Adjusting entries are required to match revenues and expenses.  True False

The revenue recognition principle is the basis for making adjusting entries that pertain to unearned and accrued revenues.  True False

Adjusting entries are required when:Group of answer choicesthe expense will be incurred with the passage of time.the entity’s profits are below its budget.expenses are recorded in the period in which they are incurred.revenues are recorded in the period in which they are earned.

Which one of the following is not a justification for adjusting entries?Group of answer choicesAdjusting entries are necessary to ensure that the revenue recognition principle is followed.Adjusting entries are necessary to ensure that the matching principle is followed.Adjusting entries are necessary to enable financial statements to conform with GAAP.Adjusting entries are necessary to bring the general ledger accounts in line with the budget. PreviousNext

An adjusting entry is usually not required for revenue that is:Multiple Choiceearned, recorded and paid for by the customer in one period.budgeted, paid for, and partially earned in one period but not fully earned until a later period.paid for by the customer and recorded in one period but not fully earned until a later period.earned in one period but not paid for by the customer or recorded until a later period

“Adjusting entries follow a pattern – they involve an account from the balance sheet and an account from the income statement, but they don’t ever involve cash.” Do you agree? Explain.