Generally Accepted Accounting Principles and Net Income

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University of Dubuque
School of Business
BAC 241: Principles of Financial Accounting

Homework Chapter 4: Completing Accounting Cycle

Name: Due Thursday, October 04, 2012 in class 1. During 2013, Rumbo Corporation had cash and credit sales of $21,760 and $15,225, respectively. The company also collected accounts receivable of $9,765 and incurred operating expenses of $27,700, 80 percent of which were paid during the year. In addition, Rumbo paid $4,500 for an 18-month advertising campaign that began on September 30. Rumbo 's accrual-basis net income (loss) for 2009 was a. | $9,285 | b. | $8,535 | c. | $14,075 | d. | $(775) |

2. The 2013 accrual-basis income statement for Razorri Corporation reports sales
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Under accrual-basis accounting, revenues are always recognized when a. | Earned | b. | Cash is received | c. | The manufacture of the product to be sold is completed | d. | The selling price is firmly established |

10. The idea that all expenses incurred in generating revenues should be recognized in the same period as those revenues is called the a. | Time period concept | b. | Realization concept | c. | Matching principle | d. | Revenue recognition principle |

11. In accrual basis accounting, when are expenses usually recognized? a. | When cash is paid | b. | When assets are purchased | c. | When incurred | d. | When assets are ordered |

12. The matching principle requires that a. | Cash outflows be matched with cash inflows | b. | Expenses incurred be matched with revenues earned | c. | Assets be matched with liabilities | d. | Assets be matched with owners ' equity |

13. A twelve-month accounting period ending on December 31 is known as a a. | Calendar year | b. | Reporting period | c. | Fiscal year | d. | All of these are correct |

14. The idea that a company 's life can be divided into distinct time periods so that accounting information can be reported on a timely basis is the a. | Accrual basis accounting | b. | Time period concept | c. | Fiscal year concept | d. | Revenue recognition
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