Acct 2311 Ch9

GRADED: 100 

1. The first caption in most income statements in annual reports is: 

A. gross sales.

**B. net sales.

C. earned revenues.

D. sales, less sales returns and allowances.

2. Gains differ from revenues because gains: 

**A. are not a result of the entity's ongoing, central operations.

B. do not have to be realized.

C. are reported as income from operating activities.

D. do not involve any offsetting costs or expenses.

3. Under most circumstances, in order to recognize revenue: 

A. cash must have been received.

B. the entity must expect to receive cash in the future.

C. the entity must have paid for all expenses incurred in generating the revenue.

**D. the revenue must be realized or realizable, and earned.

4. The concept of matching revenue and expense refers to the fact that: 

A. expenses for a period equal the revenues for the period.

**B. all costs incurred in the process of earning revenue during a period are recorded as an expense in that period.

C. all cash disbursements during a period are subtracted from all cash receipts during the period.

D. costs incurred in the process of earning revenue during a period are deferred and expensed in a future period.

5. Most entities satisfy the accounting criteria for recognizing revenue when: 

A. an order is received from a customer.

B. cash is received from a customer.

C. an unearned revenue account is credited.

**D. a product is delivered or a service is provided.

6. Most entities satisfy the accounting criteria for recognizing an expense when: 

A. a commitment is made to purchase a product or service.

B. cash is paid to a supplier.

**C. a cost is incurred in the revenue generating process.

D. a dividend is paid to stockholders.

7. The gross profit ratio is useful to the manager for each of the following purposes except that: 

A. it can be used to determine the selling price to set for an item.

B. it can be used to estimate the...