Question : Multiple Choice Questions 1.The revenue recognition principle states that:A.Revenue should be : 1236110

Multiple Choice Questions
 

1.The revenue recognition principle states that:
A.Revenue should be recognized in the period the cash is received.
B.Revenue should be recognized in the period earned.
C.Revenue should be recognized in the balance sheet.
D.Revenue is a component of common stock.

2.The matching principle is the principle that states:
A.All costs that are used to generate revenue are recorded in the period the revenue is recognized.
B.All transactions are recorded at the exchange price.
C.The business is separate from its owners.
D.The business will continue to operate indefinitely unless there is evidence to the contrary.

3.Which of the following accounting principles states that expenses are recognized in the same period as the revenues they help to generate?
A.Accounting equation.
B.Revenue recognition.
C.Matching principle.
D.Conservatism.

4.Air France collected cash on February 4 from the sale of a ticket to a customer on January 26.The flight took place on April 5. According to the revenue recognition principle, in which month should Air France have recognized this revenue?
A.January.
B.February.
C.April.
D.Evenly in each of the three months.

5.A customer purchased a drill press on November 14 on account from Sears. The drill press was delivered two weeks later. The customer paid for the drill press on December 5. When should Sears record the revenue for this transaction according to the revenue recognition principle?
A.November.
B.December.
C.Evenly in each of the two months.
D.One-third in November and two-thirds in December.

6.Which accounting principle states that a company should “record revenues when they are earned”?
A.Matching
B.Revenue recognition
C.Conservatism
D.Materiality

7.The primary difference between accrual-basis and cash-basis accounting is:
A.The timing of when revenues and expenses are recorded.
B.Cash-basis accounting is allowed for financial reporting purposes but not accrual-basis accounting.
C.Accrual-basis accounting violates both the revenue recognition and matching principles.
D.Adjusting entries are only a necessary part of cash-basis accounting.

8.When the amount of interest receivable decreases during an accounting period:
A.Accrual-basis revenues exceed cash collections from borrowers.
B.Accrual-basis net income exceeds cash-basis net income.
C.Accrual-basis revenues are less than cash collections from borrowers.
D.Accrual-basis expenses are less than cash payments to borrowers.

9.When the balance of the Unearned Revenue account decreases during an accounting period:
A.Accrual-basis revenues exceed cash collections from customers.
B.Accrual-basis expenses exceed cash collections from customers.
C.Accrual-basis revenues are less than cash collections from customers.
D.Accrual-basis net income is less than cash-basis net income.

10.Which transaction would not be recorded under cash-basis accounting?
A.Providing services to customers for cash.
B.Purchasing one year of rent in advance.
C.Paying salaries to employees.
D.Purchasing supplies on account.

 

 

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