1. The revenue recognition principle states that:
2. The matching principle is the principle that states:
3. Which of the following accounting principles states that expenses are recognized in the
same period as the revenues they help to generate?
4. 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?
5. 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?
6. Which accounting principle states that a company should “record revenues when they are
earned”?
7. The primary difference between accrual-basis and cash-basis accounting is:
8. When the amount of interest receivable decreases during an accounting period:
9. When the balance of the Unearned Revenue account decreases during an accounting
period:
10. Which transaction would not be recorded under cash-basis accounting?
11. Which of the following statements are correct?
12. On July 1, 2012, Rents-A-Lot Inc. paid $72,000 for 36 months of advance rent on its
warehouse. What would be the amount of rent expense in the 2013 financial statements for
Rents-A-Lot under both cash-basis and accrual-basis accounting?
13. The following information pertains to Sooner Company:
Assuming that Sooner Company uses cash-basis accounting, when would the company record
the expense related to the supplies?
14. The following information pertains to Sooner Company:
Assuming that Sooner Company uses accrual-basis accounting, when would the company
record the expense related to the supplies?
15. Consider the following events for Betterment Incorporated:
Under accrual-basis accounting, what is the appropriate day to record the revenues related to
lawn services?
16. Consider the following events for Betterment Incorporated:
Under accrual-basis accounting, what is the appropriate day to record the expenses related to
the gasoline?
17. Consider the following events for Betterment Incorporated:
Under cash-basis accounting, what is the appropriate day to record the expenses related to the
gasoline?
18. Consider the following events for Sophia Incorporated:
Under accrual-basis accounting, what is the appropriate day to record the revenues from the
sand volleyball camp?
19. Consider the following events for Sophia Incorporated:
Under accrual-basis accounting, what is the appropriate day to record the expenses related to
the sand volleyball camp?
20. Consider the following events for Sophia Incorporated:
Under cash-basis accounting, what is the appropriate day to record the expenses related to the
sand volleyball camp?
21. Consider the following events for Sophia Incorporated:
Under cash-basis accounting, what is the appropriate day to record the revenues related to the
sand volleyball camp?
22. 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?
23. 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?
24. 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?
25. Pawn Shops Unlimited recorded the following four transactions during April. Which of
these transactions would have the same income statement impact in April regardless of
whether the company used accrual-basis or cash-basis accounting?
26. Pawn Shops Unlimited recorded the following four transactions during April. Which of
these transactions would have the same income statement impact in April regardless of
whether the company used accrual-basis or cash-basis accounting?
27. The following events pertain to Jasper Corporation:
Using cash-basis accounting, on which date should Jasper record supplies expense?
28. The following events pertain to Bills Company:
Using cash-basis accounting, on which date should Bills Company record revenue for the
accounting and tax services?
29. The following events pertain to Bills Company:
Using accrual-basis accounting, on which date should Bills Company record revenue for the
30. When a company provides services on account, which of the following would be recorded
using cash-basis accounting?