CHAPTER 3 THE ADJUSTING PROCESS EYE OPENERS 1. a. Under cash-basis accounting, revenues are reported in the period in which cash is received and expenses are reported in the period in which cash is paid. b. Under accrual-basis accounting, revenues are reported in the period in which they are earned and expenses are reported in the same period as the revenues to which they relate. 2. a. 2010 b. 2009 3. a. 2010 b. 2009 4. The matching concept is related to the accrual basis of accounting. 5. Yes. The cash amount listed on the trial balance is normally the amount of cash on hand and needs no adjustment at the end of the period. 6. No. The amount listed on the trial balance, before adjustments, normally represents the cost of sup-plies on hand at the beginning of the period plus the cost of the supplies purchased during the period. Some of the supplies have been used; therefore, an adjustment is necessary for the supplies used before the amount for the balance sheet is determined. 7.
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Generally Accepted Accounting Principles, insurance premiums