Question :
51. The Garrison Company offers terms of net 30 days for : 1197593
51. The Garrison Company offers terms of net 30 days for its credit sales. It records the revenue from these sales as soon as the sales are made rather than waiting until cash is received from the customers. This is an example of the
A. realization principle.
B. matching principle.
C. conservatism principle.
D. consistency principle.
52. Which of the following statements is correct?
A. Under the accrual basis of accounting, revenue is recorded in the period in which it is earned.
B. Under the accrual basis of accounting, expenses are recorded in the period in which they are incurred.
C. Both of the above statements are correct.
D. Neither of the above statements is correct.
53. Each year there was an increase in the market value of some stock owned by the Mudstream Company, but the accountant did not record the increase in asset value and equity until the stock was sold. In this situation, the accountant
A. followed the matching principle.
B. followed the realization principle.
C. violated the accrual principle.
D. violated the matching principle.
54. Under the accrual basis of accounting
A. Revenue is recorded in the period in which it is earned and expenses are recorded in the period in which incurred.
B. Expenses are recorded in the period in which they are incurred and revenue is recorded when payment is received.
C. Revenue and expenses are recorded when cash is received or paid.
D. When revenues and expenses are recorded is up to the owners and/or managers.
55. Paige Turner Publishing receives cash from its subscribers in advance for a one year subscription. Under the revenue recognition principle, Paige Turner Publishing should recognize the revenue from the subscriptions
A. at the time the cash is received.
B. after the one year subscription has expired.
C. in equal installments over the one year subscription period, as it is earned.
D. in two equal installments, six months apart.
56. The Boston Red Sox receives cash from its season ticket holders in advance for the entire season. Under the revenue recognition principle, the Boston Red Sox should recognize the revenue from the season ticket holders
A. at the time the cash is received.
B. after the season is completed.
C. as each game is played.
D. in two equal installments, six months apart.
57. Paige Turner Publishing paid cash in advance for a one year insurance policy. According to the matching principle, Paige Turner Publishing should recognize the policy as insurance expense
A. at the time the cash is paid.
B. after the one year policy has expired.
C. in equal installments over the one year policy period, as the expense is incurred.
D. in two equal installments, six months apart.
58. Hour Place Clock Repair paid $1,800 cash in advance for a one year insurance policy. According to the matching principle, if 4 months of the policy has expired by the balance sheet date, how much should Hour Place Clock Repair report as Prepaid Insurance?
A. $0
B. $600
C. $1,200
D. $1,800
59. Hour Place Clock Repair paid $1,800 cash in advance for a one year insurance policy. According to the matching principle, if 4 months of the policy has expired by the end of the current fiscal year, how much should Hour Place Clock Repair report as Insurance Expense on the Income Statement?
A. $0
B. $600
C. $1,200
D. $1,800
60. Hour Place Clock Repair paid $2,400 cash in advance for a six month advertising contract with the local newspaper. According to the matching principle, if 2 months of the contract has expired by the end of the current fiscal year, how much should Hour Place Clock Repair report as Advertising Expense on the Income Statement?
A. $0
B. $400
C. $800
D. $2,400
61. Paige Turner Publishing’s employees worked the last 3 days of December 2013, that they will not be paid for until January 2014. According to the matching principle, Paige Turner Publishing should recognize the wages expense for the last 3 days of 2013
A. in 2013 when the employees worked.
B. in 2014 when they were paid.
C. half in 2013 and half in 2014.
D. in whichever year the management wants to.
62. Holly Day Company purchased a piece of land 10 years ago for $50,000. Holly Day company is considering selling the land. The piece of land was recently appraised for $120,000, they received an offer from a prospective buyer for $105,000, and a similar piece of land 5 block away recently sold for $113,000. How much should Holly Day Company report on its balance sheet for the piece of land?
A. $120,000
B. $50,000
C. $113,000
D. $105,000
63. A deviation from generally accepted accounting principles is
A. permissible if the amount involved is material.
B. permissible if the amount involved is immaterial.
C. never allowed.
D. permissible only if it’s required in order to conform to the monetary unit assumption.
64. An accountant charged the Repairs Expense account for a tool that cost $12. The tool had an estimated useful life of 5 years; however, the accountant did not choose to depreciate it. The modifying convention that the accountant followed was
A. materiality.
B. objectivity.
C. conservatism.
D. industry practice.
65. When a new company was formed, one partner contributed some used equipment he owned. The equipment was appraised at $44,000 and $50,000 by two different dealers. The accountant entered the equipment at $44,000 in the financial records of the partnership. This is an example of
A. the materiality principle.
B. the conservatism principle.
C. the matching principle.
D. industry practice principle.
