Question : Multiple Choice 54. The revenue recognition principle states that: a. Revenue should : 1255855

 

Multiple Choice

 

 

54. 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.

 

 

55. 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.

 

 

56. 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.

d. Conservatism.

 

 

57. 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.

 

58. 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.

 

59.Which accounting principle states that a company should “record revenues when they are earned”?

a.Matching.

b.Revenue recognition.

c.Conservatism.

d.Materiality.

 

 

60. The following events pertain to Jasper Corporation:

May 1   Jasper purchased office supplies of $3,000 on account.

May 5   The office supplies were shipped to Jasper.

May 8   Jasper used these office supplies for a one-time event.

May 9   Jasper paid $3,000 cash for the office supplies purchased on May 1.

Using cash-basis accounting, on which date should Jasper record supplies expense?

a.May 1.

b.May 5.

c.May 8.

d.May 9.

 

 

61. A company provided $1,500 of services to customers during the month of May.  The customers paid in June.  What would the impact of these transactions be during May on each of the following three items? 

 

    CashCash-basisAccrual-basis

    Balance    Net Income   Net Income

a. No effectNo effectIncrease

b. No effectNo effectNo Effect

c. IncreaseIncreaseIncrease

d. IncreaseIncreaseNo effect

 

 

62. A company purchased $400 of office supplies on account during May. All the supplies were used in May, and the account was paid during June.  What would the impact of these transactions be during May on each of the following three items?

 

    CashCash-basisAccrual-basis

    Balance    Net Income   Net Income

a. No effectNo effectDecrease

b. DecreaseDecreaseNo Effect

c. DecreaseDecreaseDecrease

d. DecreaseNo effectNo effect

 

 

63. A company paid $900 to workers during May.  Of this amount, $600 was for work performed in April, while the other $300 was for work performed during May.  What would the impact of this transaction be during May on each of the following three items?     

 

    CashCash-basisAccrual-basis

    Balance    Net Income   Net Income

a. No effectNo effectDecrease

b. DecreaseDecreaseNo Effect

c. DecreaseDecreaseDecrease

d. DecreaseNo effectNo effect