Saturday, October 10, 2020

The basic principle involved with expense recognition is:

A) All costs that are used to generate revenue are recorded in the period the revenue is recognized.

B) All transactions are recorded at the exchange price.

C) The business is separate from its owners.

D) The business will continue to operate indefinitely unless there is evidence to the contrary.

Ch3 answer: A

A company recognizes revenue in the period in which it records an asset for the related account receivable, rather than in the period in which the account receivable is collected in cash. This company is using:

A) Cash-basis accounting.

B) Accrual-basis accounting.

C) The recording principle.

D) The entity assumption.

Ch3 answer: B

Which accounting principle states that a company should "record revenues when they provide goods and services to customers?"

A) Valuation.

B) Revenue recognition.

C) Conservatism.

D) Materiality.

Ch3 answer: B

The revenue recognition principle states that:

A) Revenue should be recognized in the period the cash is received.

B) Revenue should be recognized in the period goods and services are provided.

C) Revenue should be recognized in the balance sheet.

D) Revenue is a component of common stock.

Ch3 answer: B

The accounting basis that records revenues when goods or services are provided to customers and expenses with related revenues is referred to as:

A) Cash-basis.

B) Profit-basis.

C) Accrual-basis.

D) Reporting-basis.

Ch3 answer: C

The accounting basis that helps to measure and report revenues and expenses in a way that clearly reflects the ability of a company to generate value for its owners is referred to as:

A) Cash-basis.

B) Accrual-basis.

C) Profit-basis.

D) Reporting-basis.

Ch3 answer: B