Question : 51. Which of the following does not correctly describe the cash : 1228493

51. Which of the following does not correctly describe the cash basis of accounting? 
A. It is not accepted for external reporting purposes.
B. Revenues are recognized when cash is collected from customers.
C. Expenses are recognized when they are paid for.
D. Cash payments for long-term assets are recognized as an expense at the time of payment.

52. A landlord collected $5,000 cash from a tenant for December 2011’s rent but the tenant’s rent for December is $8,000. Which of the following is true with respect to the landlord’s financial statements? 
A. $8,000 would be reported on the statement of cash flows.
B. $8,000 would appear on the balance sheet as rent receivable.
C. $8,000 would appear on the income statement as rent revenue earned.
D. $5,000 would appear on the balance sheet as prepaid rent.

53. Which of the following is not criteria pertaining to the revenue principle? 
A. The goods or services have been delivered.
B. The selling price is fixed or determinable.
C. Collection is reasonably assured.
D. The cash payment has been received.

54. Which of the following statements does not properly describe the accrual basis of accounting? 
A. Expenses are recognized when incurred regardless of the timing of cash flows.
B. Revenues are recognized when incurred regardless of the timing of cash flows.
C. Generally accepted accounting principles require use of the accrual basis.
D. It should not be used when providing financial statements to external decision makers.

55. Which of the following statements is false? 
A. A liability is created when cash is received prior to delivery of the goods or services.
B. Revenue is recognized at the time of delivery of the goods or services if cash is received.
C. Revenue isn’t recognized at the time of delivery of goods and services if cash is received after delivery of the goods and services.
D. Collecting cash after delivery of a good or service does not create revenue on the income statement as of the date of collection.

56. Which of the following journal entries is prepared when a customer pays cash prior to delivery of the goods or services?
   
A. Option A
B. Option B
C. Option C
D. Option D

57. Which of the following journal entries is prepared when a customer pays cash subsequent to delivery of goods or services?
   
A. Option A
B. Option B
C. Option C
D. Option D

58. Yelena Company received cash from a customer in advance of providing the service to the customer. Which of the following does not accurately describe the impact on the financial statements when Yelena later provides the service? 
A. Liabilities are decreased.
B. Operating income increases.
C. Retained earnings increases.
D. Assets are increased.

59. Which of the following best describes the matching principle? 
A. It requires expenses to be recorded when they are paid for.
B. It requires expenses to be recorded when incurred to generate revenues.
C. It requires expenses to be recorded consistent with the cash basis of accounting.
D. It does not allow expenses to be recorded if they are incurred prior to being paid for.

60. During 2010, Sigma Company earned service revenues amounting to $700,000, of which $630,000 was collected in cash; the balance will be collected in January 2011. What amount should the 2010 income statement report for service revenues? 
A. $630,000
B. $700,000
C. $70,000
D. $570,000