1) There are two methods used to account for transactions. These methods are:
A) cash and deferral
B) cash and accrual
C) accrual and deferral
D) deferral and prepaid
2) The accounting convention that ensures accounting information is reported at regular intervals is the:
A) revenue principle
B) matching principle
C) full disclosure principle
D) time-period concept
3) An accountant who records a transaction only when cash is received or disbursed is using which basis of accounting?
A) prepaid
B) accrual
C) cash
D) deferral
4) A company using the cash basis of accounting receives cash for services yet to be performed. The entry to record the cash received will involve a credit to:
A) Prepaid Revenue
B) Service Revenue
C) Accrued Revenue
D) Deferred Revenue
5) An accrual refers to an event:
A) where the cash has not been exchanged between the two parties
B) that will never involve an income statement account
C) that will never involve cash
D) where the cash has already exchanged hands between the two parties
6) Which of the following transactions would be recorded at the time the transaction occurs under the accrual basis, but would not be recorded until sometime in the future under the cash basis?
A) sale of merchandise on account
B) payment of interest expenses
C) payment of employee salaries
D) issuance of stock
7) An accrual refers to an event:
A) where the expense or revenue is recorded after the cash settlement
B) where the liability is recorded after the cash settlement
C) where the expense or revenue is recorded before the cash settlement.
D) where the asset is recorded after the cash settlement
8) The accounting principle which tells accountants when to record revenue and in what amount is called the:
A) matching principle
B) revenue principle
C) full disclosure principle
D) going concern principle
9) Under the revenue principle, a business should record revenue when the business:
A) receives an order from a customer for goods or services
B) prepares the invoice (bill) for goods or services
C) delivers goods or services to a customer
D) receives payment from a customer for goods or services.
10) On October 25, 2010 Quick Corp. prints a cheque for November's rent payment. Quick Corp. mails the cheque on October 27 to the landlord. The landlord receives the cheque October 31 and cashes the cheque on November 2. When should Quick Corp. record the rent expense associated with this transaction?
A) October 25, 2010
B) October 27, 2010
C) November 30, 2010
D) November 2, 2010