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Chapter 4 Quiz Question 1 The revenue recognition principle dictates that revenue be recognized in the accounting period in which the performance obligation is satisfied . Question 2 An adjusting entry to a prepaid expense is required to recognize expired expenses . Question 3 Unearned revenue is a prepayment that requires an adjusting entry when services are performed .
· Question 4 When closing entries are prepared , each income statement account is closed directly to retained earnings .
· Question 5 The accounting cycle begins with the journalizing of the transactions
· Question 6 Management usually wants ________ financial statements and the IRS requires all businesses to file _________ tax returns .
· Question 7 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 ?
· Question 8 Which statement is correct ?
· Question 9 Given the data below for a firm in its first year of operation , determine net income under the cash basis of accounting .
Cash received from customers $ 48,000