DO Not Write on Test 1. The revenue recognition principle dictates that revenue
ID: 2517921 • Letter: D
Question
DO Not Write on Test 1. The revenue recognition principle dictates that revenue should be recognized in the accounting records: A) when cash is received. B) when the performance obligation is satisfied. income taxes are paid. ) at the end of the month. D) in the period that 2. The expense recognition principle matches: with liabilities. D) creditors with businesses. A) customers with businesses. B) expenses with revenues. C) assets 3.A flower shop makes a large sale for S1,000 on November 30. The customer is sent a statement on December S and check is received on December 10. The flower shop follows GAAP and applies the revenue recognition principle. When is the $1,000 considered to be recognized? A) December 5 B) December 10 C) November 30 D) December I 4.On April 1,2017, Propel Corporation, which follows GAAP, paid $48,000 cash for equipment that will be used in business operations. The equipment will be used for four years. Propel records depreciation expense of $48,000 for the calendar year ending December 31, 2017. Which accounting principle has been violated? A) Depreciation principle. B) No principle has been violated. C) Cash principle. D) Expense recognition principle. 5. Using accrual accounting, expenses are recorded and reported only: A) when they are incurred whether or not cash is paid. B when they are incurred and paid at the same time. C) if they are paid before they are incurred. D) if they are paid after they are incurred. he primary difference between prepaid and accrued expenses is that prepaid expenses have: A) been incurred and accrued expenses have not. B) not been paid and accrued expenses have. C) been recorded and accrued expenses have not. D) not been recorded and accrued expenses have. 7. Accounts often need to be adjusted because: A) there are never enough accounts to record all the transactions. B) many transactions affect more than one time period. C) there are always errors made in recording transactions. D) management can't decide what they want to report. 8. An adjusting entry: A) affects two balance sheet accounts. B) affects two income statement accounts? D) is always a compound entry C) affects a balance sheet account and an income statement account. 9. Unearned revenues are: A) received and recorded as liabilities before they are recognized. B) recognized and C) recognized but not yet received or recorded. D) recognized and recorded as liabilities before they are received. already received and recorded. 10. On January 1, 2017, M. Johanson Company purchased equipment for $$4,000. The company is depreciating the equipment at the rate of $750 per month. The book value of the equipment at December 31, 2017 is: A) So. B) S9,000. C) $45,000. D) $54,000. $8,500 worth of laundry supplies on June 2 and recorded the purchase as an of the laundry supplies indicated only $1,500 on hand. The adjusting entry that should 11. The Vintage Laundry Company purchased asset. On June be made by thecompany June30 ?s: A) bit Supplies Expense, si 500creditSupplies, si 500. B)debit Supplies, $7,000; credit Supplies Expense, $7,000. C) debit Supplies, $1,500;, credit Supplies Expense, $1,500 D) debit Supplies Expense, $7,000; credit Supplies, $7,000. 30, an inventory rent paid on December 1. The adjusting entry required on December 31 is: A) debit Prepaid Rent, $4,000; credit Rent Expense $4,000. B) debit Prepaid Rent, $8,000; credit Rent Expense, $8,000. C) debit Rent Expense, $12,000; credit Prepaid Rent, $12,000. D) debit Rent Expense, $4,000; credit Prepaid Rent, $4,000. 12. The balance in the prepaid rent account before adjustment at the end of the year is $12,000 and represents three months B) proves the A) is prepared after the financial statements are completed. 13. An adjusted trial balance: uality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made. C) is a D) cannot be used to prepare financial quired financial statement under generally accepted accounting principles. tements.Explanation / Answer
Answer1: B) When the performance obligation is satisfied.
Revenue recognition principle states that revenues should be recognized when realized or realizable, and are earned (mostly when goods are transferred or services rendered), no matter whether cash is received or not.
Answer2: B) Expenses with revenues.
Expense recognition principle states that the expense should be recognized in the same period as the revenues to which they relate.
Answer3: C) November 30
Revenue recognition principle states that revenues should be recognized when realized or realizable, and are earned (mostly when goods are transferred or services rendered), no matter whether cash is received or not.. So the sale were made on November 30.
Answer4: D) Depreciation Principle.
Depreciation for an accounting practice is the allocation of cost in which the value of an asset is charged as periodic depreciation expense over the economic useful life of an asset's. As per GAAP Accounting rules, it is required that companies shall capitalize a fixed-asset that has been purchased and later recover the asset's cost through periodic depreciation charge, rather than expensing the total purchase in the same period.
Note: As per Chegg Guidelines Only first 4 questions are answered
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