Exam
09 July 2024 11:50
1.
Question 1
True or False: According to the Periodicity Assumption, companies can only review their financial health at the end of their fiscal year?
1 / 1 point
True
False
Correct
Correct! The periodicity assumption allows companies to break their business transactions into certain designated periods of time.
2.
Question 2
A client owns a small vinyl sign printing company called Printing Pros. They completed a print job for a customer on August 10, but the
customer did not pay for the service until October 15.
In which month should the revenue be recognized for this big print job?
1 / 1 point
September
August
End of the year.
October
Correct
Correct! Because the service was provided in August, that money is earned and should be recognized.
3.
Question 3
Printing Pros had another big job to do in April and needed to hire additional help to make their deadline. The new employee received their
first paycheck at the beginning of May.
When should Printing Pros recognize the expense of paying their employee?
1 / 1 point
April
May
Correct
Correct. Because the expenses helped generate the revenue earned in April, they should be recognized in April's report.
4.
Question 4
According to the Revenue Recognition Principle, when should a business recognize its revenue?
1 / 1 point
When payment is received from a customer.
Whenever the reporting period ends.
When it is earned.
Correct
Correct! According to the revenue recognition principle, a business should recognize its revenue only when a good or service has been
provided to the customer.
5.
Question 5
Which of the following best describes the Periodicity Assumption?
1 / 1 point
Companies can assume a value for intangible assets.
Companies can assume that business activity can be broken up into smaller measurements of time.
Companies can assume that the business activity will operate indefinitely.
Correct
Correct! The periodicity assumption allows companies to break up their financial life and view it in smaller chunks of time.
6.
Question 6
Which of the following statements would best describe the Matching Principle?
1 / 1 point
The manufacturing cost, or cost of goods sold, is recognized once the manufacturing process is complete.
Bookkeeping Basics Page 1
The manufacturing cost, or cost of goods sold, is recognized once the manufacturing process is complete.
Expenses should be recognized when they are paid, regardless of when revenue is generated.
Expenses like manufacturing costs or depreciation should be recognized in the same period as the revenue it helped generate.
Correct
Correct! The Matching Principle directs a company to report an expense on its income statement in the period in which the related revenues
are earned.
Bookkeeping Basics Page 2
