FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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True or False: Under the accrual accounting method, revenue is recognized when cash is received, regardless of when the goods or services are delivered.
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- Porite Company recognizes revenue in the period in which it records an asset for the related account receivable, rather than in the period in which the account receivable is collected in cash. Porite's practice is an example of: Multiple Choice O Economic entity. The matching principle. Accrual accounting. Cash basis accounting.arrow_forwardDiscuss the difference in Accrual and Cash Basis for accounting.arrow_forwardWhat does the phrase "Revenue is recognized at the point of sale" mean? (Assume the company reports using ASPE.) a.Revenue is recorded in the accounting records when the goods are sold to a customer and reported on the statement of earnings when the cash payment is received from the customer. b.Revenue is recorded in the accounting records and reported on the statement of earnings when the cash is received from the customer. c.Revenue is recorded in the accounting records when the cash is received from a customer and reported on the statement of earnings when sold to the customer. d.Revenue is recorded in the accounting records and reported on the statement of earnings when goods are sold and delivered to a customer.arrow_forward
- According to U.S. GAAP, when should revenue be recognized?a. When cash is received from the customerb. When the service is performed or the goods have been delivered to the customerc. When the goods or services have been priced and offered for saled. At the stated date in the contractarrow_forwardWhich accounting principle requires that expenses be matched with revenues? a) Revenue Recognition Principle b) Matching Principle c) Historical Cost Principle d) Full Disclosure Principlearrow_forwardUnder the accrual basis of accounting - if cash has been received before the revenue has been earned, which of the following journal entries should be recorded? A) Debit Cash, Credit Unearned Revenue. B) Debit Cash, Credit Sales Revenue. C) Debit Unearned Revenue, Credit Cash. D) Debit Cash, Credit Accounts Receivable.arrow_forward
- What’s the correct answer?arrow_forwardThe primary difference between accrual-basis and cash-basis accounting is: Multiple Choice O Accrual-basis accounting is not part of generally accepted accounting principles (GAAP). Under accrual-basis accounting, an attempt is made to record economic events as they occur, regardless of when cash is received or paid. Cash-basis accounting is allowed for financial reporting purposes but not accrual-basis accounting. O Adjusting entries are only a necessary part of cash-basis accounting.arrow_forward4. How a profit is determined a) under the cash basis of accounting and b) the accrual basis of accounting?arrow_forward
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