TRUE OR FALSE

2) The key differences between the cash basis and accrual basis of accounting can be explained by understanding the time period concept and the revenue recognition and matching principles.

3) The key differences between the cash basis and accrual basis of accounting can be explained by understanding the rules of debits and credits.

5) If a company fails to make an adjusting entry to record accrued expenses, the liabilities and net income will be overstated.

6) Since net income increases the equity account Retained Earnings, if net income is understated, then equity will also be understated.

7) If net income is overstated, equity will be understated.