Adjusting the Accounts (Reviewer)

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|1 |The time period assumption states that |D | | |a. a transaction can only affect one period of time. | | | |b. estimates should not be made if a transaction affects more than| | | |one time period. | | | |c. adjustments to the enterprise's accounts can only be made in | | | |the time period when the business terminates its operations. | | | |d. the economic life of a business can be divided into artificial | | | |time periods. | | |2 |The time period assumption is also referred to as the |C | | |a. calendar assumption. | | | |b. cyclicity assumption. | | | |c. periodicity assumption. | | | |d. fiscal assumption. | | |3 |Which of the following are in accordance with generally accepted |A | | |accounting principles? | | | |a. Accrual basis accounting | | | |b. Cash basis accounting | | | |c. Both accrual basis and cash basis accounting | | | |d. Neither accrual basis nor cash basis accounting | | |4 |The revenue recognition principle dictates that revenue should be |B | | |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. | | |5 |In a service-type business, revenue is considered earned |C | | |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. | | |6 |The matching principle matches |B | | |a. customers with businesses. | | | |b. expenses with revenues. | | | |c. assets with liabilities. | | | |d. creditors with businesses. | | |7 |Ken's Tune-up Shop follows the revenue recognition principle. Ken |A | | |services a car on July 31. The customer picks up the vehicle on | | | |August 1 and mails the payment to Ken on August 5. Ken receives | | | |the check in the mail on August 6. When should Ken show that the | | | |revenue was earned? | | | |a. July 31 | | | |b. August 1 | | | |c. August 5 | | | |d. August 6 | | |8 |A company spends P10 million pesos for an office building. Over |C | | |what period should the cost be written off? | | | |a. When the P10 million is expended in cash | | | |b. All in the first year | | | |c. Over the useful life of the building | | | |d. After P10 million in revenue is earned |...
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