Chapter 3: Q3-2DQ (page 139)
Question: Why is the accrual basis of accounting generally preferred over the cash basis?
Answer:
Accrual basis is preferred over the cash basis because accrual basis is more accurate and gives the true and fair pictures of accounting records.
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In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank.
A. Current assets E. Current liabilities
B. Long-term investments F. Long-term liabilities
C. Plant assets G. Equity
D. Intangible assets
10. Office equipment
Identity which of the following accounts would be included in a post-closing trial balance.
a. Accounts Receivable c. Goodwill e. Income Tax Expense
b. Salaries Expense d. Land f. Salaries Payable
The following information is taken from Camara Company’s unadjusted and adjusted trial balances.
Unadjusted Adjusted Credit Debit Credit
Prepaid insurance \(4,100 \)3,700
Interest payable \(0 \)800
Given this information, which of the following is likely included among its adjusting entries?
a. A \(400 debit to Insurance Expense and an \)800 debit to Interest Payable.
b. A \(400 debit to Insurance Expense and an \)800 debit to Interest Expense.
c. A \(400 credit to Prepaid Insurance and an \)800 debit to Interest Payable.
In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank.
A. Current assets E. Current liabilities
B. Long-term investments F. Long-term liabilities
C. Plant assets G. Equity
D. Intangible assets
11. Rent receivable
In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank.
A. Current assets
B. Long-term investments
C. Plant assets
D. Intangible assets
E. Current liabilities
F. Long-term liabilities
G. Equity
3. Prepaid rent
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