Quiz Ch 03 – T/F The Significance of the Revenue Principle in Accounting
Financial Accounting
Thomas, Tietz, and Harrison
12th Edition
The revenue principle requires revenue to be recognized when cash is received in the same period.
The revenue principle requires revenue to be recognized when cash is received in the same period.
The time-period concept requires monthly accounting information reporting in financial statements.
Cash-basis accounting better reflects the time-period concept and revenue principle.
When the current ratio is below 1.0, it indicates that current liabilities are greater than current assets.
Expenses represent the costs of assets consumed and liabilities incurred in generating revenue.
Liquidity refers to the speed of converting an asset into cash.
The company managers are worried about the impact of specific transactions on the ratios utilized in loan contracts.
The revenue principle governs revenue recognition and amount.
The unadjusted trial balance is not yet prepared for the company’s financial statement preparation.
Failure to record an adjustment for earned deferred revenue by the end of the current period will result in an understatement of net income.