13. Which of the following statements is true concerning the matching principle?
a. All costs can be directly matched with revenue.
b. All costs can be indirectly matched with periods in which they provide a benefit.
c. The association of assets for a period with the liabilities necessary to generate the assets is known as the matching principle.
d. Cost of goods sold matched with sales revenue is a classic example of direct matching under the matching principle.
14. All of the following describe a revenue except:
a. A revenue can result in the inflow of assets.
b. A revenue can result in the settlement of liabilities from the delivery or distribution of goods.
c. A revenue can result in the settlement of liabilities from rendering services.
d. A revenue must involve an inflow of assets.
15. If the sum of the debits and credits in a trial balance is not equal, then
a. there is no concern because the two amounts are not meant to be equal.
b. the chart of accounts also does not balance.
c. it is safe to proceed with the preparation of financial statements.
d. most likely an error was made in posting journal entries to the general ledger or in preparing the trial balance.
Wolfe Inc.
Wolfe Inc. reports these account balances at January 1, 2016:
Retained Earnings Accounts Receivable Accounts Payable Capital Stock
Land
Cash Equipment Notes Payable Buildings
$ 49,000 20,000 24,000 185,000 153,000 13,000 20,000 28,000 80,000
16. See the account balances for Wolfe Inc.
On January 31, Wolfe collected $12,000 of its accounts receivable and paid $11,000 on its note payable. In Wolfe’s trial balance prepared on January 31, 2016, the total of the credit column is:
a. $297,000 b. $287,000 c. $286,000 d. $275,000
17. What type of account is increased with a debit but is a decrease to retained earnings?
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Chapter 3-5
a. Liability b. Asset
c. Revenue d. Expense
a. November 1 of the current year when the cash is received from Harris b. On October 31 of the next year when all services have been provided c. Throughout the year as the revenue is earned
d. At December 31 of the current year, and October 31 of the next year
19. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns are $37,875 and $32,735, respectively. What is the amount of net income or net loss for the period?
a. $5,140 net income b. $37,875 net loss
c. $5,140 net loss
d. $32,735 net income
20. Why is the use of the U.S. dollar as a unit of measure for financial statement data in the U.S. widely accepted? a. U.S. dollar remains stable over a long period of time.
b. U.S. dollar is universally recognized as a reliable financial measure.
c. U.S. dollar is the medium of monetary exchange in the U.S.
d. U.S. dollar is required for financial statement presentation by the FASB and SEC.
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Date:
18. On October 31, Michael Corporation signed a one-year contract to provide services to Love Company for $80,000. Love will pay for the services on November 1. Using the accrual basis of accounting, when should Michael Corporation