ACCT 101A Quiz Ch.3

The revenue recognition principle states that revenue should be recorded in the same period as the cash is received. True False

False

The system of accounting where revenues are recorded when services have been performed or products have been delivered to customers and expenses are recorded when they are incurred is called the cash basis of accounting. True False

False

Even though GAAP requires the accrual basis of accounting, some businesses prefer using the cash basis of accounting. True False

True

Generally accepted accounting principles require accrual-basis accounting. True False

True

The matching principle requires expenses be recorded in the same period that the related revenue is recorded. True False

True

The revenue recognition principle a.determines when revenue is credited to a revenue account b.states that revenue is not recorded until the cash is received c.controls all revenue reporting for the cash basis of accounting d.is not in conflict with the cash method of accounting

a.determines when revenue is credited to a revenue account

The matching principle a.addresses the relationship between the journal and the balance sheet b.determines whether the normal balance of an account is a debit or credit c.states that the revenues and related expenses should be reported in the same period d.requires that the dollar amount of debits equal the dollar amount of credits on a trial balance

c.states that the revenues and related expenses should be reported in the same period

Using accrual accounting, expenses are recorded and reported only a.if they are paid before they are incurred b.when they are incurred and paid at the same time c.if they are paid after they are incurred d.when they are incurred, whether or not cash is paid

d.when they are incurred, whether or not cash is paid

The accounting principle upon which deferrals and accruals are based is a.matching b.conservatism c.cost d.price-level adjustment

a. matching

Using accrual accounting, revenues are recorded a.when a service has been performed or products have been delivered to customers without regard to when cash is received b.when cash is received without regard to when the services are performed or products have been delivered to customers c.only if cash is received after the services are performed or products have been delivered to customers d.when cash is received at the time services are performed or products have been delivered to customers

a.when a service has been performed or products have been delivered to customers without regard to when cash is received