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WorksheetsChapter 5 - Part 1
Total questions: 21
Worksheet time: 11mins
Which is NOT TRUE about Cash Basis Accounting?
Records only transactions involving cash.
Revenues are recognized when cash is received.
Expenses are recognized when cash is paid.
It complies with Generally Accepted Accounting Principles (GAAP).
Which is TRUE about Accrual Basis Accounting?
It records transactions in the periods in which the events occur no matter whether it is cash or on account.
Revenues are recognized when cash is received.
Expenses are recognized when cash is paid.
It did not comply with Generally Accepted Accounting Principles (GAAP).
Criterias to recognize revenues based on the Revenue Recognition principle are...
There is a change of ownership/title.
Service has been given/performed or rendered.
Buyers are willing to pay.
Buyers are able to pay.
Goods have been delivered or sold.
Select non-operational revenues of a business; either merchandise or service company.
Sales
Service Revenue
Interest Revenue
Dividend Revenue
Select operational expenses of a business; either merchandise or service company.
Salaries Expense,
Interest Expense.
Advertising Expense
Insurance Expense.
Utilities Expense.
Expenses are the cost of services or the cost of goods used to generate revenue.
TRUE
FALSE
Which is NOT TRUE about 'revenue expenditure?
Revenue expenditure decreases the business profit.
The benefit from revenue expenditure is received in the current period and sometimes recurring.
Revenue expenditure refers to the cost of acquiring/buying fixed assets
Revenue expenditures are reported in the Statement of Comprehensive Income
Which is TRUE about 'capital expenditure'?
Capital expenditure decreases the business profit.
The benefit from capital expenditure is recurring and for the current period only.
Capital expenditure improves the efficiency or substantial working life of the fixed asset.
Capital expenditures are reported in the Statement of Comprehensive Income
Which of the following is in accordance with Generally Accepted Accounting Principles?
Accrual-basis accounting
Cash-basis accounting
Both accrual-basis and cash-basis accounting
Neither accrual-basis nor cash-basis accounting
Which of the following is Revenue Expenditure?
Painting a premise while under construction
Painting of premises after 2 years
Seat covers for a new car
Purchase of furniture for office
Which of the following is NOT a capital expenditure for a cloth merchant?
Shop Rent
Motor Van
Construction of shelves in the shop
Office furniture
Which is NOT a revenue expenditure
Cost of ink cartridges
Purchase of printing paper
Purchase of a printer
Cost of printer maintenance
Which of the following is the best explanation of Capital expenditure?
Amount spent on purchase of fixed assets
Amount invested by the owner
Amount spent on running the day to day working of the business
Amount spent on maintenance of machinery
Expenditures relating to the acquisition of non-current assets are treated as
capital expenditure
revenue expenditure
expenses
revenue
Expenditures for the maintenance of non-current assets are treated as
revenue expenditure
capital expenditure
revenue
expenses
Below are the examples of capital expenditure EXCEPT for
Legal costs
Installation costs
Costs to acquire non-current assets
Fuel for motor vehicles
Below are the examples for revenue expenditure EXCEPT for
Repairs of motor vehicle
Depreciation of non-current assets
Installation costs
Motor vehicle insurance
The capital expenditure will increase the value of the non-current assets in the
Statements of Financial Position.
Statements of Profit and Loss.
Accounting Equations.
Special Journal
Expenditures for the extensions or additions to buildings of non-current assets are treated as
revenue expenditure
capital expenditure
revenue
expenses
The revenue expenditure will increase the value of the net income in the
Statements of Financial Position.
Statements of Profit and Loss.
Accounting Equations.
General Journal
The revenue expenditure will increase the value of the net income in the
Statements of Financial Position.
Statements of Profit and Loss.
Accounting Equations.
Trial Balance.
