3.2 Learning Objective 3-2
1) The revenue principle determines when to record revenue and the amount of revenue to record.
2) The revenue principle states that revenue should be recorded in the same period as the cash is received.
3) In the retail industry, revenue is recognized under IFRS when the cash is received.
4) The matching principle matches cash receipts and cash disbursements.
5) Expenses have a future benefit to the company.
6) The expense recognition principle recognizes expenses in the period they are paid.
7) On December 15, 2015, a company receives an order from a customer for services to be performed on December 28, 2015. Due to a backlog of orders, the company does not perform the services until January 3, 2016. The customer pays for the services on January 6, 2016. The revenue principle requires the revenue to be recorded by the company on:
A) December 15, 2015.
B) January 3, 2016.
C) December 28, 2015.
D) January 6, 2016.
8) On July 25, Henry Company's accountant prepared a check for August's rent payment. Henry Company mails the check on July 27 to the landlord. The landlord receives the check on July 31 and cashes the check on August 2. When should Henry Company record the rent expense associated with this transaction?
A) July 25
B) July 27
C) August 31
D) August 2
9) The revenue principle governs two things:
A) when to record revenue and where to record this revenue.
B) where to record revenue and the amount of revenue to record.
C) when to record revenue and the amount of revenue to record.
D) when to record revenue and in which journal to record the revenue.
10) Under accrual-basis accounting, the event that triggers revenue recognition for the sale of goods is the:
A) date a contract is signed.
B) date the customer pays for the goods.
C) date the customer orders the goods.
D) delivery of goods to customer.