Test ch 3

Test ch 3 - • 1 ) • Revenue should be recognized, even...

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Unformatted text preview: • 1 ) • Revenue should be recognized, even when collectibility is not reasonably assured. (2pts) False • 2 ) • Recording incurred but unpaid expenses is an example of an accrual. (2pts) True • 3 ) • When a credit sale takes place, (2pts) • a revenue account will increase. • liabilities will increase. • one asset account will increase and another will decrease. • assets will be unaffected. • 4 ) • Which of the following transactions will not result in the recognition of an expense? (2pts) • Interest accrued on a bank loan • A cash withdrawal by the owner • Use of machinery during the period • Expiration of prepaid insurance • 5 ) • Expenses are incurred (2pts) • to generate revenue. • to produce liabilities. • only during the adjustment process. to produce assets. • 6 ) • Financial statement time periods should be of equal length (2pts) • and should end during the peak season. • to make comparison easier. • and should correspond to the calendar year. • to comply with income tax regulations. • 7 ) • The going concern assumption helps solve the (2pts) • matching issue. • accounting period issue. • revenue recognition issue. • continuity issue. • 8 ) • The matching rule is applied (2pts) • because it is required by the Internal Revenue Code. • by expensing certain items immediately and in their entirety. • to help make the bookkeeper's job easier. • to help produce an accurate measurement of a company's performance. • 9 ) • Which of the following is not an application of accrual accounting? (2pts) • Recognizing revenues when earned and expenses when incurred • Applying the matching rule • Adjusting the accounts...
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This note was uploaded on 07/26/2011 for the course ACC 2003 taught by Professor Gibson during the Spring '11 term at ASU.

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Test ch 3 - • 1 ) • Revenue should be recognized, even...

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