Which of the following is true about accrual basis accounting and cash basis accounting?

A. Accrual basis accounting provides a better measure of operating performance than does cash basis accounting

B. GAAP does not require accrual basis accounting be used for external reports.

C. Net Income is generally larger under accrual basis accounting than cash basis accounting.

D. Accrual basis accounting and cash basis accounting will always produce the same amount of net income.

In January, the Caribbean Dream Resort books and accepts a cash payment for $32,000 for vacation services to be provided during spring break in March. The $32,000 would be recorded during January as a:

A. debit to Prepaid Expenses and a credit to Service Revenue.

B. debit to Accounts Payable and a credit to Service Revenue.

C. debit to Accounts Receivable and a credit to Service Revenue.

D. debit to Cash and a credit to Unearned Revenue.

Which of the following is an operating activity?

A. Repaying a bank loan.

B. Paying a dividend to owners.

C. Paying for inventory to be offered for sale.

D. Purchasing a new building.

Net Income refers to:

A. The difference between what is owned and what is owed at a point in time.

B. The change in the value of the company during a period.

C. The difference between what was earned and the costs incurred during a period.

D. The difference between the cash received and the cash paid out during a period.

Melody's Piano School operations for the month of May are summarized in the following three transactions: Provided $500 of instruction to students. Of the $500 of instruction provided in May, $400 is collected in cash, and an additional $300 is collected for lessons provided in April. Paid April's piano rental bill of $100. Received May's bill of $150 but did not pay. What is Melody's Net Income for May using the accrual basis of accounting?

A. $300

B. $400

C. $600

D. $350

The Expense Recognition (Matching) principle indicates

A. where expenses should be presented on the income statement.

B. how expenses should be split between the income statement and the balance sheet

C. the ordering of current assets and current liabilities on the balance sheet.

D. when costs are recognized as expenses on the income statement.

The following activities occurred during the current year, 2013, for the Maverick Law Firm. - On February 1, 2013, received cash of $5,000 from clients in payment of their accounts from 2012. - In 2013, received cash of $13,000 for law services rendered in 2013. - At the end of 2013, billed customers $4,000 for services rendered in 2013. This amount was unpaid as of the end of the year. - In November of 2013, received cash of $2,000 from clients as a deposit on law services to be performed in 2014. Which of the following statements is TRUE about the activities for Maverick Law Firm for 2013?

A. The $4,000 billed to clients for services rendered this year and unpaid as of December 31 will be reported on the Balance Sheet at December 31 as Accounts Payable.

B. If Accounts receivable prior to February 1, 2013 was $25,000, the amount of Accounts Receivable to be reported on the Balance Sheet at December 31, 2013 will be $24,000.

C. The $2,000 received from clients for law services to be performed next year will be reported as revenue on the Income Statement this year since cash was received.

D. The $5,000 received this year from clients in payment of their accounts will be reported on the Income Statement of 2013 as Revenue.