Application of generally accepted accounting principles requires that the accrua

Question

Application of generally accepted accounting principles requires that the accrual basis of accounting be used for reporting revenues and expenses on the income statement. The revenue realization principle recognizes revenue when the goods or services are provided, regardless of the timing of the cash collection from customers. Selling inventory to a customer on account results in an increase in both assets and revenues. Cash received prior to the providing of the goods or service results in an increase in both assets and liabilities. Reporting revenues on the income statement that were previously reported as unearned revenues on the balance sheet results in a decrease in liabilities and an increase in net income, retained earnings, and stockholders' equity. An income statement with each line divided by net sales and shown as a percentage is called a common statement. The net profit margin ratio is a measure of how much profit was created per sales dollar.

Explanation / Answer

9) true

10) false

11)false .becoz selling inventory decreses but cash increses so in assets no change is made

12) true

13)false

14)true

15)true

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