Financial Accounting
3rd Edition
ISBN: 9780133791129
Author: Jane L. Reimers
Publisher: Pearson Higher Ed
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Chapter 3, Problem 3MCQ
To determine
Identify the correct example of a deferral.
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Which of the following is false?
A. A liability is created when cash is received prior to delivery of the goods or services.
20.
B. Revenue is recognized at the time of delivery of the goods or services if cash is
received.
C. Revenue is not recognized at the time of delivery of goods and services if cash is
received after delivery of the goods and services.
D. Collecting cash after delivery of a good or service does not create revenue on the
income statement at the date of collection.
EITHER TRUE OR FALSE. Describe why the assertion is incorrect if it is in fact incorrect.
1. Cash rules are standards by which employees should be guided and safeguarded against the income statement being misused.
Which of the following is not normally increased by a cash inflow transaction?
a) Advances from Customers
b.) Unearned Revenue from Customer Loyalty Program
c.)Unearned Revenue from Warranty Contracts
d.)Deposits on Returnable Containers
Chapter 3 Solutions
Financial Accounting
Ch. 3 - Prob. 1YTCh. 3 - Prob. 2YTCh. 3 - Prob. 3YTCh. 3 - Prob. 4YTCh. 3 - Prob. 5YTCh. 3 - Prob. 6YTCh. 3 - Prob. 7YTCh. 3 - How does accrual basis accounting differ from cash...Ch. 3 - Prob. 2QCh. 3 - Prob. 3Q
Ch. 3 - Prob. 4QCh. 3 - What are accrued expenses?Ch. 3 - Prob. 6QCh. 3 - Prob. 7QCh. 3 - Name two common deferred expenses.Ch. 3 - What does it mean to recognize revenue?Ch. 3 - How does matching relate to accruals and...Ch. 3 - What is depreciation?Ch. 3 - Why is depreciation necessary?Ch. 3 - Prob. 13QCh. 3 - Prob. 14QCh. 3 - Prob. 1MCQCh. 3 - Prob. 2MCQCh. 3 - Prob. 3MCQCh. 3 - Prob. 4MCQCh. 3 - Prob. 5MCQCh. 3 - Prob. 6MCQCh. 3 - Prob. 7MCQCh. 3 - Prob. 8MCQCh. 3 - When prepaid insurance has been used, the...Ch. 3 - Prob. 10MCQCh. 3 - Prob. 1SEACh. 3 - Prob. 2SEACh. 3 - Account for interest expense. (LO 1, 2). UMC...Ch. 3 - Prob. 4SEACh. 3 - Account for insurance expense. (LO 1, 3). Catrina...Ch. 3 - Prob. 6SEACh. 3 - Account for unearned revenue. (LO 1, 3). Able...Ch. 3 - Prob. 8SEACh. 3 - Prob. 9SEACh. 3 - Prob. 10SEACh. 3 - Calculate profit margin on sales ratio. (LO 5)....Ch. 3 - Prob. 12SEBCh. 3 - Prob. 13SEBCh. 3 - Prob. 14SEBCh. 3 - Prob. 15SEBCh. 3 - Prob. 16SEBCh. 3 - Prob. 17SEBCh. 3 - Prob. 18SEBCh. 3 - Prob. 19SEBCh. 3 - Calculate net income. (LO I, 4). Suppose a company...Ch. 3 - Prob. 21SEBCh. 3 - Prob. 22SEBCh. 3 - Prob. 23EACh. 3 - Prob. 24EACh. 3 - Prob. 25EACh. 3 - Prob. 26EACh. 3 - Prob. 27EACh. 3 - Prob. 28EACh. 3 - Account for insurance expense. (LO 1, 3). Yodel ...Ch. 3 - Prob. 30EACh. 3 - Prob. 31EACh. 3 - Prob. 32EACh. 3 - Prob. 33EACh. 3 - Prob. 34EACh. 3 - Southeast Pest Control, Inc., was started when its...Ch. 3 - Prob. 36EACh. 3 - Prob. 37EACh. 3 - Prob. 38EACh. 3 - Prob. 39EACh. 3 - Prob. 40EBCh. 3 - Prob. 41EBCh. 3 - Prob. 42EBCh. 3 - TJs Tavern paid 10,800 on February 1, 2010, for a...Ch. 3 - Prob. 44EBCh. 3 - Prob. 45EBCh. 3 - Account for insurance expense. (LO 1, 3). All...Ch. 3 - Prob. 47EBCh. 3 - Prob. 48EBCh. 3 - Prob. 49EBCh. 3 - Prob. 50EBCh. 3 - Prob. 51EBCh. 3 - Prob. 52EBCh. 3 - From the following list of accounts (1) identify...Ch. 3 - Prob. 54EBCh. 3 - Prob. 55EBCh. 3 - Prob. 56EBCh. 3 - Prob. 57PACh. 3 - Prob. 58PACh. 3 - Prob. 59PACh. 3 - Following is a partial list of financial statement...Ch. 3 - Prob. 61PACh. 3 - Record adjustments. (LO 1, 2, 3). The Gladiator...Ch. 3 - Prob. 63PACh. 3 - Transactions for Pops Company for 2011 were as...Ch. 3 - Record adjustments and prepare financial...Ch. 3 - Prob. 66PACh. 3 - Prob. 67PACh. 3 - Record adjustments and prepare income statement....Ch. 3 - Prob. 69PBCh. 3 - Prob. 70PBCh. 3 - Following is a partial list of financial statement...Ch. 3 - Prob. 72PBCh. 3 - Record adjustments. (LO 1, 2, 3). Summit Climbing...Ch. 3 - Prob. 74PBCh. 3 - Prob. 75PBCh. 3 - Record adjustments and prepare financial...Ch. 3 - Prob. 77PBCh. 3 - Prob. 78PBCh. 3 - Identify and explain accruals and deferrals. (LO...Ch. 3 - Prob. 2FSACh. 3 - Prob. 3FSACh. 3 - Prob. 1CTPCh. 3 - Prob. 1IECh. 3 - Prob. 3IECh. 3 - Prob. 4IE
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- If cash is received from a customer in the current period, but the related performance obligation is not satisfied until a future period, the related expenses of generating the revenue should not be recognized until that future period. This guideline is an application of the: Select one: O a. None of the answers are correct O b. revenue recognition principle. O c. cost constraint. O d. matching principle. e. full disclosure principle.arrow_forwardDirection. TRUE or FALSE._______1. An SME does not have a “cash and cash equivalents” line item in its balance sheet whilean entity that uses the full PFRSs has this line item._______2. An SME is does not have an “allowance for bad debts” account._______3. An SME entity shall require to use the direct method of presenting cash flows from theiroperating activities._______4. An SME is exempted from accounting for interest revenue under the