Fundamentals of Financial Accounting 5Th Canadian Edition By Fred Phillips -Test Bank

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Sample Test

Chapter 03

The Income Statement

True / False Questions

1. Revenues come solely from selling a company’s goods or services.
FALSE

Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 03-01 Describe common operating transactions and select appropriate income statement account titles.
Topic: 03-03 Revenues

2. Net income of a company is the same as the amount of cash flow generated by the business during the period.
FALSE

Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: Easy
Learning Objective: 03-05 Evaluate net profit margin; but beware of income statement limitations.
Topic: 03-15 Income Statement Limitations

3. Cash basis accounting measures financial performance very well when a business sells its customers on account.
FALSE

Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 03-01 Describe common operating transactions and select appropriate income statement account titles.
Topic: 03-06 Cash Basis Accounting

4. If expenses grow faster than revenues compare to the previous period, the net income will increase.
FALSE

Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: Medium
Learning Objective: 03-01 Describe common operating transactions and select appropriate income statement account titles.
Topic: 03-02 Income Statement Accounts

5. Accrual basis of accounting is the only acceptable method for external reporting of financial statements under both ASPE and IFRS.
TRUE

Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 03-02 Explain and apply the revenue and expense recognition principles.
Topic: 03-15 Income Statement Limitations

6. When a company uses it resources to generate revenues during a period it records an expense.
TRUE

7. If payment is received at the same time a service is produced and sold, there is no difference between how cash and accrual accounting record the transaction.
TRUE

Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: Easy
Learning Objective: 03-02 Explain and apply the revenue and expense recognition principles.
Topic: 03-07 Accrual Basis Accounting

8. The cash basis of accounting works best when a lengthy delay exists between the timing of cash flows and the underlying business activities to which they relate.
FALSE

Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: Medium
Learning Objective: 03-02 Explain and apply the revenue and expense recognition principles.
Topic: 03-06 Cash Basis Accounting

9. Using the accrual basis of accounting, if payment is received before delivery of a good or service, a liability is recorded at the time the payment is received.
TRUE

10. Using the accrual basis of accounting, if payment is received after delivery of a good or service, an asset is recorded at the time the good or service was delivered.
TRUE

11. GAAP (Generally Accepted Accounting Principles) requires the use of accrual basis of accounting for external financial reporting purposes.
TRUE

12. Deferred Revenue is a liability account.
TRUE

13. Both revenues and expenses typically have credit balances.
FALSE

Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 03-03 Analyze; record; and summarize the effects of operating transactions; using the accounting equation; journal entries; and T-accounts.
Topic: 03-10 The Expanded Accounting Equation

14. Revenues and expenses are considered assets and liabilities, respectively.
FALSE

15. When a business receives a payment on account from a customer, the total assets of the business are unchanged.
TRUE

Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: Medium
Learning Objective: 03-03 Analyze; record; and summarize the effects of operating transactions; using the accounting equation; journal entries; and T-accounts.
Topic: 03-08 Revenue Recognition Principle

16. An increase in net income does not affect Shareholders’ equity.
FALSE

Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: Easy
Learning Objective: 03-01 Describe common operating transactions and select appropriate income statement account titles.
Topic: 03-05 Net Income

17. Deferred Revenue is an alternative name for the Shareholders’ equity account typically known as Retained Earnings.
FALSE

18. Recording a Debit in an expense account will reduce expenses.
FALSE

19. All operating activities will increase a company’s resources.
FALSE

20. The total credits recorded in revenue accounts must equal the total debits recorded in expense accounts.
FALSE

21. When a business uses up its resources to generate revenues for the period, it reports an expense only when it pays for them.
FALSE

22. Across all revenue accounts, the total value of all debits must equal the total value of all credits.
FALSE

23. A trial balance is included in the full set of external financial statements, just like an income statement.
FALSE

Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 03-04 Prepare an unadjusted trial balance.
Topic: 03-12 Unadjusted Trial Balance

