94.Which of the following would
not
appear on an income statement?
A. Repair service revenue.
B. Insurance expense.
C. Dividends.
D. Net income.
95.Sally Smith had expenses of $800 in June which she paid in July. She reported these expenses on her June income statement. By doing this, she is following the accounting principle of:
A. Revenue realization.
B. Adequate disclosure.
C. Matching.
D. Conservatism.
96.The principle that states revenue should be recognized at the time goods are sold or services rendered is called:
A. Adequate disclosure.
B. Conservatism.
C. Matching.
D. Revenue realization.
97.Recognizing revenue when it is earned and not when cash is received and recognizing expenses when the related goods or services are used rather than when they are paid for is called:
A. Revenue recognition.
B. Accrual accounting.
C. Conservatism.
D. Matching.
98.The
realization principle
indicates that revenue usually should be recognized and recorded in the accounting records:
A. When goods are sold or services are rendered to customers.
B. When cash is collected from customers.
C. At the end of the accounting period.
D. Only when the revenue can be matched by an equal dollar amount of expenses.
99.In February of each year, the Carlton Hotel holds a very popular wine tasting event. Tickets must be ordered and paid for in advance, and are typically sold out by November of the preceding year. The realization principle indicates that the revenue from these ticket sales should be recognized in the period in which the:
A. Order is placed.
B. Wine tasting event is held.
C. Payments are received.
D. Expenses associated with the wine tasting are paid in full.
100.The
matching principle
is best demonstrated by:
A. Using debits to record decreases in owners' equity and credits to record increases.
B. The equation Assets = Liabilities + Owners' Equity.
C. Allocating the cost of an asset to expense over the periods during which benefits are derived from the asset.
D. Offsetting the cash receipts of the period with the cash payments made during the period.
101.Clinton prepares monthly financial statements. Which of the following
violates
the matching principle?
A. A portion of the salary payments made this month are not recognized as expense because some of the work was done by employees last month.
B. The premium on a six-month insurance policy is charged immediately to expense.
C. Expenses for the period exceed revenues.
D. The cost of advertising done during the month is charged to expense even though no payment is due for 60 days.
102.The matching principle:
A. Applies only to situations in which a cash payment occurs before an expense is recognized.
B. Applies only to situations in which a cash receipt occurs before revenue is recognized.
C. Is used in accrual accounting to determine the proper period in which to recognize revenue.
D. Is used in accrual accounting to determine the proper period for recognition of expenses.
103.Davis, Inc., a music group, entertained at a black-tie dinner dance on April 26, and collected the fee in full at the end of the evening. This transaction:
A. Causes an increase in assets and revenue, as well as an increase in owners' equity.
B. Is recorded by debiting Cash and crediting the Retained Earnings account.
C. Causes an increase in assets and a decrease in owners' equity.
D. Violates the matching principle unless any expenses associated with this cash receipt are paid prior to recording the revenue.