ACCCH3HW
Homework Assignment
Chapter 3 Pg.110
SE1, E1A, E3A, E4A, E5A, E9A, P2
SE1. Accrual Accounting Concepts
1. Assumes expenses should be assigned to the accounting period in which they are used to produce revenues
Answer: (C) Accrual Accounting
2. Assumes a business will last indefinitely
Answer: (B) Continuity
3. Assumes revenues are earned at a point in time
Answer: (D) Revenue Recognition
4. Assumes net income that is measured for a short period of time, such as one quarter
Answer: (A) Periodicity
E1A.
Applications of Accounting Concepts Related to Accrual Accounting
1. Recognizes the usefulness of financial statement prepared on a monthly basis even though they are based on estimates
Answer: (A) Periodicity
2. Prepares an income statement that shows the revenue earned and the expenses incurred during the accounting period.
Answer: (D) Revenue Recognition
3. In estimating the life of a building, assumes that the business will last indefinitely.
Answer: (B) Continuity
4. Postpones the recognition of a one year insurance policy as an expense by initially recording the expenditure as an asset.
Answer: (E) Deferral
5. Records a sale when the customer is billed.
Answer: (C) Accrual Accounting
6. Recognizes, by making an adjusting entry, wages expense that has been incurred but not yet recorded.
Answer: (F) Accrual
E3A. Adjusting Entry for Unearned Revenue
Stardust publishes a monthly magazines featuring local restaurant reviews and upcoming social, cultural, and sporting event. Subscribers pay for subscriptions either one year or two year in advance. Cash received from subscribers is credited to an account called Magazine Subscriptions Received in Advance. On December 31, 2014, the end of the company’s fiscal year, the balance of this account is $750,000. Expiration of Subscriptions Revenue is as follows.
Answer: Liabilities Revenue Account
Years
DR
CR
Chapter 3 Pg.110
SE1, E1A, E3A, E4A, E5A, E9A, P2
SE1. Accrual Accounting Concepts
1. Assumes expenses should be assigned to the accounting period in which they are used to produce revenues
Answer: (C) Accrual Accounting
2. Assumes a business will last indefinitely
Answer: (B) Continuity
3. Assumes revenues are earned at a point in time
Answer: (D) Revenue Recognition
4. Assumes net income that is measured for a short period of time, such as one quarter
Answer: (A) Periodicity
E1A.
Applications of Accounting Concepts Related to Accrual Accounting
1. Recognizes the usefulness of financial statement prepared on a monthly basis even though they are based on estimates
Answer: (A) Periodicity
2. Prepares an income statement that shows the revenue earned and the expenses incurred during the accounting period.
Answer: (D) Revenue Recognition
3. In estimating the life of a building, assumes that the business will last indefinitely.
Answer: (B) Continuity
4. Postpones the recognition of a one year insurance policy as an expense by initially recording the expenditure as an asset.
Answer: (E) Deferral
5. Records a sale when the customer is billed.
Answer: (C) Accrual Accounting
6. Recognizes, by making an adjusting entry, wages expense that has been incurred but not yet recorded.
Answer: (F) Accrual
E3A. Adjusting Entry for Unearned Revenue
Stardust publishes a monthly magazines featuring local restaurant reviews and upcoming social, cultural, and sporting event. Subscribers pay for subscriptions either one year or two year in advance. Cash received from subscribers is credited to an account called Magazine Subscriptions Received in Advance. On December 31, 2014, the end of the company’s fiscal year, the balance of this account is $750,000. Expiration of Subscriptions Revenue is as follows.
Answer: Liabilities Revenue Account
Years
DR
CR