24. Corporate income taxes cannot be calculated until all adjustments are made to net income.
TRUE

Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 03-04 Prepare an unadjusted trial balance.
Topic: 03-12 Unadjusted Trial Balance

25. If number of debits equal number of credits in the unadjusted trial balance, you have made no errors in preparing and posting journal entries.
FALSE

Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 03-04 Prepare an unadjusted trial balance.
Topic: 03-12 Unadjusted Trial Balance

26. The balances for each account reported on an unadjusted trial balance are determined by adding the amounts on the “+” side and subtracting the amounts on the “-” side of each ledger or T-account.
TRUE

Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 03-04 Prepare an unadjusted trial balance.
Topic: 03-12 Unadjusted Trial Balance

27. During August, your company sells $10,000 of services that cost $8,000 to provide. You report the revenue in August and the expenses (that is, the costs incurred to provide those services) in September and October when they are paid. This is an acceptable accounting procedure.
FALSE

28. According to the Revenue Recognition Principle, a company should not record the revenue from a transaction until it is actually received in cash.
FALSE

29. To ensure revenue reporting is consistent over time, a business adopts a revenue recognition policy that defines the time at which they report revenues from providing goods or services to customers.
TRUE

30. The expense recognition principle requires that expenses be determined first and then revenues be “matched” to those expenses.
FALSE

31. An increase in deferred revenue would have an impact on the income of the company.
FALSE

32. Company’s net income is the sole determinant of its value for the period the net income is generated.
FALSE

Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 03-05 Evaluate net profit margin; but beware of income statement limitations.
Topic: 03-15 Income Statement Limitations

33. Operating cycle is the time period from buying raw material to provide goods and services to customers through to collecting cash from them.
TRUE

34. Net income for the accounting period will increase retained earnings account.
TRUE

35. Under IFRS and ASPE cash basis accounting can never be used for reporting.
FALSE

Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 03-02 Explain and apply the revenue and expense recognition principles.
Topic: 03-07 Accrual Basis Accounting

36. When cash is received, but no service is provided by the company, net income is zero under accrual accounting.
TRUE

37. Operating activities are the primary source of revenues and expenses
TRUE

38. Businesses adhere to roughly the same steps in the operating cycle, regardless of what industry they are in.
TRUE

39. The time period assumption refers to the accounting convention of using a calendar year, as the fiscal period.
FALSE

40. Revenue recognition conditions are generally met at the point of payment of goods and services
FALSE

41. Under accrual basis accounting, the expense recognition principle stipulates expenses are to be recorded in the same period in which cash is paid for them
FALSE

42. Prepaid Rent was incorrectly debited to rent expense, as a result the unadjusted trial balance will not balance.
FALSE

Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: Medium
Learning Objective: 03-04 Prepare an unadjusted trial balance.
Topic: 03-12 Unadjusted Trial Balance

43. Net profit margin indicates how much revenue is earned from each dollar of profit.
FALSE

44. Net income divided by net profit margin is equivalent to total revenue.
TRUE

Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: Medium
Learning Objective: 03-05 Evaluate net profit margin; but beware of income statement limitations.
Topic: 03-14 Net Profit Margin

Multiple Choice Questions

45. Which of the following is not an expense and would not show on income statement?
A.Paying for supplies.
B. Paying a dividend.
C. Paying for electricity used by production equipment.
D. Paying wages for production workers.

46. Which of the following represents a subtotal rather than an account?
A.Advertising Expense.
B. Sales Revenues.
C. Cost of Goods Sold.
D. Operating Income.

47. A toy manufacturer sells land for $180,000 that it bought four years ago for $320,000. This transaction, when recorded, would be:
A.an operating expense.
B. operating revenue.
C. a loss.
D. non-operating revenue.

48. Which of the following is an example of a non-operating expense?
A.Interest expense.
B. Rent expense.
C. Advertising expense.
D. Salaries and Wages Expense.

49. Operating income refers to:
A.operating revenue minus operating expenses.
B. revenue generated by day-to-day business activities.
C. gains minus losses.
D. the net income of the company during the relevant time period.

