Question

36) The accrual basis of accounting: A) Is generally accepted for external reporting because it is more useful than cash basis f or most business decisions. B) Is flawed because it gives complete information about cash flows. C) Recognizes revenues when received in cash. D) Recognizes expenses when paid in cash. E) Eliminates the need for adjusting entries at the end of each period. 37) The difference between the cost of an asset and the accumulated depreciation for that asset is called: A) Depreciation Expense. B) Unearned Depreciation. C) Prepaid Depreciation. D) Depreciation Value. E) Book Value. 38) A company's Office Supplies account shows a beginning balance of $600 and an ending balance of $400. If office supplies expense for the year is $3,100, what amount of office supplies was purchased during the period? A) $2,700. B) $2,900. C) $3,300. D) $3,500. E) $3,700. 39) A trial balance prepared after adjustments have been recorded is called a(n): A) Balance sheet. B) Adjusted trial balance. C) Unadjusted trial balance. D) Classified balance sheet. E) Unclassified balance sheet. 40) The adjusting entry to record an accrued expense is: A) Increase an expense; increase a liability. B) Increase an asset; increase revenue. C) Decrease a liability; increase revenue. D) Increase an expense; decrease an asset. E) Increase an expense; decrease a liability. 41) The adjusting entry to record an accrued revenue is: A) Increase an expense; increase a liability. B) Increase an asset; increase revenue. C) Decrease a liability; increase revenue. D) Increase an expense; decrease an asset. E) Increase an expense; decrease a liability.

Answer 1

Question 36

Correct answer-----------(A) Is generally accepted for external reporting because it is more useful than the cash basis for most business decision.

.

Accrual method of accounting is the accepted accounting for expernal use. Expense are recorded when they are incurred not when cash is paid and revenue are recognized when they are earned not when cash is received.

Question 37

Correct answer-----------(E) Book value

Question 38

Correct answer-----------(B) $2900

Working

Supplies used	$    3,100
Add: Ending balance	$        400
Supplies needed	$    3,500
Less: Beginning balance	$        600
Supplies purchased	$    2,900

Question 39

Correct answer-----------(B) Adjusted trial balance.