ACC Question

On June 30, a printing shop provides $1,000 of services to a customer to custom print restaurant menus. The customer is sent a bill on July 5 for the amount due. A check in the amount of $1,000 is received from the customer on July 25. The printing shop follows GAAP and applies the revenue recognition principle. When is the $1,000 sale recognized? A July 25. B July 5. C June 30. D July 1.

C June 30.

Revenues for which services are performed but not yet received in cash or recorded are called A accrued revenues. B interim revenues. C unearned revenues. D prepaid revenues.

A accrued revenues.

An adjusting entry always affects A an income statement account and a balance sheet account. B an asset account and a liability account. C an asset account and a revenue account. D an expense account and a revenue account.

A an income statement account and a balance sheet account.

Under cash-basis accounting, companies record revenue only when A cash is received. B it is earned. C services are performed. D the performance obligation is satisfied.

A cash is received.

Companies record an expense under cash-basis accounting only when A they pay out cash. B the performance obligation is satisfied. C it is incurred. D services are performed.

A they pay out cash.

An adjusting entry that debits an expense and credits an asset is necessary for A prepaid expenses. B accrued revenues. C accrued expenses. D unearned revenues.

A prepaid expenses.

Prepaid expenses are A shown on the balance sheet as assets. B shown on the balance sheet as liabilities. C shown on the income statement as revenue. D not shown on a financial statement.

A shown on the balance sheet as assets.

The time period assumption states that A the economic life of a business can be divided into artificial time periods. B companies must wait until the calendar year is completed to prepare financial statements. C companies use the fiscal year to report financial information. D companies record information in the time period in which the events occur.

A the economic life of a business can be divided into artificial time periods.

An accounting time period that is one year in length is A a quarterly period. B a fiscal year. C an interim period. D a calendar year.

B a fiscal year.

Which of the following time periods would not be referred to as an interim period? A monthly B annually C quarterly D none of these answers is correct as all of these are interim periods

B annually

If an adjusting entry for depreciation is not made A assets will be understated. B expenses will be understated. C net income will be understated. D owner's equity will be understated.

B expenses will be understated.

The revenue recognition principle dictates that companies recognize revenue in the accounting period A before services are performed. B in which services are performed. C in which it is collected. D after services are performed.

B in which services are performed.

Which of the following statements about the accrual-basis of accounting is false? A Events that change a company's financial statements are recorded in the periods in which the events occur. B Accrual-basis is in accordance with generally accepted accounting principles. C Revenue is recorded only when cash is received, and expense is recorded only when cash is paid. D Revenue is recognized in the period in which services are performed.

C Revenue is recorded only when cash is received, and expense is recorded only when cash is paid.

Accumulated Depreciation is A an owner's equity account. B an expense account. C a contra asset account. D a liability account.

C a contra asset account.

An adjustments for unearned revenue A has an asset and revenue account relationship. B increases an asset and increases revenue. C decreases a liability and increases revenue. D decreases revenue and decreases an asset.

C decreases a liability and increases revenue.

Expenses paid in cash and recorded as assets before they are used or consumed are called A interim expenses. B accrued expenses. C prepaid expenses. D unearned expenses.

C prepaid expenses.

The revenue recognition principle dictates that revenue should be recognized in the accounting records A at the end of the month. B in the period that income taxes are paid. C when services are performed. D only when cash is received.

C when services are performed.

If a utility service bill has not been received at the end of the accounting period, but utilities were used during the period, then A it is optional whether to record the expense before the bill is received. B an expense should be recorded in the next accounting period when the bill is received. C an expense should be recorded when the cash is paid out. D an adjusting entry should be made to recognize the expense in the current period.

D an adjusting entry should be made to recognize the expense in the current period.

The expense recognition principle matches A assets with owner's equity. B assets with liabilities. C assets with expenses. D expenses with revenues.

D expenses with revenues.

The accumulated depreciation account A is a contra revenue account with a debit balance. B is shown as an expense on the income statement. C is shown on the balance sheet as a liability. D is a contra asset account with a credit balance.

D is a contra asset account with a credit balance.