50. Pet Sitters, Inc., sold $27,000 of pet-care services that cost $19,000 to provide. The company also incurred $6,000 in income tax and interest expenses. Net income was:
A.$41,000.
B. $19,000.
C. $8,000.
D. $2,000.

Revenue – expenses = Net income, 27,000 – (19,000 + 6,000) = $2,000.

Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: Medium
Learning Objective: 03-01 Describe common operating transactions and select appropriate income statement account titles.
Topic: 03-02 Income Statement Accounts

51. An account that measures interest earned on investments might include which of the following terms in its title?
A.Gain.
B. Loss.
C. Revenue.
D. Expense.

52. Rogers Communications is a communications company, specializing in cable television operation, television program development, and other telecommunication services. Its financial statements show $37,666 in an account called “Deferred Subscriber Revenue,” which represents amounts that customers have paid in advance of receiving cable television and internet services. What type of account is this and on what statement is it reported?

	Type of Account	Financial Statement
A)	Asset	Balance Sheet
B)	Liability	Balance Sheet
C)	Revenue	Balance Sheet
D)	Revenue	Income Statement

1. Option A
B. Option B
C. Option C
D. Option D

53. Which of the following items is not a specific account in a company’s chart of accounts?
A.Income Tax Expense.
B. Sales Revenue.
C. Deferred Revenue.
D. Net Income.

54. An account that measures the amount of income taxes incurred might include which of the following terms in its title?
A.Gain.
B. Loss.
C. Revenue.
D. Expense.

55. When cash is paid before the expense is incurred to generate revenue, costs are stated as:
A.Prepaid (asset).
B. Payable (liability).
C. Receivable (asset).
D. Shareholders’ equity.

56. Guessco reported the following amounts on its income statement: total revenues, $31,500; interest expense, $300; net income, $1,600; income tax expense, $900; and operating income, $2,800. What was the amount of Guessco’s income before income tax expense?
A.$1,300.
B. $2,500.
C. $29,000.
D. $29,900.

57. During November 2017, Asler, Inc., performs consulting services. The client does not pay Asler until January 2018.
A.Using the accrual basis of accounting, the revenue is reported in January 2018
B. Using the cash basis of accounting, the revenue is reported in November 2017.
C. Using the accrual basis of accounting, the revenue is reported in November 2017.
D. Using the accrual basis of accounting, the revenue is reported when Asler’s expenses are paid.

58. The Fastbank Motorcycle Company (FMC) receives a $10 million order from dealers wanting to buy its most popular model on credit. No money changes hands. Due to excess demand, FMC cannot supply the motorcycles until next quarter. How will these events affect the balance sheet?
A.Accounts Receivable will increase by $10 million this quarter and Inventories will decrease next quarter.
B. Both Accounts Receivable and Accounts Payable will increase by $10 million this quarter.
C. Both Accounts Receivable and Shareholders’ Equity will increase by $10 million this quarter.
D. These events will not impact the balance sheet this quarter.

59. During June, The Grass Is Greener Company mows 100 lawns a week and is paid in July by those customers. The company uses the accrual basis of accounting. How will these events affect the company’s financial statements?
A.The income statement shows the effects of the transactions in June.
B. The income statement shows the effects of the transactions in July.
C. The balance sheet shows no effect from the transactions in June.
D. The transactions have no effect on the balance sheet.

60. During June, the Grass is Greener Company mows 100 lawns a week; the company was paid in advance during May by those customers. The company uses the accrual basis of accounting. How will these events affect the company’s financial statements?
A.The income statement shows the effects of the transactions in May.
B. The income statement shows the effects of the transactions in June.
C. The balance sheet shows no effect from the transactions in May.
D. The transactions have no effect on the balance sheet.

61. During April, the Grass is Greener Company buys and pays for a six-month supply of fertilizer in order to receive a bulk discount. The cost of fertilizer is recorded:
A.immediately as an expense.
B. as a liability, which will later be reduced as the fertilizer used.
C. partially as an expense and partially as a liability.
D. as an asset, which will later be reduced as the fertilizer is used.

