Question :
61. As a general principle, under the accrual basis of accounting, : 1245892
61. As a general principle, under the accrual basis of accounting, the firm recognizes revenue when the transaction meets which of the following conditions?
A. Revenue is recognized when there is completion of the earnings process, only.
B. Revenue is recognized when there is receipt of assets from the customer, only.
C. Revenue is recognized when there is completion of the earnings process and receipt of assets from the customer.
D. Revenue is recognized when there is expiration of the warranty period, only.
E. Revenue is recognized when there is receipt of the final payment, only.
62. Manufacturing overhead include(s):
A. costs that the firm cannot associate with particular products.
B. expenditures for factory utilities, property taxes, insurance, and depreciation on manufacturing plant and equipment.
C. expenditures for supervisors’ salaries.
D. costs that jointly benefit all goods produced during the period, not any one particular item.
E. all of the above.
63. For manufacturing firms, the cost of completed products remains on the balance sheet as __________ assets until the firm sells the products; upon sale, the cost of the assets becomes a cost of goods sold expense.
A. Direct Materials Inventory
B. Work-in Progress Inventory
C. Finished Goods Inventory
D. Cost of Products Ready for Sale
E. none of the above
64. Which of the following is not an example of a period expense?
A. the president’s salary
B. insurance for the home office
C. accounting and information systems costs
D. support activity costs such as legal services, employee training, and corporate planning.
E. the factory foreman’s salary
65. Which of the following is not a period expense?
A. salaries and commissions of the sales staff
B. costs to produce catalogs
C. marketing costs, such as advertising
D. costs to produce sales literature
E. direct labor
66. A manufacturing firm has manufacturing costs which become product costs. These manufacturing costs do not include:
A. direct material costs (or raw material costs).
B. direct labor costs.
C. manufacturing overhead costs (sometimes called indirect manufacturing costs).
D. expenditures for administrative staff.
E. expenditures for supervisors’ salaries, factory utilities, property taxes, insurance, and depreciation on manufacturing plant and equipment.
67. Which of the following is not true?
A. Net income or profit for a period is the difference between revenues from selling goods and services and the expenses incurred to generate those revenues, plus some gains or losses of the period.
B. If the expenses plus losses exceed the revenues plus gains, the result is a net loss.
C. U.S. GAAP and IFRS require the accrual basis of accounting, which detaches the recognition of revenue from the receipt of cash.
D. A seller recognizes revenues when it has performed all, or nearly all, of its obligations to the customer and when it has received cash or an asset that is convertible to cash.
E. The firm recognizes and reports expenses that have a causal link with revenues, such as cost of sales, in the next accounting period.
68. Which financial statement reports operating performance for a specific period of time?
A. Balance sheet
B. Income statement
C. Statement of changes in shareholders’ equity
D. Statement of retained earnings
E. Statement of Cash Flows
69. Revenue and expense accounts
A. are permanent accounts.
B. are temporary accounts.
C. reflect cumulative changes in each account since the organization of the firm.
D. record all cash receipts and cash disbursements.
E. none of the above.
70. Recognition of revenue usually occurs when
A. the firm pays for the related expenses.
B. the revenue is earned, such as at the time of the sale or delivery of the goods.
C. a signed, legally binding contract is received.
D. an advance payment for the goods is received.
E. none of the above.
