midterm - true/false (finacct)

If an expense is paid in advance, a debit entry is made in the prepaid expense account at the time it is paid.

When prepaid expenses are realized, an adjusting credit entry is made to prepaid expense and a debit entry is made for the relevant expense account.

At the time equipment is purchased, no expense is recorded.

When depreciation expense is recognized, the accumulated depreciation account is credited and the depreciation expense account is debited.

Unearned revenue is a liability account.

When prepaid rent is recognized as revenue by the landlord, the unearned revenue account is debited and the revenue account for rent is credited.

When inventory is sold, a debit entry is made to the cost of goods sold account.

At the time inventory is purchased, no expense is recorded.

Sales revenue and cost of goods sold should be recorded when merchandise inventory is sold, not when it is purchased.

All of the following are considered current assets: cash, accounts receivable, merchandise inventory, supplies, and prepaid expense.

If an expense is paid in advance, a credit entry is made in the prepaid expense account at the time it is paid.

When prepaid expenses are realized, an adjusting debit entry is made to prepaid expense and a credit entry is made for the relevant expense account.

Depreciation expense is recorded at the time a depreciable asset is purchased, for the amount of the purchase.

When depreciation expense is recognized, the accumulated depreciation account is debited and the depreciation expense account is credited.

Unearned revenue is an asset account.