ACCT. FOR GOV.&NONPROF. ENTITIES>CUSTOM
18th Edition
ISBN: 9781307515596
Author: RECK
Publisher: MCG/CREATE
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Chapter 2, Problem 16.8EP
Under the modified accrual basis of accounting
- a. Revenues are recognized at the time an exchange transaction occurs.
- b. Expenditures are recognized as the cost of an asset expires or is used up in providing government services.
- c. Revenues are recognized when current financial resources become measurable and available to pay current-period obligations.
- d. Expenses are recognized when an obligation occurs for costs incurred in providing services.
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When an entity has the benefit of particular service but it has not received the bill (invoice) to pay for it, this creates:
a.
prepayment
b.
accrued expense.
c.
accounts receivable
d.
revenue
8. Income is:
a. An amount for payment of services, interest, or profit from investment
b. The gain derived from capital or labor
c. Any material gain, not otherwise excluded by law, realized out of a closed and completed transaction, where there is an exchange of economic value for economic value, with a specified taxable period, under the method of accounting employed.
d. A flow of service rendered by capital by the payment of money from it or any other benefit rendered by a fund of capital in relation to such fund through a period of time.
Which accounting principle requires that
revenue be recognized when it is earned,
regardless of when payment is received?
A. Matching Principle
B. Revenue Recognition Principle
C. Historical Cost Principle
D. Full Disclosure Principle
Chapter 2 Solutions
ACCT. FOR GOV.&NONPROF. ENTITIES>CUSTOM
Ch. 2 - Prob. 1QCh. 2 - Prob. 2QCh. 2 - Prob. 3QCh. 2 - Explain the modified accrual basis of accounting....Ch. 2 - Prob. 5QCh. 2 - What is the primary reason government entities use...Ch. 2 - What is meant by the terms deferred outflows of...Ch. 2 - How do expenses and expenditures differ?Ch. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Accounting and Reporting Principles. (LO2-3) The...Ch. 2 - Prob. 12CCh. 2 - Which of the following statements is true...Ch. 2 - Prob. 16.2EPCh. 2 - Prob. 16.3EPCh. 2 - The measurement focus and basis of accounting that...Ch. 2 - Which of the following amounts that are identified...Ch. 2 - Prob. 16.6EPCh. 2 - Prob. 16.7EPCh. 2 - Under the modified accrual basis of accounting a....Ch. 2 - Prob. 16.9EPCh. 2 - A certain city reports the following year-end...Ch. 2 - Prob. 16.11EPCh. 2 - Prob. 16.12EPCh. 2 - Prob. 16.13EPCh. 2 - Prob. 16.14EPCh. 2 - Which of the following fund(s) will generally be...Ch. 2 - Prob. 17EPCh. 2 - Prob. 18EPCh. 2 - Matching Funds with Transactions. (LO2-3) Choose...Ch. 2 - Fund Balance Classifications. (LO2-3) Section A...Ch. 2 - Prob. 21EPCh. 2 - Major Funds. (LO2-4) At the end of the fiscal...
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- Revenues and expenses must be recorded in the accounting period in which they were earned or incurred, no matter when cash receipts or outlays occur under which of the following accounting methods? A. accrual basis accounting B. cash basis accounting C. tax basis accounting D. revenue basis accountingarrow_forwardWhich of the following is not a criterion to recognize revenue under GAAP? A. The earnings process must be completed. B. A product or service must be provided. C. Cash must be collected. D. GAAP requires that the accrual basis accounting principle be used in the revenue recognition process.arrow_forwardUnder the modified accrual basis of accounting, expenditures generally are not recognized until: O a. They are paid in cash. O b. An obligation is incurred that will be paid from currently available financial resources. O c. Goods or services are ordered. O d. They are approved by the legislative body.arrow_forward
- How is the valuation of cuIrent assets affected if the company follows IFRS? ( OValuation is based on historical cost. OValuation is based on market adjustments. OValuation is based on LCM accounting. O Assets are expensed immediately. Aliability created for receiving cash for future services to be provided is termed O service revenue. O estimated warranty payable. Ounearned revenue. Oaccrued liability.arrow_forwardThe cash basis and accrual basis of accounting in the public sector in terms of A. Recognition of revenue B. Recognition of expenditure C. Disclosure of non financial assets D. Notion of depreciation Please answer part A-Darrow_forwardWhich of the following principles matches expenses with associated revenues in the period in which the revenues were generated? Group of answer choices 1.revenue recognition principle 2.expense recognition (matching) principle 3.cost principle 4.full disclosure principlearrow_forward
- The primary objective of expense recognition is toa. Provide full disclosure.b. Record expenses in the period that related revenues are recognized.c. Provide timely information to decision makers.d. Promote comparability between financial statements of different periods.arrow_forwardWhat is meant by the term unearned revenue? Where should an unearned revenue account appear in the financial state-ments? As the work is done, what happens to the balance of an unearned revenue account?arrow_forwardAlso known as the historical cost principle, ________ states that everything the company owns orcontrols (assets) must be recorded at their value at the date of acquisition.A. revenue recognition principleB. expense recognition (matching) principleC. cost principleD. full disclosure principlearrow_forward
- The principle of revenue recognition results in: a. recording revenue in the income statement b. recording realized revenue when it is earned c. measuring relevant and reliable information whenever a transaction has occured. d. assuring the existence of all amounts recorded as net incomearrow_forwarddescribe general principles of revenue recognition and accrual accounting, specifi c revenue recognition applications (including accounting for long-term contracts, installment sales, barter transactions, gross and net reporting of revenue), and implications of revenue recognition principles for fi nancial analysisarrow_forwardMatch the statements below with the accounting assumption, characteristic, or principle to which the statement relates. Assumptions/characteristics/principles may be used once, more than once, or not at all. Recorded when the performance obligation is satisfied. a. Revenue recognition principle V The reason for recording accruals and deferrals in adjusting entries. b. Matching principle Valuing assets at amounts originally paid for them. C. Historical cost principle Entity assumed to have a long life d. Going concern assumption Description of significant accounting policies and unusual events. e. Full disclosure principle v Information has predictive and confirmatory value. T. Relevance characteristic 8. Consistency characteristicarrow_forward
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