The matching principle states that ________. A. financial statements can be prepared for specific periods B. a business's activities can be sliced into small time segments C. companies should record revenue when it has been earned D. all expenses should be recorded when they are incurred during the period

The matching principle states that ________. A. financial statements can be prepared for specific periods B. a business's activities can be sliced into small time segments C. companies should record revenue when it has been earned D. all expenses should be recorded when they are incurred during the period

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter3: Analyzing And Recording Transactions

Section: Chapter Questions

Problem 1MC: That a business may only report activities on financial statements that are specifically related to...

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PURPOSE OF ACCOUNTING Match the following users with the information needed. 1. Ownersa. Whether the firm can pay its bills on time 2. Managersb. Detailed, up-to-date information to measure business performance (and plan for future operations) 3. Creditorsc. To determine taxes to be paid and whether other regulations are met 4. Government agenciesd. The firms current financial condition
That companies can present useful information in shorter time periods such as years, quarters, or months is known as which of the following? A. separate entity concept B. monetary measurement concept C. going concern assumption D. time period assumption
State whether the balance in each of the following accounts increases with a debit or a credit. A. Office Supplies B. Retained Earnings C. Salaries Expense D. Accounts Receivable E. Service Revenue
Indicate whether each account that follows has a normal debit or credit balance. A. Unearned Revenue B. Office Machines C. Prepaid Rent D. Cash E. Legal Fees Earned F. Salaries Payable G. Dividends H. Accounts Receivable I. Advertising Expense J. Retained Earning
Which of the following statements is true? Under cash-basis accounting, revenues are recorded when a company satisfies its performance obligations and expenses are recorded when incurred. Accrual-basis accounting records both cash and noncash transactions when they occur. Generally accepted accounting principles require companies to use cash-basis accounting. The key elements of accrual-basis accounting are the revenue recognition principle, the expense recognition principle, and the historical cost principle.
Identify the financial statement on which each of the following accounts would appear: the income statement (IS), the retained earnings statement (RE), or the Balance Sheet (BS). A. Insurance Expense B. Accounts Receivable C. Office Supplies D. Sales Revenue E. Common Stock F. Notes Payable
Which of the following statements is true? a. Every transaction is recorded as an increase and/or decrease in only one account. b. One side of the equation does not need to equal the other side of the equation. c. Double-entry accounting is demonstrated by the fact that each transaction must be recorded in at least two accounts. d. When a business earns revenue, owners equity decreases.
Which of the following is the principle that a business must report any business activities that could affect what is reported on the financial statements? A. revenue recognition principle B. expense recognition (matching) principle C. cost principle D. full disclosure principle
Types of Events For each of the following events, identify whether it is an external event that would be recorded as a transaction (E), an internal event that would be recorded as a transaction (I), or not recorded (NR). ________________ 1. A vendor for a companys supplies is paid an amount owed on account. ________________ 2. A customer pays its open account. ________________ 3. A new chief executive officer is hired. ________________ 4. The biweekly payroll is paid. ________________ 5. Depreciation on equipment is recognized. ________________ 6. A new advertising agency is hired to develop a series of newspaper ads for the company. ________________ 7. The advertising bill for the first month is paid. ________________ 8. The accountant determines the federal income taxes owed based on the income for the period.
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Determine on which financial statement each account listed below is reported. Use the following abbreviations: Income Statement (IS), Statement of Owners Equity (OE), and Balance Sheet (BS). a. M. James, Capital b. Cash c. Rent Expense d. Accumulated Depreciation, Equipment e. Wages Payable f. M. James, Drawing g. Equipment h. Office Supplies i. Depreciation Expense j. Office Supplies k. Income from Services l. Accounts Receivable
Accounting concepts Match each of the following statements with the appropriate accounting concept. Sonic concepts may he used more than once, while others may not be used at all. Use the notat ions shown to indicate the appropriate accounting concept. Statements 1. Assume that a business will continue forever. 2. Material litigation involving the corporation is described in a note. 3. Monthly utilities costs are reported as expenses along with the monthly revenues. 4. Personal transactions of owners are kept separate from the business. 5. This concept supports relying on an independent actuary (statistician), rather than the chief operating officer of the coq)ration, to estimate a pension liability. 6. Changes in the use of accounting methods from one period to the next are described in the notes to the financial statements. 7. Land worth $800,000 is reported at its original purchase price of $220,000. 8. This concept justifies recording only transactions that are expressed in dollars. 9. If this concept was ignored, the confidence of users in the financial statements could not be maintained. 10. The changes in financial condition are reported at the end of the month.