To match expenses against revenues means to ________. A) add expenses incurred during one period from revenues earned during that same period B) subtract expenses incurred during one period from revenues earned during the previous period C) add expenses incurred during one period from revenues earned during the previous period D) subtract expenses incurred during […]
The matching principle states that ________. A) financial statements can be prepared for specific periods B) a business’s activities can be sliced into small time segments C) all expenses should be recorded when they are incurred during the period D) companies should record revenue when it has been earned ANSWER C
In reviewing the T-account for Accounts Payable, you find that the beginning balance is zero, the total increases are $7,200 and the total decreases are $4,000. This means that the ending balance of the account is a credit balance of $3,200. Indicate whether the statement is true or false ANSWER TRUE
List the order in which the balance sheet, statement of retained earnings, and income statement are prepared. Briefly discuss why this order is necessary. What will be an ideal response ANSWER The order in which these statements are prepared is income statement, statement of retained earnings, and balance sheet. The income statement is prepared first […]
The revenue recognition principle is the basis for recording revenues-both when to record revenue and the amount of revenue to record. Indicate whether the statement is true or false ANSWER TRUE
Debits in the journal are always posted as debits in the ledger. Indicate whether the statement is true or false ANSWER TRUE
Revenue is earned when the business has ________. A) entered into an agreement with the customer about the goods or services to be delivered B) prepared a journal entry to record revenue C) received cash from the customer before goods or services are delivered D) delivered a good or service to the customer ANSWER D
In a balance sheet, assets are classified as either current or long term, depending on their liquidity. Indicate whether the statement is true or false ANSWER TRUE
Which of the following entries would be made as the result of the revenue recognition principle? A) Service Expense 1,000 Service Revenue 1,000 B) Accounts Receivable 1,000 Service Revenue 1,000 C) Salaries Expense 1,000 Accounts Payable 1,000 D) Depreciation Expense 1,000 Accumulated Depreciation 1,000 ANSWER B
Prepaid Rent is always classified as a long-term asset. Indicate whether the statement is true or false ANSWER FALSE
