Question

Select the one BEST answer. Remember to transfer your answers to the grid on page 2 1. Under accrual accounting as required by Generally Accepted Accounting Principles, which of the following results in the recording of revenue for the current period on the Income Statement of a service company? a. A service company receives cash from a bank in exchange for a note payable b. A service company signs an agreement to provide services to a customer in a future period c. A service company provides services for a customer in the current period that had been paid for in advance in an earlier period d. A service company receives a cash payment in the current period from a customer for work to be done in a future period 2. Which of the following best describes the book value of total shareholders' equity reported on a company's Balance Sheet? a. It is equal to the difference between the assets and liabilities shown on the balance sheet b. It typically consists of at least two primary components: Contributed Capital and Retained Earnings c It is typically equal to the market value of the company d. Both a and b are true. e. a, b, and c are all true. Under accrual accounting as required by Generally Accepted Accounting Principles, which of the following results in the immediate recognition of an expense on the Income Statement of a manufacturing company? 3. The sales staff is paid commissions for selling the companý's products during the current a period end of the current period goods. b. Factory workers are paid for their work producing goods that are still in inventory at the c Goods manufactured during the period are transferred from work in process to finished d. Cash is paid to purchase raw materials to be used in future production. Which of the following can explain why a company's net income reported on its Income Statement is more than its cash flow from operations reported on its Cash Flow Statement? a. The company issued new shares of its own common stock. b. The company sold an investment for an amount less than the company's original purchase price. The company sold merchandise on account and the company has not yet received payment. The company purchased a piece of equipment, financing the entire purchase price with a note payable. c. d.

Answer 1

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All are individual Questions, although all have been answered: Solution: Answers are highlighted in yellow: Explanation: Per this method, revenue is recognized once performed all related obligations. Answer: 1) C. A service provides services for a customer in the current period that had been paid for a advance in an earlier period 2) d. Both a and b are true It is standardized. 3) a.The sale staff is paid commissions for selling the Because it is period cost, is recognized in the same period company's products during the current period 4) c. The company sold merchandise on account and the Income will be recongized but cash flow from operation will be affected once collected. ompany has not yet received payment