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. Cash basis accounting records only cash transactions—cash receipts and cash payments. Basically, it is a simple method. But it prevents businesses from being cautious. Companies adopting cash basis accounting focus only transactions involving cash. Those with no monetary input are not taken into consideration. It is possible to say that cash basis accounting is mostly used by small businesses.

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

Statement I and IV are among the adjustment categories.

Any entry made on the left side of the account is a debit (abbreviated Dr.), and any entry made on the right side is a credit (abbreviated Cr.). These terms are used to describe the place of entries in recording process not for “increase” or “decrease”. For example, entering an amount on the left side of an account is called debiting while crediting refers to the act of making an entry on the right side of an account. Also, if the sum of the left side exceeds the sum of the right side of an account, a debit balance occurs. other words, debit balance shows the difference between total amounts of the left and the right side where debit amount exceeds the credits. In reverse situation, when the credit amount exceeds the debits, credit balance occurs. Credit balance shows the difference between total amounts of the right and the left side where credit amount exceeds the debits.

Bookkeeping is an accounting action that usually refers only keeping of the chronological diary of financial transactions while the concept of recording includes classifying and measuring as well.

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. The correct answer is E. 

The basic form of account generally is called as T-account, because the shape of the account resembles the letter T.T-accounts have a title and include two sides: Debit (left) and credit (right). Debit represents the left side of an account. Credit represents the right side of an account. Each account has a space for recording increases in the amount of the item.

Residual value is the expected value of the plant asset at the end of its useful life. The correct answer is D.

This system includes three kinds of basic activities which are identifying, recording and communicating of the financial transactions of an entity.

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

In a journal entry, Debits are ALWAYS entered first, and Credits are INDENTED and listed second.

Unearned Revenue (Advances from customers). The obligation occurs when a company receives cash from a customer in advance but has not provided the product or service. The company gives promise to provide services or deliver goods in the future.

Financial accounting provides financial information to meet the information needs of external information users. Managerial accounting provides financial information to meet theinformation needs of managers.

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.

Accounting periods may be monthly, quarterly, semiannually or yearly

Current liabilities, non current liabilities, owner's equity

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).

Financial statements are prepared from the adjusted trial balance. Balance sheet, income statement, and owner’s equity statement are prepared with the data found in adjusted trial balance.

Dr./Cr. Rules for Contributions (Owner’s capital): Contributions increase on right side by crediting while decrease on left side by debiting and normally show credit balance.

ıt sould be trial balance