ACCOUNTING EXAM 4
1. The periodicity assumption states that
Answer the economic life of a business can be divided into artificial time periods
2. One of the accounting concepts upon which adjustments for prepayments and accruals are
based is
Answer expense recognition
3. An accounting time period that is one year in length is called
Answer a fiscal year
4. Expenses are recognized when
Answer they contribute to the production of revenue
5. The revenue recognition principle dictates that revenue should be recognized in the accounting
records
Answer when the performance obligation is satisfied
6. In a service-type business, revenue is recognized
Answer when the service is performed
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, 7. The expense recognition principle matches
Answer expenses with revenues
8. Otto's Tune-Up Shop follows the revenue recognition principle. Otto services a car on August
31. The customer picks up the vehicle on September 1 and mails the payment to Otto on
September 5. Otto receives the check in the mail on September 6. When should Otto show
that the revenue was recognized?
Answer August 31
9. A flower shop makes a large sale for $1,000 on November 30. The customer is sent a
statement on December 5 and a check is received on December 10. The flower shop follows
GAAP and applies the revenue recognition principle. When is the $1,000 considered to be
recognized?
Answer November 30
10. A furniture factory's employees work overtime to finish an order that is sold on January
31. The office sends a statement to the customer in early February and payment is received by
mid-February. The overtime wages should be expensed in
Answer January
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1. The periodicity assumption states that
Answer the economic life of a business can be divided into artificial time periods
2. One of the accounting concepts upon which adjustments for prepayments and accruals are
based is
Answer expense recognition
3. An accounting time period that is one year in length is called
Answer a fiscal year
4. Expenses are recognized when
Answer they contribute to the production of revenue
5. The revenue recognition principle dictates that revenue should be recognized in the accounting
records
Answer when the performance obligation is satisfied
6. In a service-type business, revenue is recognized
Answer when the service is performed
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, 7. The expense recognition principle matches
Answer expenses with revenues
8. Otto's Tune-Up Shop follows the revenue recognition principle. Otto services a car on August
31. The customer picks up the vehicle on September 1 and mails the payment to Otto on
September 5. Otto receives the check in the mail on September 6. When should Otto show
that the revenue was recognized?
Answer August 31
9. A flower shop makes a large sale for $1,000 on November 30. The customer is sent a
statement on December 5 and a check is received on December 10. The flower shop follows
GAAP and applies the revenue recognition principle. When is the $1,000 considered to be
recognized?
Answer November 30
10. A furniture factory's employees work overtime to finish an order that is sold on January
31. The office sends a statement to the customer in early February and payment is received by
mid-February. The overtime wages should be expensed in
Answer January
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