MUHASEBE I - Deneme Sınavı - 5

If the accounting period consists of one year and the starting and ending dates are January 1 and December 31, fiscal year will be equal to the calendar year. But that does not mean that it is absolutely necessary.

The correct answer is C.

The 12-month accounting period used for the annual financial statements is called as fiscal year.

The correct answer is D.

In accrued revenue, revenue is recognized before the cash is received.

The correct answer is E.

In accrued expense, expense is recognized before the cash is paid. 

The correct answer is E.

Residual value as land has an indefinite useful life, it is not subject to depreciation.

The correct answer is B.

Residual value is the expected value of the plant asset at the end of its useful life. 

The correct answer is B.

Accounting is based on either the cash basis or the accrual basis. In cash basis accounting, companies record revenues when they receive the cash and they record expenses when the cash is paid. In accrual basis accounting, companies record revenues when they perform services (rather than when they receive cash) and record expenses when they are incurred (rather than when paid). The time-period concept assumes that unlimited economic life of a company will be divided into regular intervals and that financial statements will be prepared for specific periods such as a month, quarter, or year. Accounting periods may be monthly, quarterly, semiannually or yearly.

Expense is the cost of assets consumed or services used during the revenue earning process.

Deferred expenses (prepaid expenses) are advance payments of future expenses.

Book Value of an asset is the depreciable asset’s cost minus the asset’s accumulated depreciation.

Accounting periods may be monthly, quarterly, semiannually or yearly.

In accrued revenue, revenue is recognized before the cash is received.

Adjusting Entries are necessary every time financial statements are prepared.

Depreciable amount is the cost of an asset, or other amount substituted for cost, less than its residual value.

Adjusted trial balance is one form of trial balance that holds in-term transactions’ totals and balances as well as the end of the period transactions’ totals and balances for final checking of the accounts and preparation of financial statements.

In the income statement company reports revenues, expenses and their differences.

Statement of owner’s equity reports the changes in the capital throughout the period caused by the owner’s capital investments or withdrawals, net profit or loss.

Revenues and expenses are reported in the income statement; assets, liabilities and owner’s equity are reported in the balance sheet.

Liquidity is the measure of how quickly and easily an account can be converted into cash