The accounting basis that records revenues when cash is received and expenses when cash is paid is referred to as:
A) Cash-basis.
B) Accrual-basis.
C) Realization-basis.
D) Reporting-basis.
Ch3 answer: A
Saturday, October 10, 2020
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 salaries expense?
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 salaries expense?
A) November.
B) December.
C) January.
D) Evenly over the three months.
Ch3 answer: B
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?
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?
A) June.
B) July.
C) August.
D) Evenly over the three months.
Ch3 answer: B
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?
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?
A) June.
B) July.
C) August.
D) Evenly over the three months.
Ch3 answer: C
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?
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?
A) June.
B) July.
C) August.
D) Evenly over the three months.
Ch3 answer: B
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?
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?
A) November.
B) December.
C) Evenly in each of the two months.
D) One-third in November and two-thirds in December.
Ch3 answer: A
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?
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?
A) January.
B) February.
C) April.
D) Evenly in each of the three months.
Ch3 answer: C
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