62. Under IFRS, the following is not part of the revenue recognition principle:
A.promised goods or services have been transferred.
B. when control to the goods and services has not been transferred to the customer
C. the transaction price is determinable
D. the obligated performance is satisfied

63. Your company bought a 30-second advertisement that aired during the Stanley Cup finals at a cost of $1.2 million. It is legally obligated to pay for the ad but has not yet done so. How does the purchase and use of the ad time affect your company’s balance sheet?
A.It increases both assets and liabilities by $1.2 million.
B. It increases assets and decreases Shareholders’ equity by $1.2 million each.
C. It does not affect the balance sheet.
D. It increases liabilities and decreases Shareholders’ equity by $1.2 million each.

Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: Hard
Learning Objective: 03-02 Explain and apply the revenue and expense recognition principles.
Topic: 03-06 Cash Basis Accounting

64. Your company receives advance payment in October for services that are provided during November. Which of the following is true?
A.A liability is recorded in October; in November the liability is reduced and revenue is recorded.
B. Revenue is recorded in October and expenses are recorded in November.
C. An asset is recorded in October; in November, the asset is reduced and revenue is recorded.
D. Revenue and expenses are recorded in October.

65. Your company orders and receives goods in January, pays for them in February, sells them in March and is paid by customers in April. Using the accrual basis of accounting:
A.expenses are recorded in February and revenues are recorded in April.
B. expenses are recorded in February and revenues are recorded in March.
C. expenses and revenues are recorded in March.
D. expenses are recorded in January and revenues are recorded in April.

66. Which of the following is most likely to be reported as an accrued liability?
A.Supplies.
B. Wages Expense.
C. Prepaid Rent.
D. Property and Equipment.

67. When should a company recognize revenue under GAAP?
A.When delivery has occurred or services have been provided (rendered).
B. When the price is measurable.
C. When the promised performance has been satisfied.
D. All of the choices are necessary to recognize revenue.

68. Expenses
A.represent the costs that arise when a company sacrifices its resources during the accounting period.
B. are reported in the period in which they are incurred to generate revenue.
C. reduce Shareholders’ equity.
D. all of the choices.

69. Galvan Corporation (GC) capitalized a $20,000 automobile. Which of the following is true?
A.GC recorded a liability for $20,000.
B. GC recorded an asset for $20,000.
C. GC recorded an expense for $20,000.
D. GC recorded Contributed Capital for $20,000.

70. Company A receives $10,000 in advance this month for work to be performed next month. This month, the company should:
A.Debit Inventory $10,000 and credit Sales Revenue $10,000.
B. Debit Cash $10,000 and credit Deferred Revenue $10,000.
C. Debit Inventory $10,000 and credit Accounts Payable $10,000.
D. Debit Accounts Payable $10,000 and credit Cash $10,000.

71. A customer purchased $1,500 of services on credit two months ago and has just paid the bill. The receipt of the payment from the customer is recorded as a
A.debit to Cash and a credit to Accounts Receivable.
B. debit to Cash and a credit to Inventory.
C. debit to Expenses and a credit to Revenue.
D. debit to Accounts Receivable and a credit to Retained Earnings.

72. When a customer buys services on account, it should be recorded as:
A.a debit to Cash and a credit to Accounts Receivable.
B. a credit to Revenue and a debit to Accounts Receivable.
C. a credit to Deferred Revenue and a debit to Inventory.
D. a debit to Cash and a credit to Accounts Payable.

Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: Easy
Learning Objective: 03-03 Analyze; record; and summarize the effects of operating transactions; using the accounting equation; journal entries; and T-accounts.
Topic: 03-10 The Expanded Accounting Equation

73. Which of the following is a true statement?
A.Revenue accounts are a subset of assets, and expense accounts are a subset of liabilities.
B. Both revenue accounts and expense accounts are subsets of contributed capital.
C. Both revenue accounts and expense accounts are subsets of retained earnings.
D. Revenue accounts are a subset of cash, and expense accounts are a subset of accounts payable.

Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 03-03 Analyze; record; and summarize the effects of operating transactions; using the accounting equation; journal entries; and T-accounts.
Topic: 03-10 The Expanded Accounting Equation

74. Which of the following is true?
A.Credits increase both assets and liabilities.
B. Credits increase expenses and decrease liabilities.
C. Credits increase revenues and decrease expenses.
D. Credits decrease both assets and liabilities.

75. If a company provides a service and receives payment at the same time:
A.only one journal entry is needed.
B. Cash will be debited.
C. a revenue account will be increased with a credit.
D. all of the choices are correct.

76. During March, the Long Life Consulting Company provides $23,000 in consulting services of which $12,000 is immediately paid for and $11,000 is on account.
A.Cash increases $12,000, revenue increases $11,000, and Shareholders’ equity increases $23,000.
B. Cash increases $12,000, Accounts Receivable increases $11,000, and revenues increase $23,000.
C. Accounts Receivable increases $11,000, liabilities decrease $12,000, and Shareholders’ equity decreases $1,000.
D. Revenues increase $12,000, liabilities decrease $12,000, and Shareholders’ equity is unchanged.

Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: Medium
Learning Objective: 03-03 Analyze; record; and summarize the effects of operating transactions; using the accounting equation; journal entries; and T-accounts.
Topic: 03-10 The Expanded Accounting Equation

77. In October, your company prepays rent of $7,000 for November and December. Which of the following describes the effects of this transaction in October?
A.Assets decrease $7,000 and liabilities decrease $7,000.
B. Assets increase $7,000 and Shareholders’ equity increases $7,000.
C. There is no change to total assets, liabilities or Shareholders’ equity.
D. Liabilities decrease $7,000 and Shareholders’ equity increases $7,000.

78. Cansing Company collected $5,000 from a customer on account. What journal entry will Cansing record?
A.Debit Cash, credit Accounts Receivable.
B. Debit Cash, credit Revenue.
C. Debit Accounts Receivable, credit Revenue.
D. Debit Accounts Receivable, credit Cash.

Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: Medium
Learning Objective: 03-03 Analyze; record; and summarize the effects of operating transactions; using the accounting equation; journal entries; and T-accounts.
Topic: 03-10 The Expanded Accounting Equation

79. WestJet Corporation issued a $1,000 gift certificate. What journal entry will WestJet Corporation record?
A.Debit Cash, credit Sales Revenue.
B. Debit Cash, credit Deferred Revenue.
C. Debit Deferred Revenues, credit Cash.
D. Debit Accounts Receivable, credit Cash.

80. If a company is paid in full for services provided this month, how will the basic accounting equation be affected?
A.Liabilities will decrease.
B. Shareholders’ equity will increase as revenue is recorded.
C. Liabilities will increase.
D. Shareholders’ equity will increase as gains are recorded.

81. Your company received payment last month for a service that you provided this month. How will the business activity of the current month affect the basic accounting equation?
A.Assets will not change; liabilities (Deferred Revenue) will decrease; and Shareholders’ equity (Service Revenue) will increase.
B. Assets (Cash) will increase, liabilities (Deferred Revenue) will increase, and Shareholders’ equity will not change.
C. Assets (Cash) will increase, liabilities will not change, and Shareholders’ equity (Service Revenue) will increase.
D. Assets (Prepaid Expenses) will decrease, liabilities will not change, and Shareholders’ equity (Service Revenue) will increase.

82. Which of the following would eventually cause a reduction in retained earnings?
A.Interest earned on investment.
B. A decrease in deferred revenue.
C. An increase in prepaid utilities.
D. A loss on disposal of land.

Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: Hard
Learning Objective: 03-03 Analyze; record; and summarize the effects of operating transactions; using the accounting equation; journal entries; and T-accounts.
Topic: 03-10 The Expanded Accounting Equation

83. Customers paid $8,000 on their accounts. Which accounts are affected by this transaction?
A.Revenue and Retained Earnings increase $8,000.
B. Cash and Revenue increase $8,000. Liabilities and Expense increase $8,000.
C. Cash increases $8,000 and Accounts Receivable decreases $8,000. Revenue and Retained Earnings are unchanged.
D. Revenue and Retained Earnings decrease $8,000.

84. Sparkling Pools provides $1,000 of pool maintenance services during July and collects payment in August. The company performs $1,600 of pool maintenance services during July that were paid for in June. The company accepts an order to perform $500 of pool maintenance services in August and will be paid in the same month. Revenue should be credited for:
A.$1,600 in June, $1,000 in July, and $500 in August.
B. $1,600 in June, $0 in July, and $1,500 in August.
C. $0 in June, $1,600 in July, and $1,500 in August.
D. $0 in June, $2,600 in July, and $500 in August.

Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: Hard
Learning Objective: 03-03 Analyze; record; and summarize the effects of operating transactions; using the accounting equation; journal entries; and T-accounts.
Topic: 03-10 The Expanded Accounting Equation

85. Sparkling Pools received a bill for $1,200 for running newspaper ads during the last two weeks of July; the bill will be paid on August 1. Advertising expense should be:
A.credited for $1,200 in July.
B. credited for $1,200 in August.
C. debited for $1,200 in July.
D. debited for $1,200 in August.

86. This month, a company performed $517,000 of services and incurred total expenses of $438,000. If the company was paid in cash for all its services and paid cash for all its expenses, these transactions would cause:
A.revenues to increase $517,000, expenses to increase $438,000, and retained earnings to decrease $79,000.
B. cash increase $517,000, expenses to increase $438,000, and retained earnings to increase $79,000.
C. revenues to increase $517,000, expenses to increase $438,000, and cash to increase $79,000.
D. revenues to increase $79,000, expenses to increase $438,000, and cash to increase $517,000.

87. This month, Grass is Greener Lawn Service pays cash for $4,000 of grass fertilizer to be used two months from now. What journal entry will Grass is Greener record this month?
A.Debit cash for $4,000 and credit supplies expense for $4,000.
B. Debit supplies expense for $4,000 and credit accounts payable for $4,000.
C. Debit supplies for $4,000 and credit cash for $4,000.
D. Debit retained earnings for $4,000 and credit accounts payable for $4,000.

88. On the last day of the current month, a company paid $12,000 to its suppliers, of which $2,000 was for supplies received on the last day of the current month and $10,000 was for supplies received during the previous month. The $12,000 payment would be recorded as a:
A.$10,000 debit to Supplies, a $2,000 debit to Accounts Payable, and a $12,000 credit to Cash.
B. $12,000 debit to Supplies and a $12,000 credit to Cash.
C. $12,000 debit to Supplies Expense and a $12,000 credit to Cash.
D. $2,000 debit to Supplies, a $10,000 debit to Accounts Payable, and a $12,000 credit to Cash.

89. On the 15thof the month, a company receives $8,000 in payments from customers. $1,000 is for services performed on that day and the remaining is payment for services performed in the previous month. The $8,000 cash receipt would be recorded as a:
A.debit of $7,000 to Accounts Receivable, debit of $1,000 to Service Revenue, and a credit of $8,000 to Cash.
B. debit of $8,000 to Cash, a credit of $7,000 to Accounts Receivable, and a credit of $1,000 to Service Revenue.
C. debit of $7,000 to Accounts Receivable, a debit of $1,000 to Unearned Revenue, and a credit of $8,000 to Cash.
D. debit of $8,000 to Cash, debit of $1,000 to Service Revenue, and a credit of $7,000 to Accounts Receivable.

90. A customer orders a heavy duty machinery from Yukon Inc in October. Yukon manufactures it in November and ships it along with their bill in December and receives payment in January. If Yukon is to recognize revenue in January, they are following:
A.Credit basis accounting
B. Accrual-basis accounting
C. Cash basis accounting
D. Debit basis accounting

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