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Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition by Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt

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EXERCISE 3-9

Purpose: (L.O. 1 thru 8) This exercise will quiz you about terminology used in this chapter.

A list of accounting terms with which you should be familiar appears below:

Accrual-basis accounting Deferrals
Accruals Depreciation
Accrued expenses Expense recognition principle (matching principle)
Accrued revenues Fiscal year
Adjusted trial balance Interim periods
Adjusting entries Prepaid expenses
Book value Revenue recognition principle
Calendar year Time period assumption
Cash-basis accounting Unearned revenues
Contra asset account Useful life

Instructions

For each item below, enter in the blank the term that is described.

  1. _____________________________________Accounting basis in which events that change sa company's financial statements are recorded in the periods in which the events occur, rather than in the periods in which the company receives or pays cash. Thus, revenues are recognized when earned and expenses are recognized when incurred, regardless of when the related cash is received or paid.
  2. _____________________________________Revenue is recorded only when cash is received, and an expense is recorded only when cash is paid.
  3. _____________________________________An assumption that the economic life of a business can be divided into artificial time periods of equal length. Another name for this assumption is the periodicity assumption.
  4. _____________________________________The principle that dictates revenue be recognized in the accounting ...

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