Chapter 3—The Adjusting Process

TRUE/FALSE
20. The difference between deferred revenue and accrued revenue is that accrued revenue has been recorded
and needs adjusting and deferred revenue has never been recorded.

ANS: F PTS: 1 DIF: Moderate OBJ: 03-02

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-04-Cash vs. Accrual

21. Deferrals are recorded transactions that delay the recognition of an expense or revenue.

ANS: T PTS: 1 DIF: Easy OBJ: 03-02

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-04-Cash vs. Accrual

22. Adjustments for accruals are needed to record a revenue that has been earned or an expense that has been
incurred but not recorded.

ANS: T PTS: 1 DIF: Moderate OBJ: 03-02

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-07-Adjusting Entries

23. Unearned revenue is a liability.

ANS: T PTS: 1 DIF: Moderate OBJ: 03-02

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-04-Cash vs. Accrual

24. The systematic allocation of land's cost to expense is called depreciation.

ANS: F PTS: 1 DIF: Moderate OBJ: 03-02

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-04-Cash vs. Accrual

25. The difference between the balance of a fixed asset account and the balance of its related accumulated
depreciation account is termed the book value of the asset.

ANS: T PTS: 1 DIF: Moderate OBJ: 03-02

NAT: AACSB Analytic | AICPA FN-Measurement

26. The Accumulated Depreciation's account balance is the sum of the depreciation expense recorded in past
periods.

ANS: T PTS: 1 DIF: Moderate OBJ: 03-02

NAT: AACSB Analytic | AICPA FN-Measurement

27. Accumulated Depreciation accounts are liability accounts.

ANS: F PTS: 1 DIF: Easy OBJ: 03-02

NAT: AACSB Analytic | AICPA FN-Measurement

28. Accumulated Depreciation is reported on the income statement.

ANS: F PTS: 1 DIF: Easy OBJ: 03-02

 NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-09-Financial Statements

29. A contra asset account for Land will normally appear in the balance sheet.

ANS: F PTS: 1 DIF: Moderate OBJ: 03-02

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-09-Financial Statements