Exam 3: Adjusting the Accounts

Sonic Youth Corporation purchased a one-year insurance policy in January 2015 for $49,500. The insurance policy is in effect from March 2015 through February 2016. If the company neglects to make the proper year-end adjustment for the expired insurance

The revenue recognition principle dictates that revenue be recognized in the accounting period in which cash is received.

An expense is recorded under the cash basis only when

Characteristics associated with relevant accounting information are

If prepaid costs are initially recorded as an asset, no adjusting entries will be required in the future.

The cash basis of accounting is not in accordance with generally accepted accounting principles.

If a business has received cash in advance of services performed and credits a liability account, the adjusting entry needed after the services are performed will be

At December 31, 2015, before any year-end adjustments, Murmur Company's Insurance Expense account had a balance of $2,450 and its Prepaid Insurance account had a balance of $3,800. It was determined that $2,800 of the Prepaid Insurance had expired. The adjusted balance for Insurance Expense for the year would be

Revenue received before services are performed and expenses paid before being used or consumed are both initially recorded as liabilities.

Nirvana Corporation issued a one-year, 9%, $400,000 note on April 30, 2015. Interest expense for the year ended December 31, 2015 was

If an adjusting entry is not made for an accrued revenue,

Expenses incurred but not yet paid or recorded are called

Which of the following would not result in unearned revenue?

A liability-revenue relationship exists with

If unearned revenues are initially recorded in revenue accounts and not all the related services been performed at the end of the accounting period, the failure to make an adjusting entry will cause

Depreciation is the process of

The quality of consistency pertains to the use of the same accounting principles by firms in the same industry.

Depreciation based on revaluation of land and buildings is permitted under

Which one of the following is not an enhancing quality of useful information?

For prepaid expense adjusting entries