For each of the following items before adjustment, indicate the type of adjusting entry (prepaid expense, unearned revenue, accrued revenue, and accrued expense) that is needed to correct the misstatement. If an item could result in more than one type of adjusting entry, indicate each of the types.

(a) Assets are understated.

(b) Liabilities are overstated.

(c) Liabilities are understated.

(d) Expenses are understated.

(e) Assets are overstated.

(f) Revenue is understated.

The revenue recognition principle states that:

a. revenue should be recognized in the accounting period in which it is earned.

b. expenses should be matched with revenues.

c. the economic life of a business can be divided into artificial time periods.

d. the fiscal year should correspond with the calendar year.

The principle or assumption dictating that efforts (expenses) be matched with accomplishments (revenues) is the:

a. expense recognition principle.

b. cost assumption.

c. periodicity principle.

d. revenue recognition principle.

Accumulated Depreciation is:

a. a contra-asset account.

b. an expense account.

c. a stockholders’ equity account.

d. a liability account.

Adjustments for accrued revenues:

a. have a liabilities and revenues account relationship.

b. have an assets and revenues account relationship.

c. decrease assets and revenues.

d. decrease liabilities and increase revenues.