3A-W'08-EX#2-KEY

3A-W'08-EX#2-KEY - Econ 3AFinancial AccountingW08 Exam # 2...

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ECON 3A-W’08-EXAM # 2 – ANSWER KEY - p1 Econ 3A–Financial Accounting–W’08 Exam # 2 – 100 points Answer all questions in your bluebook; show all your work; clearly label answers. Problem 1 – Accrual accounting concepts (15 points) 1. The revenue recognition principle dictates that revenue should be recognized in the accounting records a. when cash is received. b. when it is earned. c. at the end of the month. d. in the period that income taxes are paid. 2. In a service-type business, revenue is considered earned a. at the end of the month. b. at the end of the year. c. when the service is performed. d. when cash is received. 3. The matching principle matches a. customers with businesses. b. expenses with revenues. c. assets with liabilities. d. creditors with businesses. 4. Javier’s Tune-Up Shop follows the revenue recognition principle. Javier services a car on August 31. The customer picks up the vehicle on September 1 and mails the payment to Javier on September 5. Javier receives the check in the mail on September 6. When should Javier show that the revenue was earned? a. August 31 b. August 1 c. September 5 d. September 6 5. A company spends $20 million dollars for an office building. Over what period should the cost be written off? a. When the $20 million is expended in cash b. All in the first year c. Over the useful life of the building d. After $20 million in revenue is earned Problem 2 – Adjusting entries (15 points) Prepare adjusting entries for the following transactions. Omit explanations. 1.
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3A-W'08-EX#2-KEY - Econ 3AFinancial AccountingW08 Exam # 2...

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