Principles of Accounting
12th Edition
ISBN: 9781133626985
Author: Belverd E. Needles, Marian Powers, Susan V. Crosson
Publisher: Cengage Learning
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Question
Chapter 2, Problem 5C
1.
To determine
Explain the manner that the concept of recognition applies to advertising costs.
2.
To determine
Explain the manner that the concept of
3.
To determine
Explain the manner that the concept of classification applies to cash and cash equivalents.
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Which of the following statements is correct?
Group of answer choices
A)Revenue is recognized at the time of shipment when goods are shipped FOB destination.
B)Sales returns and allowances are reported as operating expenses on an income statement.
C)Revenue is recorded when title and risks of ownership transfer to the buyer.
D)Sales discounts are reported as operating expenses on an income statement.
What 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.
Which of the following is NOT a financial transaction? a. purchase of products b. cash receipts c. update valid vendor file d. sale of inventory
Chapter 2 Solutions
Principles of Accounting
Ch. 2 - A company incurs a cost for a part that is needed...Ch. 2 - Prob. 2DQCh. 2 - Prob. 3DQCh. 2 - Prob. 4DQCh. 2 - How are assets and expenses related, and why are...Ch. 2 - Prob. 6DQCh. 2 - Prob. 7DQCh. 2 - Prob. 8DQCh. 2 - Tell whether each of the following accounts is an...Ch. 2 - Prob. 2SE
Ch. 2 - Prob. 3SECh. 2 - Prob. 4SECh. 2 - Prob. 5SECh. 2 - Prob. 6SECh. 2 - Prob. 7SECh. 2 - Prepare a general journal form like the one in...Ch. 2 - Prepare three ledger account forms like the one in...Ch. 2 - Prob. 10SECh. 2 - Prob. 11SECh. 2 - Prob. 12SECh. 2 - Which of the following events would be recognized...Ch. 2 - You are given the following list of accounts with...Ch. 2 - The following ledger accounts are for Afocentric...Ch. 2 - Prob. 4EACh. 2 - The accounts that follow are applicable to Harolds...Ch. 2 - Prob. 6EACh. 2 - Prob. 7EACh. 2 - Prob. 8EACh. 2 - After recording the transactions in E6A, prepare a...Ch. 2 - The list that follows presents Shah Companys...Ch. 2 - Which of the following errors would cause a trial...Ch. 2 - Prob. 12EACh. 2 - Record the transactions in E6A in the general...Ch. 2 - Prob. 14EACh. 2 - Prob. 15EACh. 2 - Prob. 16EACh. 2 - Highland Design Company creates radio and...Ch. 2 - The following accounts are applicable to Georges...Ch. 2 - Jennifer Lopez opened a school for administrative...Ch. 2 - Sid Patel bid for and won a concession to rent...Ch. 2 - Nordtown Company is a marketing firm. The companys...Ch. 2 - Prob. 6APCh. 2 - The following accounts are applicable to Raymonds...Ch. 2 - Prob. 8APCh. 2 - David Roberts began an upholstery cleaning...Ch. 2 - Prob. 10APCh. 2 - Prob. 1CCh. 2 - Prob. 2CCh. 2 - Prob. 3CCh. 2 - Prob. 4CCh. 2 - Prob. 5CCh. 2 - Prob. 6CCh. 2 - Prob. 7C
Knowledge Booster
Similar questions
- Identify whether each of the following transactions, which are related to revenue recognition, are accrual, deferral, or neither. A. sold goods to customers on credit B. collected cash from customer accounts C. sold goods to customers for cash D. collected cash in advance for goods to be delivered laterarrow_forwardWhich of the following best describes the activities of the accounting function? a. inventory control, accounts payable, fixed assets, and payrollb. fixed assets, accounts payable, cash disbursements, and cost accounting c. purchasing, cash receipts, accounts payable, cash disbursements, and payroll d. inventory control, cash receipts, accounts payable, cash disbursements, and payroll e. inventory control, cost accounting, accounts payable, cash disbursements, and payrollarrow_forwardUsing accrual accounting, when is revenue recognized?A. When cash transfers B. When the performance obligation is fulfilled C. When products is received FOB shipping point D. When the products is shipped FOB destinarrow_forward
- Which of the following groupings of accounts includes only accounts that carry a normal credit balance? a.Customer Refunds Payable, Estimated Returns Inventory, and Sales b.Sales Tax Payable, Cost of Goods Sold, and Sales c.Inventory, Delivery Expense, and Sales d.Sales Tax Payable, Customer Refunds Payable, and Salearrow_forwardWhich of the following accounts has a normal debit balance? a.Accounts Payable b.Sales c.Interest Revenue d.Merchandise Inventoryarrow_forwardWhich of the following statements about merchandisingactivities is true? (More than one answer may be correct.)a. As inventory is purchased, the Inventory Expenseaccount is debited and Cash (or Accounts Payable) iscredited.b. Inventory is recorded as an asset when it is firstpurchased. c. As inventory is sold, its cost is transferred from the bal-ance sheet to the income statement. d. As inventory is sold, its cost is transferred from theincome statement to the balance sheet.arrow_forward
- Indicate the normal balance and category of each of the following accounts: CATEGORy options ARE: asset, contra-expense, contra-revenue, expense, liability, revenue. Account Normal Balance Category a. Sales Returns and Allowances b. Merchandise Inventory c. Miscellaneous Income d. Payroll Tax Expense e. Sales Discounts f. Cost of Goods Sold g. Income Tax Payable h. Prepaid Expensesarrow_forwardIdentify which one of the following formula is used to calculate the net income of the service companies in an accounting period? a.Net Purchases – Cost of goods sold b.Net Sales – Cost of goods sold c.Services Revenue – Operational and Administrative Expenses d.Operational and Administrative Expenses – Service Revenuearrow_forwardWhen does the cost of inventory become an expense?a. When cash is collected from the customerb. When inventory is delivered to a customerc. When payment is made to the supplierd. When inventory is purchased from the supplierarrow_forward
- 7. Which of the following is classified as general and administrative expenses? a. Salaries of admin personnel b. Salaries of sales agents c. Rent for sales office d. Depreciation of delivery van 8. What is the resulting figure if inventory is deducted from the cost of goods available for sale? a. Gross Profit b. Net Purchases c. Net Sales d. Cost of Goods Soldarrow_forwardWhich of the following are the suppliers of goods/services whose invoices have not yet been paid? a. Cash b. Accounts Receivable c. Accounts Payable d. Inventoryarrow_forwardIdentify the items from the following list that are likely to serve as source documents. Item a. Sales receipt b. Liability accounts c. Balance sheet d. Ledger e. Bank statement f. General journal g. Income statement h. Telephone bill i. Credit card receipt Is this a source document?arrow_forward
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