Chapter 5, Problem 7Q

Using the accrual basis, in which month should revenue be recorded?a. In the month that cash is collected from the customerb. In the month that goods are ordered by the customerc. In the month that goods are shipped to the customerd. In the month that the invoice is mailed to the customer

If Dome Corporation does not record a sale made on account in December until a month later when the customer pays its invoice, how will Dome’s December financial statements be impacted?

A new client, the Wolf Company, asks your advice concerning the point in time that the company should recognize revenue from the rental of its office buildings under generally accepted accounting principles. Renters usually pay rent on a quarterly basis at the beginning of the quarter. The owners contend that the critical event that motivates revenue recognition should be the date the cash is received from renters. After all, the money is in hand and is very seldom returned.Required:Do you agree or disagree with the position of the owners of Wolf Company? State whether you agree or disagree, and support your answer by relating it to accrual accounting under GAAP.

At year-end, the president instructs you, the financial officer, not to record accrued expenses until next year because they will not be paid until then. The president also directs you to record in current-year sales a recent purchase order from a customer that requires merchandise to be delivered two weeks after the year-end. Your company would report a net income instead of a net loss if you follow these instructions. What do you do?

Below are transactions for Lobos, Inc., during the month of December. Calculate the amount of revenue to recognize in December. If the transaction does not require the company to recognize a revenue, indicate how it would report the transaction. a. Receive $1,200 cash from customers for services to be provided next month. b. Perform $900 of services during the month and bill customers. Customers are expected to pay next month. c. Perform $2,300 of services during the month and receive full cash payment from customers at the time of service.

For each of the following situations, identify whether a change in accounting estimate, change in accounting policy, or an accounting error has occurred.  Also indicate whether the change or correction should be made prospectively or retrospectively. The accounting clerk did not record a shipment of product on the last day of the previous fiscal year, because the customer had not yet paid for the product.  The shipment was made FOB shipping point. In the past, Uni-Focus Company used the cash basis of accounting.  This year, the Company is changing to the accrual basis of accounting. Tri-Facet Ltd follows ASPE.  Management of Tri-Facet decided to switch from using the taxes payable method to using the future income tax method.

Which of these transactions requires a credit entry to Revenue? A.collected balance due from customers B.refunded a customer for a defective product C.received cash from bank loan D.received cash from services performed this month

Suppose a business receives a bill for services rendered from one of itssuppliers. The business will pay the supplier next month. When the businessreceives the bill from its supplier, explain how this affect the accounting equationin terms of increasing or decreasing assets, liabilities, or owner’s equity?

1. Suppose a business receives a bill for services rendered from one of itssuppliers. The business will pay the supplier next month. When the businessreceives the bill from its supplier, explain how this affect the accounting equation in terms of increasing or decreasing assets, liabilities, or owner’s equity? 2. Suppose equipment is sold for cash in an amount equal to the cost of theequipment recorded on the books. How does this sale affect the accountingequation in term of increasing or decreasing assets, liabilities or owner’s equity?