Learning Objective 3-2
1) The revenue recognition principle is the basis for recording revenues?both when to record revenue and the amount of revenue to record.
2) In accounting terms, the calendar year is always called the fiscal year.
3) Which of the following is considered a fiscal year?
A) six months
B) three months
C) twelve months
D) four months
4) Revenue is said to be earned when the business has ________.
A) entered into an agreement with the customer about the goods or services to be delivered
B) prepared a journal entry to record revenue
C) received cash from the customer before goods or services are delivered
D) delivered a good or service to the customer
5) The accounting principle that ensures all expenses are recorded when they are incurred during the period and offsets those expenses against the revenues of the period, is called the ________ principle.
A) comparison
B) accrual
C) matching
D) revenue recognition
6) Which of the following accounting terms assumes that a business's activities can be divided into small segments and financial statements can be prepared for specific periods, such as a month, quarter, or year?
A) adjusting entry concept
B) revenue recognition principle
C) matching principle
D) time period concept
7) The matching principle is also called the ________.
A) adjusting entry concept
B) revenue recognition principle
C) expense recognition principle
D) time period concept
8) Which of the following accounting elements does the matching principle help to match?
A) revenues and liabilities
B) expenses and assets
C) expenses and revenues
D) expenses and liabilities
9) To match expenses against revenues means to ________.
A) add expenses incurred during one period from revenues earned during that same period
B) subtract expenses incurred during one period from revenues earned during the previous period
C) add expenses incurred during one period from revenues earned during the previous period
D) subtract expenses incurred during one period from revenues earned during that same period
10) The revenue recognition principle guides accountants in ________.
A) ensuring only revenues received in cash are recorded
B) determining when to record expenses
C) determining when to record revenues
D) ensuring expenses are deducted from revenues
11) Which of the following assumes that financial statements of a business can be prepared for specific periods?
A) matching principle
B) revenue recognition principle
C) time period concept
D) adjusting entry principle
12) The matching principle states that ________.
A) financial statements can be prepared for specific periods
B) a business's activities can be sliced into small time segments
C) all expenses should be recorded when they are incurred during the period
D) companies should record revenue when it has been earned
13) The time period concept states that ________.
A) financial statements can be prepared for specific periods
B) all expenses should be recorded when they are incurred during the period
C) companies should record revenue when it has been earned
D) expenses incurred during a period should be matched against the revenues of the period
14) Which of the following entries would be made as the result of the revenue recognition principle?
A)
|
Service Revenue |
1,000 |
|
|
Service Revenue |
1,000 |
B)
|
Accounts Receivable |
1,000 |
|
|
Service Revenue |
1,000 |
C)
|
Salaries Expense |
1,000 |
|
|
Accounts Payable |
1,000 |
D)
|
Depreciation Expense |
1,000 |
|
|
Accumulated Depreciation |
1,000 |
15) Which of the following entries would be made because of the matching principle?
A)
|
Salaries Expense |
1,000 |
|
|
Service Revenue |
1,000 |
B)
|
Cash |
1,000 |
|
|
Salaries Expense |
1,000 |
C)
|
Salaries Expense |
1,000 |
|
|
Salaries Payable |
1,000 |
D)
|
Cash |
1,000 |
|
|
Unearned Revenue |
1,000 |
