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?

A) (1) No effect, (2) No effect, (3) Decrease.

B) (1) Decrease, (2) Decrease, (3) No effect.

C) (1) Decrease, (2) Decrease, (3) Decrease.

D) (1) Decrease, (2) No effect, (3) No effect.

Ch3 answer: C

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?

A) (1) No effect, (2) No effect, (3) Decrease.

B) (1) Decrease, (2) Decrease, (3) No effect.

C) (1) Decrease, (2) Decrease, (3) Decrease.

D) (1) Decrease, (2) No effect, (3) No effect.

Ch3 answer: A

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?

A) (1) No effect, (2) No effect, (3) Increase.

B) (1) No effect, (2) No effect, (3) No effect.

C) (1) Increase, (2) Increase, (3) Increase.

D) (1) Increase, (2) Increase, (3) No effect.

Ch3 answer: A

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?

A) May 1.

B) May 5.

C) May 8.

D) May 9.

Ch3 answer: D

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

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) June.

B) July.

C) August.

D) Evenly over the three months.

Ch3 answer: B