Which of the following WILL NOT result in an increase in revenues? a) sale of go

Question

Which of the following WILL NOT result in an increase in revenues?

a) sale of goods on credit

b) Sales of services for cash

c) Accrued interest on money in a bank account

d) Capital contributed by an owner

Which of the following is an example of a deferral?

a) Interest expense has been incurred but has not yet been paid

b) a client pays for services before they are performed

c) interest income is recorded before payment is received

d) revenue has been earned but yet collected

Closing entries

a) decrease the balance of retained earnings

b) either increase or decrease the balance of retained earnings

c) increase the balance of retained earnings

d) not affect retained earnings

Which of the following would NOT be classified as a current asset

a) special investment fund to purchase land

b) inventory

c) office supplies

d) prepaid rent

Presenting all important information to users of financial statements most clearly follows the convention of

a) cost benefit

b) conservatism

c) full disclosure

d) materiality

What criteria or test is used to determine whether an asset or a liability should be classified as current or long term?

Explanation / Answer

Part (6) :

Criteria for Assets : Whether their benefit lasts for one year or one Operating cycle or more as the case may be.

In case it is less than one year it's a current Asset else it's a Long term Asset.

Criteria fof Liabilites : Whether the obligation thereon shall be payable within one year or one operating cycle. In case it is less than one year it's a current Liability else it's a Long term Liability.

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