Income statement reports the revenues and expenses and resulting net income or loss of a company for a specific period of time.

The correct answer is B.

Assets are economic resources that provide a future benefit for a business –something the business owns. Most firms use the following asset accounts:

• Cash. Cash means business’s money and any medium of exchange including paper currency, coins, certificates of deposit, and checks.
• Accounts Receivable. Companies might sell their goods and services on account and receives a promise for future collection of cash. The Accounts Receivable account holds a customer’s promise to pay in the future for services or goods sold on account. Arises from a credit sale. The company collects cash from the customer sometime after the sale.
• Notes Receivable. A note receivable is similar to an account receivable, but a note receivable is more formal than Accounts Receivable because the customer signed a formal note. Notes receivable usually includes interest.
• Prepaid Expenses. Companies might pay certain expenses in advance, such as insurance and rent. A prepaid expense is considered as an asset because the prepayment provides a future benefit for the business. Prepaid Rent, Prepaid Insurance, and Supplies are examples of prepaid expenses.
• Land. The Land account shows the cost of the land a business uses in its operations.
• Buildings. The costs of an office building, factory building, a warehouse, and other buildings appear in the Buildings account.
• Equipment, Furniture, and Fixtures. The cost of equipment, furniture and fixtures. A business has a separate asset account for each type of equipment, for example, Manufacturing Equipment and Office Equipment. The Furniture and Fixtures account shows the cost of these assets such as desks, tables, chairs, counters, etc.

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

The correct answer is C. Assets, distributions and expenses normally show debit balance.Liabilities, contributions and revenues normally show credit balance. 

Deferred expenses (prepaid expenses) are advance payments of future expenses. Deferred expenses are the ones that are firstly paid and reported as an asset but will not be recorded as an expense until a future accounting period. In other words, cash is paid before the expense is recognized. Rent, interest, insurance, etc. are the examples of prepaid expenses. The amounts of office supplies used up may also be considered as prepaid expenses. As it is not necessary, such kinds of expenses are not required in daily recordings. For that reason, companies do not recognize them until the preparation of their financial reports. 

Income statement is the financial statement that reports operation results of a business for a specific period of time (month, quarter quarter, or year year).

You receive the cash in advance for the work you will do in the future. The company owes a product or a service to the customer, or it owes the customer his or her money back. Only after completing the work or service or delivering the product does the business earn the revenue. Because of this delay, unearned revenue is a liability. The correct answer is C.

The correct answer is C. An account is an individual accounting tool that shows the increases and decreases in a specific asset, liability, or owner’s equity item during a specified period. Account receivables, account payables and net income are accounts.

• Identifying includes selecting financial transactions.
• Recording includes recording, classifying, and summarizing.
• Communicating includes preparing financial reports.

The correct answer is E.

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

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

In accrued expense, expense is recognized before the cash is paid. The correct answer is C.

Net income results when revenues exceed expenses and loss results when expenses exceed revenues. In this sense, net income increases owner’s equity while loss decreases owner’s equity. Therefore, net income or loss is the financial result of the performance of a business in a given period.

The correct answer is A.

In addition to proving the equality of debits and credits, the trial balance is also used to prepare the financial statements. The trial balance is normally prepared at the end of every accounting period and is the basis for preparation of financial statements. The income statement is prepared using the revenue and expense accounts from the trial balance. The net income relates to the increase (or in the case of a net loss, the decrease) in owner’s equity.

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

Journal entries include debit and credit effects of each transaction. In a journal entry, debits are ALWAYS entered first, and credits are INDENTED and listed second

The two basic categories of adjustments can be divided into four different types as follows:

1. Deferred (Prepaid) Expenses

2. Deferred (Unearned) Revenues

3. Accrued Expenses

4. Accrued Revenues

The correct answer is C.

The ledger is a record of all the accounts that the company uses the changes in those accounts, and their balances. A ledger is often defined as a book of accounts.

Assets are economic resources controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity. In short, assets are economic resources a business owns and assets will provide future services or benefits.

Assets are economic resources controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity. In short, assets are economic resources a business owns and assets will provide future services or benefits. B is the right answer.