14. The rule that (1) requires revenue to be recognized at the time it is earned

Question

14. The rule that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of asset associated with revenue to be in a form other than cash, and (3) measures the amount of revenue as the cas plus the cash equivalent value of any noncash assets received from customers in exchange for goods or servi is called the: A. Going-concern assumption. B. Cost principle. C. Revenue recognition principle. D. Objectivity principle. E. Business entity assumption. 15.The difference between a company's assets and its liabilities, or net assets is: A. Net income. B. Expense. C. Equity D. Revenue. E. Net loss. 16. Creditors' claims on the assets of a company are called: A. Net losses. B. Expenses. C. Revenues. D. Equity 17. Decreases in equity that represent costs of assets or services used to earn revenues are called: B. Equit E. Liabilities. A. Liabilities C. Withdrawals D. Expenses. E. Owner's Investment. 18. Revenues are: A. The same as net income. B. The excess of expenses over assets. C. Resources owned or controlled by a company D. The increase in equity from a company's earning activities. E. The costs of assets or services used 19. The financial statement that reports whether the business earned a profit and also lists the revenues an

Explanation / Answer

Answer 14: C

Revenue recognition principle states three guidelines (1) requires revenue to be recognized at the time it is earned, following the accrual system of accounting, (2) recognizes assets other than cash in relation to revenue, and (3) measures the value of any noncash assets received from customers.

Answer 15: C

The accounting equation states as below:

Assets=Liabilities + Equity

So,

Assets - Liabilities = Equity

Answer 16: E

Since the company needs to pay to Creditors. Their claims become the liability of company.

Answer 17: D

The costs incurred to earn revenue are called Expense

Answer 18: D

Revenue means the amount received or to be received by the company by selling its goods and services.

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