owners equity but there must also
be a corresponding change in either assets or liabilities
every adjusting entry affects? 1. income statement (revenue or expense)
2. balance sheet (asset or liability)
rarely do adjusting entries include an entry to? cash
ANSWERS
accrual cash comes after transaction date (example: receivables and payables)
deferral cash comes before (example: prepaid account or unearned revenue)
purpose of adjusting entries? needed at the end of each accounting period to make certain that appropriate
amounts of revenue and expenses are reported in the company's income
statement because some business activities affect the revenue and expenses of
multiple accounting periods
an adjusting entry does what? assigns revenues to the period in which they are earned and expenses to the
periods in which related goods or services are used
four general adjusting entry categories 1. converting assets to expenses
2. converting liabilities to revenue
3. accruing unpaid expenses
4. accruing uncollected revenue
in an accrual accounting system there are timing cash flows and the recognition of expenses or revenue
differences between?
two important characteristics of all adjusting entires 1. involves the recognition of either revenue or expenses
2. revenue and expenses represent changes in owners equity but there must also
be a corresponding change in either assets or liabilities
every adjusting entry affects? 1. income statement (revenue or expense)
2. balance sheet (asset or liability)
rarely do adjusting entries include an entry to? cash
