Chapter 3 LearnSmart ACG2021

Monster Music Company provided music lessons to customers for $10,000, receiving $6,000 in cash and the rest on account. What is Monster Music Company's revenue under the accrual basis of accounting?

$10,000

On May 1, Cut Above, Inc. collected $3,000 in advance from customers to mow their lawns in June. Under cash basis accounting, revenues in May will equal ______.

3,000

Reporting revenues only when cash is received and expenses only when cash is paid is called the ____ basis of accounting.

cash

Assets, on the balance sheet, provide future benefits for a company, while ____ on the income statement, are used-up benefits

expenses

____ are the costs of operating a business that are incurred to generate revenues in the period covered by the income statement

expenses

Revenues are recognized when ______, even when the cash is collected in a different accounting period than the obligation to the customer has been performed.

goods are delivered services are performed

is the financial statement that summarizes the financial impact of operating activities and reports the amount of profit earned during the accounting period.

income statement

Identifying the performance obligation is an important step in determining whether to recognize revenue especially when the contract involves ______.

multiple obligations

If a company incorrectly records cash received for services to be provided in the future with a debit to Cash and a credit to Sales Revenue, how will this error affect net income for the current period?

net income will be too high

is the quantity sold times the price charged from selling goods or services to customers.

revenue

The income statement is the financial statement that reports the amount of _____ and ___ during the accounting period.

revenues and expenses

True or false: Operating activities are the primary sources of revenue and expenses involved in running a business.

true