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ACC 556 ACC556 ACC/556 WEEK 2 CHAPTER 4

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ACC 556 WEEK 2 CHAPTER 4 •Question 1 The revenue recognition principle dictates that revenue be recognized in the accounting period in which the performance obligation is satisfied. •Question 2 An adjusting entry to a prepaid expense is required to recognize expired expenses. •Question 3 Unearned revenue is a prepayment that requires an adjusting entry when services are performed. •Question 4 When closing entries are prepared, each income statement account is closed directly to retained earnings. •Question 5 The accounting cycle begins with the journalizing of the transactions. •Question 6 Management usually wants ________ financial statements and the IRS requires all businesses to file _________ tax returns. •Question 7 A flower shop makes a large sale for $1,000 on November 30. The customer is sent a statement on December 5 and a check is received on December 10. The flower shop follows GAAP and applies the revenue recognition principle. When is the $1,000 considered to be recognized? •Question 8 Which statement is correct? •Question 9 Given the data below for a firm in its first year of operation, determine net income under the cash basis of accounting. Cash received from customers $48,000 Accounts receivable 12,000 Cash paid for expenses 26,000 Accounts payable (related to expenses) 3,000 Prepaid rent for next period 7,000 •Question 10 Accrued expenses are: •Question 11 If a resource has been consumed but a bill has not been received at the end of the accounting period, then: •Question 12 Depreciation is the process of: •Question 13 If a company fails to adjust a Prepaid Rent account for rent that has expired, what effect will this have on that month’s financial statements? •Question 14 Why do generally accepted accounting principles require the application of the revenue recognition principle? •Question 15 Which of the following would not result in unearned revenue? •Question 16 Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause: •Question 17 At the end of the fiscal year, the usual adjusting entry for accrued salaries owed to employees was omitted. Which of the following statements is true? •Question 18 Can financial statements be prepared directly from the adjusted trial balance? •Question 19 Which statement is correct concerning the adjusted trial balance? •Question 20 Match the items below by entering the appropriate code letter in the space provided. o Question Selected Match Periodicity assumption H. The economic life of a business can be divided into artificial time periods Cash basis B. Events recorded only in periods the company receives or pays cash Revenue recognition principle D. Revenue is recognized when the performance obligation is satisfied. Prepaid expenses E. Expenses paid before they are incurred Expense recognition principle C. Efforts are related to accomplishments Accrued revenues A. Revenues earned but not yet received Depreciation F. A cost allocation process Post-closing trial balance G. Includes only permanent—balance sheet—accounts Accrued expenses I. Expenses incurred but not yet paid o Accounts Assignment Help, Accounts Homework help, Accounts Study Help, Accounts Course Help

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