Professional Documents
Culture Documents
By
Santro Sophia Jepil
1) The operating cycle begins with
A) the acquisition of goods.
B) the receipt of cash from customers.
C) the payment for goods.
D) the initial investment by owners.
E) the sales to customers.
2) Net income is
A) the difference between revenues and dividends
B) the difference between revenues and retained earnings.
C) the difference between cash and dividends.
D) the difference between revenues and total assets.
E) the difference between revenues and expenses.
3) Revenues are
A) increases in liabilities resulting from delivering goods or services to customers.
B) decreases in net assets resulting from delivering goods or services to customers.
C) increases in net assets resulting from delivering goods or services to customers.
D) decreases in retained earnings resulting from delivering goods or services to customers.
E) another term for assets.
4) The operating cycle is the time it takes for a company to buy goods. False
5) The additional owners' equity generated by net income or net profits is used to increase retained
earnings. True
6) For revenue to be earned under the cash basis of accounting, the cash from the customer must be
received. True
8) Performing a service and receiving a promise to pay from the customer would
A) increase revenue.
B) decrease assets.
C) increase liabilities.
D) decrease expenses.
E) decrease revenue.
9) Revenue is recognized when a customer's promise to pay exists, even if the company is not relatively
certain that they will receive payment. False
10) The recording of expenses in the same time period as the related revenues are recognized is known as
A) cost recovery.
B) realization.
C) matching.
D) recognition.
E) period costs.
12) The right side of a T-account always increases an account balance and the left side of a T-account
always decreases an account balance. False