57.
Which accounting principle states that a company should “record revenues when they
provide goods and services to customers?”
58.
The concept of matching in accounting refers to:
59.
Which of the following concepts suggests that expenses should be recognized in the same
period as the revenues they help to generate?
60.
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?
61.
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?
62.
A company received an order from a customer in June for services to be provided. Those
services were provided in July, and the customer paid the full amount in August. According
to the revenue recognition principle, in which month should the company record revenue?
63.
A company orders office supplies in June. Those supplies are received and paid for in July.
The supplies are used in August. In which month should the company record supplies
expense?
64.
A company orders office supplies in June. Those supplies are received and used in July.
The supplies are paid for in August. In which month should the company record supplies
expense?
65.
In November, a company hires three temporary employees that are scheduled to work only
the month of December. Those employees work during December, and they are then paid
their full salaries in January. In which month should the company record supplies
expense?
66.
The accounting basis that records revenues when cash is received and expenses when
cash is paid is referred to as:
3-26
67.
The following events pertain to Jasper Corporation:
May 1 Jasper purchased office supplies of $3,000 on account.
May 5 The office supplies were shipped to Jasper.
May 8 Jasper used these office supplies for a one-time event.
May 9 Jasper paid $3,000 cash for the office supplies purchased on May 1.
Using cash-basis accounting, on which date should Jasper record supplies expense?
68.
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 (1)
the balance of cash, (2) cash-basis net income, and (3) accrual basis net income?
69.
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 (1) the balance of cash, (2) cash-basis net income, and (3)
accrual-basis net income?
70.
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 (1) the balance of cash, (2) cash-basis net
income, and (3) accrual-basis net income?
71.
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?
72.
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?
73.
The following events pertain to Bills Company:
December 28, 2018
Bills was contacted by a customer for possible accounting
and tax services.
December 30, 2018
Bills signed a formal agreement with the customer to provide
accounting and tax services in 2019.
January 4, 2019
The customer paid $1,000 in advance for the services to be
provided by Bills Company.
January 11, 2019
Bills provided accounting and tax services to the customer.
Using cash-basis accounting, on which date should Bills Company record revenue for the
accounting and tax services?
74.
When a company provides services on account, which of the following would be recorded
using cash-basis accounting?
75.
The following events pertain to Bills Company:
December 28, 2018
Bills was contacted by a customer for possible accounting and
tax services.
December 30, 2018
Bills signed a formal agreement with the customer to provide
accounting and tax services in 2019.
January 4, 2019
The customer paid $1,000 in advance for the services to be
provided by Bills Company.
January 11, 2019
Bills provided accounting and tax services to the customer.
Using accrual-basis accounting, on which date should Bills Company record revenue for
the accounting and tax services?
76.
Consider the following transactions:
1. The company uses supplies purchased in the previous period, $1,500.
2. The company pays cash for rent in advance, $6,000.
3. The company repays a loan to the bank, $10,000 (ignore any interest cost).
The amount of accrual-basis expense is _____ while the amount of cash-basis expense is
_____.
77.
A company has the following three events in December:
1. December 1 – Pay last month’s rent (November), $500.
2. December 15 – Pay rent for the current month (December), $500.
3. December 31 – Pay rent for the following year, $6,000.
How much would be recorded as Rent Expense for the month of December using accrual–
basis accounting?
78.
A company has the following transactions:
1. Pay employees’ salaries for the current period.
2. Pay rent in advance.
3. Pay dividends to stockholders in the current period.
4. Receive (but do not pay) a utility bill.
5. Use supplies previously purchased.
How many of these transactions result in an expense being reported in the current period
using accrual-basis accounting?
79.
A company has the following transactions:
1. Pay employees’ salaries for the current period.
2. Pay rent in advance.
3. Pay dividends to stockholders in the current period.
4. Receive (but do not pay) a utility bill.
5. Use supplies previously purchased.
How many of these transactions result in an expense being reported in the current period
using cash-basis accounting?
80.
The primary difference between accrual-basis and cash-basis accounting is:
81.
When the amount of interest receivable decreases during an accounting period:
82.
When the balance of the Deferred Revenue account decreases during an accounting
period:
83.
Which transaction would not be recorded under cash-basis accounting?
84.
Which of the following statements are correct?
For accrual-basis accounting:
(1) record revenues when earned.
(2) record expenses when cash is paid.
For cash-basis accounting:
(3) record revenue when cash is received.
(4) record expenses when benefit is received.
85.
On July 1, 2018, 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 2019 financial statements
for Rents-A-Lot under both cash-basis and accrual-basis accounting?
86.
The following information pertains to Sooner Company:
May 1
Customer ordered an installation service to be done by Sooner Company
on May 15.
May 2
Customer paid cash for the installation job to be done on May 15.
May 8
The Sooner Company purchased installation supplies on account for the
job.
May 15
The installation job was started and completed.
May 20
Amount owed for supplies purchased on May 8 is paid.
Assuming that Sooner Company uses cash-basis accounting, when would the company
record the expense related to the supplies?
87.
The following information pertains to Sooner Company:
May 1
Customer ordered an installation service to be done by Sooner Company
on May 15.
May 2
Customer paid cash for the installation job to be done on May 15.
May 8
The Sooner Company purchased installation supplies on account for the
job.
May 15
The installation job was started and completed.
May 20
Amount owed for supplies purchased on May 8 is paid.
Assuming that Sooner Company uses accrual-basis accounting, when would the company
record the expense related to the supplies?
88.
Consider the following events for Betterment Incorporated:
January 1
Betterment purchases gasoline for $200 on account.
January 7
Betterment advertises lawn mowing services for $100 per lawn.
January 9
Betterment signs up 8 customers who pay a total of $800 cash.
January 12
Betterment mows the lawns of the 8 customers and all gasoline
purchased on January 1 is used.
January 13
Betterment pays for the gasoline purchased on January 1.
Under accrual-basis accounting, what is the appropriate day to record the revenues
related to lawn services?
89.
Consider the following events for Betterment Incorporated:
January 1
Betterment purchases gasoline for $200 on account.
January 7
Betterment advertises lawn mowing services for $100 per lawn.
January 9
Betterment signs up 8 customers who pay a total of $800 cash.
January 12
Betterment mows the lawns of the 8 customers and all gasoline
purchased on January 1 is used.
January 13
Betterment pays for the gasoline purchased on January 1.
Under accrual-basis accounting, what is the appropriate day to record the expenses
related to the gasoline?