Question

6) On December 30 of the current year Lafforgue & Baria, CPAs sign a $135,000 contract to provide accounting services to one of its clients in the next year. Alforque & Baria, CPAS have a December 31 year end. Which accounting principle or assumption requires the firm to record the accounting services revenue from this client in the next year and not in the current year? a. Business entity assumption b. Monetary unit assumption C. Cost principle d. Revenue recognition principle e. Going concern assumption 7) Hoang Consulting performs services for a customer and bills the customer for $450. How should Hoang Consulting record this transaction? a. A/R increase by $450; Revenues increase by $450 b. Cash increases by $450, Revenues increase by $450 C. A/R increase by $450, Revenues decrease by $450 d. A/R increase by $450, A/P increase by $450 e. A/P increase by $450, revenues increase by $450 8) Koulabouth Company received a utility bill for the current period for $625 and immediately paid it. It's journal entry to record this transaction includes a a. Debit to Cash b. Debit to Accounts Payable C. Debit to Utility Expense d. Credit to Utility Expense e. Credit to Capital 9) Tyler Roebbert contributed $250,000 Cash and Land worth $500,000 to open his new Aviation business. Which of the following journal entries are made to record this transaction: a. Cash 750,000 T. Roebbert Capital 750,000 b. T. Roebbert Capital 750,000 Cash 750,000 C. Cash Land 250,000 500,000 T. Roebbert Capital 750,000 d. T. Roebbert Capital Cash Land 750,000 250,000 500,000

Answer 1

ANSWER

6. D. REVENUE RECOGNITION PRINCIPLE

AS PER REVENUE RECOGNITION PRINCIPLE, REVENUE WILL BE RECOGNISED IN THE PERIOD TO WHICH IT PERTIANS, IRRESPECTIVE OF WHEN CASH IS RECEIVED. IN CURRENT CASE REVENUE RECEIVED IN CURRENT YEAR HOWEVER IT PERTAINS TO NEXT YEAR, SO IT WILL BE RECOGNISED AS REVEUNUE IN NEXT YEAR ONLY.

7. A. A/R INCREAS BY $450, EVENUE INCREASE BY $450

SERVICE REVENUE EARNED $450, AND IT IS ON ACCOUNT SO ACCOUNTS RECEIVABLE WILL BE INCREASED B $450.

8. C. DEBIT TO UTILITIES EXPENSE

ENTRY   UTILITIES EXPENSE DR $625

CASH CR $625

9. C. CASH DR $250,000

LAND DR $500,000

T, ROBBERT CAPTAL CR $750,000

SINCE THE TOTAL ASSETS CONTRIBUTED BT T. ROBBERT INCLUDE CASH $250,000 AND LAND $500,000, SO THE CAPITAL WOULD BE INCREASED BY TOTAL OF $750,000