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3.2  Recognize revenue and record expenses 1) An accrual refers to

Question : 3.2  Recognize revenue and record expenses 1) An accrual refers to : 1895473

3.2  Recognize revenue and record expenses

1) An accrual refers to an event:

A) where the expense or revenue is recorded after the cash settlement

B) where the liability is recorded after the cash settlement

C) where the expense or revenue is recorded before the cash settlement.

D)  where the asset is recorded after the cash settlement

2) The accounting principle which tells accountants when to record revenue and in what amount is called the:

A) matching principle

B) revenue principle

C) full disclosure principle

D) going concern principle

3) Under the revenue principle, a business should record revenue when the business:

A) receives an order from a customer for goods or services

B) prepares the invoice (bill) for goods or services

C) delivers goods or services to a customer

D) receives payment from a customer for goods or services.

4) On October 25, 2010 Quick Corp. prints a cheque for November's rent payment. Quick Corp. mails the cheque on October 27 to the landlord. The landlord receives the cheque October 31 and cashes the cheque on November 2. When should Quick Corp. record the rent expense associated with this transaction?

A) October 25, 2010

B) October 27, 2010

C) November 30, 2010

D) November 2, 2010

5) An expense incurred in 2010 is not paid until 2011. Using the accrual basis of accounting, the expense should appear on:

A) the 2011 income statement

B) the 2010 income statement

C) neither the 2010 nor 20011 income statement

D) both the 2010 and 2011 income statements

6) Cash for services to be performed in 2011 is received in 2010. Using the accrual basis of accounting, the revenue should appear on:

A) the 2011 income statement

B) both the 2010 and 2011 income statements

C) neither the 2010 nor 2011 income statement

D) the 2010 income statement

7) On December 15, 2010, a company receives an order from a customer for services to be performed on December 28, 2010. Due to a backlog of orders, the company does not perform the services until January 3, 2011. The customer pays for the services on January 6, 2011. When should revenue be recorded by the company?

A) December 15, 2010

B) January 3, 2011

C) December 28, 2010

D) January 6, 2011

8) Using accrual accounting, expenses are not recorded until the cash for the expense is disbursed.

9) Accrual accounting provides some ethical challenges that cash accounting avoids.

10) Under the revenue principle, businesses should record revenue when it is earned regardless of when payment is received from the customer.

11) To obtain a new customer, a business sells merchandise to the customer for $100. Normally, the merchandise sells f


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