Chapter 3, Problem 1ISTQ

When a company collects cash from customers before performing the contracted service, what is the impact, and how should it be recorded?

If a journal entry includes a debit or credit to the Cash account, it is most likely which of the following? A. a closing entry B. an adjusting entry C. an ordinary transaction entry D. outside of the accounting cycle

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

Is this true or false? When recording a cash transaction from a client for a service that will be supplied in a future period, a debit is made to an unearned revenue account.

What does the phrase "Revenue is recognized at the point of sale" mean? (Assume the company reports using ASPE.) a.Revenue is recorded in the accounting records when the goods are sold to a customer and reported on the statement of earnings when the cash payment is received from the customer. b.Revenue is recorded in the accounting records and reported on the statement of earnings when the cash is received from the customer. c.Revenue is recorded in the accounting records when the cash is received from a customer and reported on the statement of earnings when sold to the customer. d.Revenue is recorded in the accounting records and reported on the statement of earnings when goods are sold and delivered to a customer.

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.

The realization principle indicates that revenue should be recorded in the accounting records: when cash is collected from customers when goods are sold or services are provided to customers at the end of the accounting period only when the revenue can be matched by an equal dollar amount of expenses

Dd4.

Under the accrual basis of accounting - if cash has been received before the revenue has been earned, which of the following journal entries should be recorded?   A)  Debit Cash,         Credit Unearned Revenue.   B) Debit Cash,         Credit Sales Revenue.   C) Debit Unearned Revenue,          Credit Cash.   D) Debit Cash,           Credit Accounts Receivable.