Match the definitions with its related term by entering the appropriate letters.

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Chapter 3, Problem 3.1ME

To determine

Match the definitions with its related term by entering the appropriate letters.

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Match 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 characteristic

When recognizing revenue, a company has a performance obligation when it agrees to a. perform a service for a customer and receives cash payment O b. sell a product to a customer after receiving payment O c. receives cash payment O d. perform a service or sell a product to a customer

n: In a sheet of paper, write TRUE if the statement is correct and FALSE if the statement is incorrect. 1. The revenue earned by a service business for rendering services for a fee is commonly referred to as Service Income or Service Revenue. 2. A Statement of Comprehensive Income may be presented using a “multistep statement” presentation only. 3. Revenue includes both income and gains. 4. If expenses are greater than income, the difference is net loss. 5. The revenue earned by the merchandising business from its sales of goods is commonly referred to as Sales. 6. Income increases economic benefits during the period in the form of inflows of cash from rendering services. 7. The statement of Comprehensive Income shows information on an entity’s financial performance during the period. 8. A Statement of Comprehensive Income that shows expenses by its function is referred to as prepared using a single-step approach. 9. Expenses encompass both…