6. In cash base accounting, companies recognize: a. Expenses when paid, and revenues when received b. Expenses when paid, and revenues when earned c. Expenses when used, and revenues when received d. Expenses when used, and revenues when earned 7. The main equation in the income statement is: a. Gross income-administrative and selling expenses = Net income or loss b. Sales - cost of goods sold - all expenses = Net income or loss c. Beginning inventory + purchases - ending inventory = Cost of goods sold d. Sales - sales discount - sales returns = Net sales 8. Regarding nominal and real accounts, which a statement is correct: a. Nominal accounts will be carried forward to coming periods whereas real accounts will be closed in the profit and loss account at the period end b. Real accounts will be carried forward to coming periods whereas nominal accounts will be closed in the profit and loss account at the period end c. Both real accounts and nominal accounts will be closed in the profit and loss account at the period end d. Both Real accounts and nominal accounts will be carried forward to coming periods 9. Which of the following statements is correct regarding current assets items: a. Cash, receivables, creditors, inventory, and prepaid expenses b. Cash, receivables, bank loans, inventory, and prepaid expenses C. Cash, receivables, inventory, and short term investments d. Cash, receivables, inventory, stockholders' equity and prepaid expenses 10. According to revenue recognition principle, revenue will be recognized: a. When the company receives cash or cheque for the sales b. When the company pays cash or cheque for the purchase c. When the company delivers goods or provides services for the clients d. When the company receives goods or services from the suppliers 6. In cash base accounting, companies recognize: a. Expenses when paid, and revenues when received b. Expenses when paid, and revenues when earned c. Expenses when used, and revenues when received d. Expenses when used, and revenues when earned 7. The main equation in the income statement is: a. Gross income-administrative and selling expenses = Net income or loss b. Sales - cost of goods sold - all expenses = Net income or loss c. Beginning inventory + purchases - ending inventory = Cost of goods sold d. Sales - sales discount - sales returns = Net sales 8. Regarding nominal and real accounts, which a statement is correct: a. Nominal accounts will be carried forward to coming periods whereas real accounts will be closed in the profit and loss account at the period end b. Real accounts will be carried forward to coming periods whereas nominal accounts will be closed in the profit and loss account at the period end c. Both real accounts and nominal accounts will be closed in the profit and loss account at the period end d. Both Real accounts and nominal accounts will be carried forward to coming periods 9. Which of the following statements is correct regarding current assets items: a. Cash, receivables, creditors, inventory, and prepaid expenses b. Cash, receivables, bank loans, inventory, and prepaid expenses C. Cash, receivables, inventory, and short term investments d. Cash, receivables, inventory, stockholders' equity and prepaid expenses 10. According to revenue recognition principle, revenue will be recognized: a. When the company receives cash or cheque for the sales b. When the company pays cash or cheque for the purchase c. When the company delivers goods or provides services for the clients d. When the company receives goods or services from the suppliers
