For accrual-basis accounting:
(1) record revenues when providing goods and services to customers.
(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.
A) (1) and (4).
B) (2) and (3).
C) (1) and (3).
D) (2) and (4).
Answer: C
A) Providing services to customers for cash.
B) Paying one year of rent in advance.
C) Paying salaries to employees.
D) Purchasing supplies on account.
Answer: D
A) Accrual-basis revenues exceed cash collections from customers.
B) Accrual-basis expenses exceed cash collections from customers.
C) Accrual-basis revenues are less than cash collections from customers.
D) Accrual-basis net income is less than cash-basis net income.
Answer: A
A) Accrual-basis revenues exceed cash collections from borrowers.
B) Accrual-basis net income exceeds cash-basis net income.
C) Accrual-basis revenues are less than cash collections from borrowers.
D) Accrual-basis expenses are less than cash payments to borrowers.
Answer: C
A) The timing of when revenues and expenses are recorded.
B) Cash-basis accounting is allowed for financial reporting purposes but not accrual-basis accounting.
C) Accrual-basis accounting violates both the concepts of revenue recognition and expense recognition.
D) Adjusting entries are only a necessary part of cash-basis accounting.
Answer: A
A company has the following transactions:
Pay employees' salaries for the current period.
Pay rent in advance.
Pay dividends to stockholders in the current period.
Receive (but do not pay) a utility bill.
Use supplies previously purchased.
A) 1.
B) 2.
C) 3.
D) 4.
Answer: B
A company has the following transactions:
Pay employees' salaries for the current period.
Pay rent in advance.
Pay dividends to stockholders in the current period.
Receive (but do not pay) a utility bill.
Use supplies previously purchased.
A) 1.
B) 2.
C) 3.
D) 4.
Answer: C
