Question : 1. Under accrual accounting, revenue recognized: A. when cash received, and expenses, when : 1224877

1. Under accrual accounting, revenue is recognized: 
A. when cash is received, and expenses, when cash is paid.
B. when cash is received, and expenses, when they are incurred.
C. when it is earned, and expenses, when the costs are incurred.
D. When it is earned, and expenses when cash is paid.

2. Glass Corporation sold merchandise to a customer for $30,000 on credit on July 15. The customer paid Glass the amount due on July 31. Under the accrual basis of accounting, how should Glass record the transaction? 
A. Glass should recognize the revenue on July 31.
B. The July 15th transaction increases revenue, but has no effect on assets because cash has not been received.
C. Revenue is recognized after the cost of the merchandise sold has been paid by Glass Corporation
D. Revenue is recognized on July 15. The July 31st transaction has no effect on total assets under the accrual basis.

3. GMC sells cars and pays each salesperson a commission of $800 for each car sold. During the month of December, a salesperson, Tom, sold 3 new cars. GMC pays commissions on the 5th day of the month following the sale. Tom operates on the cash basis; the car dealer operates on the accrual basis. Which of the following statements is true? 
A. Tom will recognize commission revenue earned in the amount of $2,400 in December.
B. GMC will recognize commission expense in the amount of $2,400 in December.
C. Tom will recognize commission expense in the amount of $2,400 in January.
D. Tom will recognize revenue in the same month that the car dealer recognizes expense.

4. Under which accounting method are revenues and expenses recognized in the same accounting period that cash receipts and payments occur? 
A. Under the cash basis of accounting
B. Under the accrual basis of accounting
C. Under the percentage of sales method of accounting
D. Under the direct write-off method of accounting

5. Which of the following concepts is important to accrual accounting? 
A. Time period, because accrual accounting divides earnings into time periods.
B. Market basis, because inflation is a big factor in the environment.
C. Cash basis, because if cash is not received, revenue is not accrued.
D. Entity concept, because personal transactions must be separated from business transactions.

6. Which of the following statements present financial information based on the cash basis of accounting? 
A. Balance Sheet
B. Income Statement
C. Statement of Retained Earnings
D. Statement of Cash Flows

7. FedZ is a local package delivery service. If FedZ uses accrual basis of accounting, when should it recognize revenue from its package delivery service? 
A. At the date the customer places the order
B. At the date the packages are delivered
C. At the date the invoice is mailed to the customer
D. At the date the customer’s payment is received

8. Using the accrual basis of accounting, when is revenue from the sale of merchandise normally recognized? 
A. On the date the sale is made.
B. On the date the customer pays for the merchandise.
C. Either on the date on which the sale occurs, or the date on which the customer pays.
D. When the merchandise is sold, if sold for cash, or when payment is received, if sold on credit.

9. Brooks Company sells merchandise to customers. Under the accrual basis of accounting, Brooks should normally recognize: 
A. revenue and the related expenses in the same accounting period as earned, whether payment is received or not.
B. revenue when cash is collected and expenses when Brooks pays its creditor for the merchandise.
C. revenue and expenses after all payments are made.
D. expenses in the period the merchandise is sold and defer revenue recognition until the customer pays for the merchandise.

10. Under accrual basis of accounting, expenses are be matched against revenue: 
A. if the earnings process is not complete.
B. when cash is collected from the sale of products.
C. in the same period as the revenue that it helped to generate.
D. when payment is made for costs related to revenue.