13. Morgan’s Accounting Secrets should record revenue if it follows accrual basi

Question

13. Morgan’s Accounting Secrets should record revenue if it follows accrual basis accounting when… A) Services are performed, even though cash may be received at a later date B) Cash is received after the service is performed C) Services are being performed D) Cash is received, either prior to, at the time of, or after the services are performed

14. Following are the month's account balances for Erik, Inc., before preparing the trial balance. Accounts Payable $7,500 Revenue 5,750 Cash 4,500 Expenses 5,500 Furniture 3,000 Accounts Receivable 12,000 Common Stock ??? Notes Payable 6,500 What amount should be shown for Common Stock on Erik, Inc.’s trial balance? A) $16,750 B) $5,250 C) ($6,750) D) $3,000

Explanation / Answer

13) In accural basis of accounting revenue should be record when services are performed even though cash may be received at a later date.

so answer is a) Services are performed, even though cash may be received at a later date

14) Assets = 19500

Liabilities = 14000

Retained earnings = 250

Common stock = (19500-14000-250) = 5250

so answer is b) $5250

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