1) Business pays cash to settle its phone bill. Describe how would this be recorded?
a) Increase assets (cash) and decrease retained earnings (phone expense
b) Increase assets (cash) and increase retained earnings (phone expense).
c) Decrease assets (cash) and increase retained earnings (phone expense).
d) Decrease assets (cash) and decrease retained earnings (phone expense).
2) Jasmine Inc. given services during November 2004 and thus earned revenues of $200,000. Though, Jasmine collected only $95,000 of this amount. In the same time period, Jasmine acquired $98,000 of expenses, of which all but $8,000 was paid. By using cash basis accounting, determine net income (loss) for period?
a) $5,000
b) $87,000
c) $3,000
d) $102,000
3) Utility bill was received on October 31, 2004, for services received in October 2004. Bill was paid in November 2004. Under the accumulation basis of accounting, when would utility expense be recorded?
a) Not recorded at all
b) In November.
c) In October.
d) When it was paid.