Reference no: EM1356579
A. Which of the following is not one of the four conditions that normally must be met for revenue to be recognized according to the revenue principle for accrual basis accounting?
a. The price is fixed or determinable.
b. Services have been performed.
c. Cash already has been collected.
d. Evidence of an arrangement for customer payment exists.
B. The matching principle controls
a. Where on the income statement expenses should be presented.
b. How costs are allocated between Cost of Goods Sold (sometimes called Cost of Sales)
and general and administrative expenses.
c. The ordering of current assets and current liabilities on the balance sheet.
d. When costs are recognized as expenses on the income statement.
C. Which of the following would not be considered a recurring item on the income statement?
a. Administrative expenses.
b. Sales revenues
c. Selling expenses.
d. Loss on disposal of a business division.
D. If a company decides to record an expenditure as an asset rather than as an expense, how will this decision affect net income in the current period?
a. Net income will be higher.
b. Net income will be lower.
c. Net income will not be affected by this decision.
d. It's a mystery; nobody really knows.
E. When should a company report the cost of an insurance policy as an expense?
a. When the company first signs the policy.
b. When the company pays for the policy.
c. When the company receives the benefits from the policy, over its period of coverage.
d. When the company receives payments from the insurance company for its insurance
claims.
F. When expenses exceed revenues in a given period (and there are no gains or losses),
a. Stockholders' equity will not be impacted.
b. Stockholders' equity will be increased.
c. Stockholders' equity will be decreased.
d. One cannot determine the impact on stockholders' equity without additional information.
G. Which account is least likely to be debited when revenue is recorded?
a. Accounts payable c. Cash
b. Accounts receivable d. Unearned revenue