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2-Chapter 2 Review Questions - BB

2-Chapter 2 Review Questions - BB - Chapter 2 Review...

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Chapter 2 Review Questions 1. In 2011, Capri Company paid $5,000 for advertising that had appeared in 2010. As a result of the transaction, a. Capri should recognize an expense of $5,000 in 2011. b. Capri’s assets in 2011 were not affected. c. Capri’s 2011 cash flow from operating activities would decrease by $5,000. d. Both b and c. Use the following information to answer the next two questions. BBC Company received $9,900 cash on February 1, 2010, from XYZ Company as advance payment for services BBC promised to perform for XYZ over the next three years on a continuous basis. 2. On its 2010 income statement, BBC would report revenue of 3. On its December 31, 2011 balance sheet BBC would report liabilities (unearned revenue) of 4. Moe Company paid $12,000 cash in advance for a one-year insurance policy on August 1, 2010. The company recorded this purchase as prepaid insurance. If the company fails to make the appropriate adjusting entry on December 31, 2010, which of the following is true?
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