Accrual basis accounting: Multiple Choice O O O O Recognizes expenses when paid in cash. Is flawed because it gives complete Information about cash flows. Recognizes revenues when received in cash. Eliminates the need for adjusting entries at the end of each period. Increases the comparability of financial statements from period to period.

Accrual basis accounting: Multiple Choice O O O O Recognizes expenses when paid in cash. Is flawed because it gives complete Information about cash flows. Recognizes revenues when received in cash. Eliminates the need for adjusting entries at the end of each period. Increases the comparability of financial statements from period to period.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter3: Analyzing And Recording Transactions

Section: Chapter Questions

Problem 26MC: What is the impact on the accounting equation when an accounts receivable is collected? A. both...

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Under the accrual basis of accounting, revenue is recognized when: Multiple Choice cash is received, not necessarily when revenues have been earned. accounts receivable are collected. revenue has been earned, not necessarily when cash is received. revenues can be matched to expenses.
A change from cash basis to accrual basis should be reported A. Retroactively as a correction of errorB. Retroactively as a change in accounting policyC. As component of income from continuing operationsD. As component of other comprehensive income
When converting accrual basis to cash basis of accounting, which of the following adjustments should not be made to accrual basis sales to arrive at the cash basis sales? a. Deduct beginning balance of advances from customers. b. Subtract ending accounts receivable c. Add ending accounts receivable d. Add beginning accounts receivable
If cash is received from a customer in the current period, but the related performance obligation is not satisfied until a future period, the related expenses of generating the revenue should not be recognized until that future period. This guideline is an application of the: Select one: O a. None of the answers are correct O b. revenue recognition principle. O c. cost constraint. O d. matching principle. e. full disclosure principle.
What’s the correct answer?
Which situation indicates loss on the income statement a. Total debits exceed total credits b. Total credits exceed total debits c. None of the choices d. Total debits equal total credits
A credit balance in which of the following accounts would indicate a likely error? a.Common Stock b.Salary Expense c.Accounts Payable d.Fees Earned
In income statement columns of the worksheet, when total credits exceed total debits, there is * Wrong calculation Loss O Profit O Error
When converting from cash basis to accrual basis accounting, which of the following adjustments should be made to cash receipts from customers to determine accrual basis service revenue. a. Subtract ending accounts receivable. b. Subtract beginning unearned service revenue. c. Add ending accounts receivable. d. Add cash sales.
Unearned revenue adjustments are needed when cash is received before ?revenue is earned False True
What is false about the matching principle? a. Incurred expenses should be matched with earned revenues. b. It supports accrual accounting principles. Matches assets with liabilities d. It is in accordance with the Internatidwal Financial Reporting Standards.
Which of the following statements is incorrect? A. The accrual method, which builds directly on the revenue and matching principles, ignores the timing of cash receipts or payments determining when to revenue or expenses. when recognize B. In accordance with the going concern assumption, the life of the business is presumed to be indefinite. C. Expenses are matched with revenues, not the reverse. D. In accordance with the unit of measure assumption, accountants normally revise the amounts to reflect the changing purchasing power of money due to inflation or deflation.