Operating risks - please choose one

1) include variability in sales from changing economic conditions (cyclicality risk)

2) include variability in sales from short product life cycles (because of technological change or changes in consumer taste)

3 include variability of earnings that arises when the firm has a high proportion of fixed costs that do not change as sales change

4 all of the above

5 none of the above

Julia Corporation purchased an insurance policy for three years beginning January 1, Year 2, and recorded the $6,000 premium in the Prepaid Insurance account. What adjusting entry is required to reflect the proper balances, in the insurance-related accounts at year-end, on December 31, Year 2?

please choose the correct answer

Insurance Expense2,000Prepaid Insurance2,000Prepaid Insurance2,000Insurance Expense2,000Insurance Expense4,000Prepaid Insurance4,000Prepaid Insurance4,000Insurance Expense4,000Insurance Expense6,000Prepaid Insurance6,000

Question ? Which of the following is not true?

1) Net income or profit for a period is the difference between revenues from selling goods and services and the expenses incurred to generate those revenues, plus some gains or losses of the period.

2) If the expenses plus losses exceed the revenues plus gains, the result is a net loss.

3) U.S. GAAP and IFRS require the accrual basis of accounting, which detaches the recognition of revenue from the receipt of cash.

4) A seller recognizes revenues when it has performed all, or nearly all, of its obligations to the customer and when it has received cash or an asset that is convertible to cash.

5) The firm recognizes and reports expenses that have a causal link with revenues, such as cost of sales, in the next accounting period.