Multiple Choice Answers

ABN Company sold goods, receiving $10,000 in cash and $25,000 on credit. How much revenue should it record under the accrual basis of accounting?

a. $10,000
b. $35,000
c. $25,000
d. None at this time

Publicly held corporations are required to use the accrual basis of accounting.

True
False
Capital market stakeholders expect to receive a return on their investments proportionate to their degree of __________.

a. Stock
b. Investment
c. Profit
d. Risk

Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for the customer. What adjustment is required in the depositor’s accounts?

a. increase Notes Receivable; decrease Cash
b. increase Cash; increase Miscellaneous Income
c. increase Cash; decrease Notes Receivable
d. increase Accounts Receivable; decrease Cash

For EFG Co., the transaction “Payment of interest expense” would __________.

a. Increase the assets
b. Decrease the assets
c. Have no effect on the assets