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Chapter 3

Multiple Choice

Multiple Choice

This activity contains 10 questions.

	If a company is using the cash basis of accounting, when is an expense recorded?   A. When the expense is incurred, even though it may be paid at a later date. B. When paid in cash. C. Only when cash is paid at the same time the expense is incurred. D. Only when cash is paid after the expense is incurred.

	If a company is using GAAP, when is revenue recorded?   A. Only when cash is received at the completion of the services. B. Only when cash is received after the completion of the services. C. When services are rendered, even though cash may be received at a later date. D. When cash is received.

	Which of the following is the purpose of the time-period concept?   A. To ensure that information is reported at regular intervals. B. To determine the amount of revenue to record. C. To determine the amount of expense to record. D. None of the above.

	Which of the following is the purpose of the revenue concept?   A. To ensure that information is reported at regular intervals. B. To determine the amount of revenue to record. C. To determine the amount of expense to record. D. None of the above.

	Which of the following is the purpose of the matching concept?   A. To ensure that information is reported at regular intervals. B. To determine the amount of revenue to record. C. To determine the amount of expense to record. D. None of the above.

	What credit is required as part of an adjusting entry when a prepaid expenses is initially recorded as an expense?   A. A credit to an asset account. B. A credit to a deferred revenue account. C. A credit to an expense account D. A credit to a contra account.

	What credit is required as part of an adjusting entry when unearned income is initially recorded as a liability?   A. A credit to an asset account. B. A credit to a deferred revenue account. C. A credit to a revenue account. D. A credit to a contra account.

	What credit is required as part of an adjusting entry when depreciation expense is recorded as an expense?   A. A credit to an asset account. B. A credit to a deferred revenue account. C. A credit to a revenue account. D. A credit to a contra account.

	Which of the following financial statements reports financial information for a specified period of time?   A. The income statement B. The statement of retained earnings C. The balance sheet D. Both A and B

	Which of the following financial statements reports financial information as of a specified date?   A. The income statement B. The statement of retained earnings C. The balance sheet D. Both A and B

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