Suppose that Robert Jones purchases a $100 gift card at Best Buy on December 24, 2013, and gives it to his wife, Mary Jones, on December 25, 2013. On January 3, 2014, Mary uses the card to purchase $100 worth of CDs. When do you think Best Buy should recognize revenue and why?
Accrual accounting is often considered superior to cash accounting. Why, then, were some people critical of China’s use of accrual accounting in this instance?
IFRS:
(a) uses accrual accounting.
(b) uses cash-basis accounting.
(c) allows revenue to be recognized when a customer makes an order.
(d) requires that revenue not be recognized until cash is received.
As a result of the revenue recognition project by the FASB and IASB:
(a) revenue recognition places more emphasis on when the performance obligation is satisfied.
(b) revenue recognition places more emphasis on when revenue is realized.
(c) revenue recognition places more emphasis on when expenses are incurred.
(d) revenue is no longer recorded unless cash has been received.
Which of the following is false?
(a) Under IFRS, the term income describes both revenues and gains.
(b) Under IFRS, the term expenses includes losses.
(c) Under IFRS, companies do not engage in the adjusting process.
(d) Under IFRS, revenue recognition fraud is a major issue.
Accrual-basis accounting:
(a) is optional under IFRS.
(b) results in companies recording transactions that change a company's financial statements in the period in which events occur.
(c) has been eliminated as a result of the IASB/FASB joint project on revenue recognition.
(d) is not consistent with the IASB conceptual framework.
The financial statements of Zetar plc are presented. Instructions for accessing and using the company"s complete annual report, including the notes to its financial statements, are also provided.
Instructions
Visit Zetar"s corporate website and answer the following questions from Zetar"s 2011 annual report.
(a) From the notes to the financial statements, how does the company determine the amount of revenue to record at the time of a sale?
(b) From the notes to the financial statements, how does the company determine whether a sale has occurred?
(c) Using the consolidated income statement and consolidated statement of financial position, identify items that may result in adjusting entries for deferrals.
(d) Using the consolidated income statement, identify two items that may result in adjusting entries for accruals.
ACT360 Assignment Module 2
Rented movie for 3500 1000 paid in cash and 2500 will be paid in the future
This exercise will provide you with examples of adjusting entries for the accrual of expenses and revenues.
The following information relates to the Yuppy Clothing Sales Corporation at the end of 2014. The accounting period is the calendar year. This is the company"s first year of operations. Employees are paid every Monday for the five-day work week ending on the prior Friday. Salaries amount to $2,400 per week. The accounting period ends on a Monday. On October 1, 2014, Yuppy borrowed $16,000 cash by signing a note payable due in one year at 8% interest. Interest is due when the principal is due. A note for $2,000 was received from a customer in a sales transaction on May 1, 2014. The note matures in one year and bears 12% interest per annum. Interest is due when the principal is due. A portion of Yuppy"s parking lot is used by executives of a neighboring company. A person pays $6 per day for each day"s use. The parking fees are due by the fifth business day following the month of use. The fees for December 2014 amount to $2,904.
Instructions
Prepare the necessary adjusting entries at December 31, 2014.
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