1.

LO 9.1Which of the following is not a criterion to recognize revenue under GAAP?

1. The earnings process must be completed.
2. A product or service must be provided.
3. Cash must be collected.
4. GAAP requires that the accrual basis accounting principle be used in the revenue recognition process.

2.

LO 9.1Which of the following best represents the matching principle criteria?

1. Expenses are reported in the period in which they were incurred.
2. Expenses may be reported in a different period than the matching revenues.
3. Revenue and expenses are matched based on when expenses are paid.
4. Revenue is recognized when an order occurs and not when the actual sale is initiated.

4.

LO 9.1A car dealership sells a car to a customer for $35,000. The customer makes a 10% down payment, and the dealership finances the remaining 90% in-house. How much will the car dealership record in Accounts Receivable for this customer?

1. $31,500
2. $19,250
3. $8,750
4. $7,000

5.

LO 9.2Tines Commerce computes bad debt based on the allowance method. They determine their current years balance estimation to be a credit of $45,000. The previous period had a credit balance in Allowance for Doubtful Accounts of $12,000. What should be the reported figure in the adjusting entry for the current period?

1. $12,000
2. $45,000
3. $33,000
4. $57,000

7.

LO 9.2Balloons Plus computes bad debt based on the allowance method. They determine their current years balance estimation to be a credit of $84,000. The previous period had a credit balance in Allowance for Doubtful Accounts of $26,000. What should be the reported figure in the adjusting entry for the current period?

1. $84,000
2. $58,000
3. $26,000
4. $110,000