63 which of the following is not a step pertaining to the revenue recognition princi 4314212

63 which of the following is not a step pertaining to the revenue recognition princi 4314212

63.Which of the following is not a step pertaining to the revenue recognition principle beginning in year 2018, for more complex customer contracts, according to both U.S. GAAP and to International Financial Reporting Standards (IFRS)? 

A. Determine the transaction price.

B. Identify the performance obligations.

C. Identify the contract between the company and its supplier of goods.

D. Allocate the transaction price to the performance obligations.

64.Which of the following statements does not properly describe the accrual basis of accounting? 

A. Expenses are recognized when incurred in generating revenues regardless of the timing of cash flows.

B. Revenues are recognized when the company transfers promised goods or services to customers regardless of the timing of cash flows.

C. Generally accepted accounting principles require use of the accrual basis.

D. Accrual accounting should not be used when providing financial statements to external decision makers.

65.Which of the following statements is false?

A. A liability is created when cash is received prior to delivery of the goods or services to a customer.

B. Revenue is recognized at the time of delivery of the goods or services to customers if cash is received.

C. Revenue is not recognized at the time of delivery of goods and services to customers if cash is received after delivery of the goods and services.

D. Collecting cash after delivery of a good or service to a customer does not create revenue on the income statement at the date of collection.

66.Which of the following journal entries is prepared when cash is received from a customer prior to delivery of the goods or services? 

A. Cashxxx

B. Cashxxx

C. Unearned revenuexxx

D. Cashxxx

67.Which of the following journal entries is prepared by an auto repair shop when a customer will pay cash subsequent to delivery of goods or services? 

A. Accounts receivablexxx

B. Cashxxx

C. Unearned revenuexxx

D. Revenuexxx

68.Yelena Company received cash from a customer in advance of providing the service to the customer. Which of the following does not accurately describe the impact on the financial statements when Yelena later provides the service? 

A. Liabilities are decreased.

B. Operating income increases.

C. Retained earnings increases.

D. Assets are increased.

69.Toby Toy Store has noticed the following items that need to be considered for its income statement for the year ended December 31, 2016:

• Commissions of $3,000 for salespeople who made sales in December will be paid January 3, 2017.

• The phone bill of $400 for December was received and will be paid January 20, 2017.

• The store rent of $2,000 for January, 2017 was paid on December 28, 2016.

• At the beginning of November, Toby paid $1,500 for advertising in a monthly magazine that is distributed in November and December of 2016, and January of 2017.

What is the proper amount of expenses to be included in the income statement for the year? 

A. $4,400.

B. $6,900.

C. $6,400.

D. $5,900.

70.Which of the following best describes the expense recognition principle? 

A. It requires expenses to be recorded when they are paid for.

B. It requires expenses to be recorded when incurred to generate revenues.

C. It requires expenses to be recorded consistent with the cash basis of accounting.

D. It does not allow expenses to be recorded if they are incurred prior to being paid.

71.During 2016, Sigma Company earned service revenue amounting to $700,000, of which $630,000 was collected in cash; the balance will be collected in January, 2017. Also in 2016 there were collections of cash prior to the delivery of goods/services totaling $10,000. What amount should the 2016 income statement report for service revenue? 

A. $630,000.

B. $700,000.

C. $70,000.

D. $570,000.

72.A company purchased supplies for cash, which will be consumed during future months. Which of the following correctly describes the impact of the supplies purchase on the financial statements? 

A. Total assets will remain unchanged.

B. Total assets will decrease.

C. Operating expenses will increase.

D. Operating income will decrease.

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