1. What are the distinctive features of accrual accounting and cash basis accounting?
a. Accrual accounting records only receivables, payables, and depreciation.
b. Accrual accounting is superior because it provides more information.
c. Cash basis accounting records all transactions.
d. All the above are true.
2. The revenue recognition principle says
a. divide time into annual periods to measure revenue properly.
b. record revenue only after you have earned it.
c. measure revenues and expenses in order to compute net income.
d. record revenue after you receive cash.
3. Adjusting the accounts is the process of
a. subtracting expenses from revenues to measure net income.
b. recording transactions as they occur during the period.
c. updating the accounts at the end of the period.
d. zeroing out account balances to prepare for the next period.