ACC 201 Exam 2024- Questions with 100% Correct Verified Answers
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Course
ACC 201
Institution
ACC 201
Revenue Recognition Principle - Answer Recognize revenue GENERALLY when you
deliver a product or service. For example, if someone pays you $1000 in advance for 100
hours tutoring them, you can't report this officially as revenue on the income statement
until you start the tutoring. Initially, th...
ACC 201 Exam 2024- Questions with 100%
Correct Verified Answers
Revenue Recognition Principle - Answer Recognize revenue GENERALLY when you
deliver a product or service. For example, if someone pays you $1000 in advance for 100
hours tutoring them, you can't report this officially as revenue on the income statement
until you start the tutoring. Initially, the company will call this a liability until it delivers
the product or service even if cash has been received. The title of this liability is either
Unearned Revenue or Deferred Revenue. Each time you tutor an hour, you would
recognize $10 dollars as revenue and reduce your liability by $10.
By the same token, if a company performs a service or delivers a product, it can
recognize the money it is owed revenue EVEN if the customer has not yet paid cash for
it.
Shareholders' equity is affected by only one of the following: - Answer 1. Sell stock of
the company to raise money.
2. Record income or loss
3. Pay dividends
If not, then shareholder's equity is not affected
Ex. When you first receive $1000 in advance for tutoring you haven't done yet,
shareholder's equity is not because you haven't called any of it revenue so there is no
income yet.
Profit margin - Answer The amount by which revenue from sales exceeds costs in a
business
, Typically, if a company owes salaries to its employees, it must record a liability. When
the salaries are actually paid, that liability is eliminated. - Answer
3 primary sections of the cash flow statement of a company: - Answer Cash flows from
operations, financing, and investing
Accruals vs Deferrals - Answer Transaction in which the revenue has been earned or the
expense has been incurred, but no cash has been exchanged.
Transaction in which the cash is exchanged before the revenue has been earned or the
expense has been incurred.
Ending Retained Earnings = - Answer Beginning Retained Earnings + Net Income -
Dividends
Remember that if there is a loss then net income is negative.
Accumulated Depreciation - Answer TOTAL Depreciation to date
An entrepreneur contributes his own money to start a new business - Answer Financing
The business buys a machine - Answer Investing
The business purchases inventory - Answer Operating
The business sells inventory to customers - Answer Operating
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