cost interest method._______5. An SME is exempt from measuring its long-term, noninterest-bearing notes at present value._______6. An SME does not account for changes in fair values of investments in equity securities inthe other comprehensive income._______7. An SME is not required to present earnings per share information._______8. An SME is required to disclose key management personnel compensation in total only._______9. An SME doe not account for derivatives and hedging transactions._______10.An SME does not have any accounting for share-based…arrow_forwardWhich of the following statement is incorrect regarding Cash and Cash Equivalents? a. Postage Stamps and expenses advances should be reported as office supplies or prepaid expense b. Undelivered or unreleased checks should be reverted back to Cash and Accounts payable. c. Cash set aside for long-term specific purpose or for acquisition of a non-current asset should be reported as non-current financial asset. d. Cash in closed banks or banks having difficulty or in bankruptcy should be classify as Cash and should be written down to its recoverable amount.arrow_forward
- A member attempts to make a make deposit to her account, which involves a large sum of cash, which is inconsistent with her known business activity. This arouses the teller's suspicion, prompting him to ask her what is the source of the funds. The member refuses to disclose its origin. How should the teller proceed? A. The transaction should not be undertaken, and an STR should be filled. B. Transaction may be undertaken if the member is on who is known to management and who has had a relationship with the credit union for 5 years C. The member should be advised that a STR would be filed D. None of the abovearrow_forwardCeres Corporation made travel advances to the marketing team. Why are they considered nontrade receivables? The amounts are owed to the employees, not to the company. The amounts owed to the company did not result from selling goods or services. The amounts owed to the company are not from external parties. O The amounts owed will not cause a decrease in the Cash account.arrow_forwardThe companies dispose their accounts receivable because _____________ a. of shortage of accounting staff b. there are other ways to earn cash c. billing and collection expense are costly d. the accounts receivable are all goodarrow_forward
- The new bookkeeper forgot to record the payment of an accounts payable to a supplier. What impact does this have on the company’s books? No effect Cash is understated/the Income Statement is understated Cash is overstated/the Income Statement is overstated Cash is overstated/liabilities are understated Cash is overstated/liabilities are overstatedarrow_forwardThe removal of cash from a victim organization before the cash is entered in the organization’s accounting system is:A. Cash larcenyB. A fraudulent disbursementC. SkimmingD. An illegal gratuityarrow_forwardWhich of the following statements, if any, is false? O Under the cash receipts method, income is not recognized until a payment is actually or constructively received. 2 Under the accrual method, income is generally recognized when (1) all events have occurred that fix the right to receive income and (2) the amount to be received can be determined with reasonable accuracy. If a seller receives a payment from a customer in the form of a laptop computer (instead of a more normal method such as a cash, check or credit card payment) the receipt of the computer is not taxable to the seller because the seller did not receive any cash (or cash equivalent) from the customer. A cash-basis seller does not have to recognize any income at the time of a sale to a customer if the seller sells on its own credit to the customer (i.e., where the seller risks not getting paid by the customer). Vone of the above - they are all true statementsarrow_forward
- Which of the following errors would not affect net income?A. Post-dated checks are classified as cash upon receipt from customersB. Purchases on account are unrecorded because the goods are still in transit : butthe goods were included in inventoryC. Depreciation expense was recorded twice for the same yearD. The client charged an ordinary repair as part of equipment cost.arrow_forward1. How to record an amount due for customer that becomes definitely uncollectible? 2. How to record an amount due for customer that the entity might not be able to collect from customer? CHOICES for number 1 & 2: a. Dr Allowance for Bad Debts and Cr Cash b. Dr Allowance for Bad Debts and Cr Accounts Receivable c. Dr Bad Debt Expense and Cr Allowance for Bad Debts d. Dr Bad Debt Expense and Cr Cash 3. How to recognize the depreciation of an equipment? a. Dr Depreciation Expense and Cr Accumulated Depreciation b. Dr Accumulated Depreciation and Cr Depreciation Expense c. Dr Depreciation Expense and Cr Cash d. Dr Cash and Cr Accumulated Depreciation 4. How to record an expenses for which payment has not been made? a. Dr Expense and Cr Accounts Payable b. Dr Expense and Cr Accrued Expense Payable c. Dr Expense and Cr Cash d. Dr Expense and Cr Account Receivablearrow_forwardgive explanationarrow_forward
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