1 ultramega company collected 11 760 in may of 2012 for 4 months of service whic 380316

1.) Ultramega Company collected $11,760 in May of 2012 for 4 months of service which would take place from October of 2012 through January of 2013. The revenue reported from this transaction during 2012 would be (A) $8,820. (B) $0. (C) $2,840. (D) $11,760. 2.) On July 1, Runner’s Sports Store paid $10,000 to Corona Realty for 4 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by Runners Sports Store is (A) Debit Rent Expense, $2,500; Credit Prepaid Rent, $2,500. (B) Debit Rent Expense, $10,000; Credit Prepaid Rent, $10,000. (C) Debit Rent Expense, $10,000; Credit Prepaid Rent, $2,500. (D) Debit Prepaid Rent, $2,500; Credit Rent Expense, $2,500. 3.) Live Wire Hot Rod Shop follows the revenue recognition principle. Live Wire services a car on July 31. The customer picks up the vehicle on August 1 and mails the payment to Live Wire on August 5. Live Wire receives the check in the mail on August 6. When should Live Wire show that the revenue was earned? (A) August 1 (B) July 31 (C) August 6 (D) August 5 4.) In recording an accounting transaction in a double entry system (A) there must always be entries made on both sides of the accounting equation. (B) there must only be two accounts affected by any transaction. (C) the number of debit accounts must equal the number of credit accounts. (D) the amount of the debits must equal the amount of the credits. 5.) Revenues are (A) the cost of services used during the period. (B) the cost of assets consumed during the period. (C) gross increases in owner’s equity resulting from business activities. (D) actual or expected cash outflows. 6.) Communication of economic events is the part of the accounting process that involves (A) quantifying transactions into dollars and cents. (B) identifying economic events. (C) recording and classifying information. (D) preparing accounting reports.