64.
Which of the following statements does not properly describe the accrual basis of
accounting?
65.
Which of the following statements is false?
66.
Which of the following journal entries is prepared when cash is received from a customer prior
to delivery of the goods or services?
67.
Which of the following journal entries is prepared by an auto repair shop when a customer will
pay cash subsequent to delivery of goods or services?
68.
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?
69.
Toby Toy Store has noticed the following items that need to be considered for its income
statement for the year ended December 31, 2016:
• Commissions of $3,000 for salespeople who made sales in December will be paid January 3,
2017.
• The phone bill of $400 for December was received and will be paid January 20, 2017.
• The store rent of $2,000 for January, 2017 was paid on December 28, 2016.
• At the beginning of November, Toby paid $1,500 for advertising in a monthly magazine that
is distributed in November and December of 2016, and January of 2017.
What is the proper amount of expenses to be included in the income statement for the year?
Topic Area: Recognition of expenses
70.
Which of the following best describes the expense recognition principle?
71.
During 2016, Sigma Company earned service revenue amounting to $700,000, of which
$630,000 was collected in cash; the balance will be collected in January, 2017. Also in 2016
there were collections of cash prior to the delivery of goods/services totaling $10,000. What
amount should the 2016 income statement report for service revenue?
72.
A company purchased supplies for cash, which will be consumed during future months. Which
of the following correctly describes the impact of the supplies purchase on the financial
statements?
73.
A company purchased supplies for cash, which will be consumed during future months. Which
of the following does not correctly describe the impact on the financial statements when the
supplies are used during future months?
74.
June’s Printing Shop had the following information for office supplies:
• Ordered $1,200 of supplies March 3
• Received half the order of supplies on March 16
• Used one-third of the supplies during March
What is the total amount that should be reported as supplies expense for the month of
March?
75.
Daring Dolls, Inc. received an order to provide SuperDolls for a big department store. The
store paid Daring Dolls in advance for the order of SuperDolls. Which of the following
describes what will occur when Daring Dolls recognizes revenue?
76.
The core revenue recognition principle has two requirements for recognizing revenue. Which
of the following is one of these requirements?
77.
Revenue may be recognized:
78.
Which of the following journal entries is correct when a company has incurred an expense for
work performed but has not yet paid for theses wages to employees?
79.
McNeil Company owed its employees for services performed and recorded a liability for the
wages owed the employees. Which of the following correctly describes the impact on the
financial statements when the employee wages are subsequently paid?
80.
Which of the following journal entries correctly records the receipt of a utility bill, which will
be paid for in later weeks?
81.
Which of the following is not a proper application of the revenue recognition principle?
82.
Which of the following is an example of revenue or expense to be recognized in the current
period’s income statement?
83.
Which of the following liability accounts is likely to be satisfied without a future cash
payment?
84.
A company receives a $50,000 cash deposit from a customer on October 15 but will not deliver
the goods until November 20. Which of the following statements is true?
85.
A company purchased $20,000 of inventory during February and will pay for it during March.
Which of the following statements is false, assuming the inventory was sold during March?
86.
Which of the following correctly applies the revenue recognition principle?
87.
Which of the following accounts normally have a credit balance?
88.
During 2016, Sensa Corporation incurred operating expenses amounting to $100,000 of which
$75,000 was paid in cash; the balance will be paid during 2017. Which of the following is
correct for the 2016 year-end balance sheet?