AFE Quiz 16: Revenues – Accounting for Everyone

Which of the following best defines revenue?

The increase in assets from selling goods or services
The decrease in liabilities
The owner’s investment in the business
The amount owed to suppliers

Revenue is typically recognized in accounting when:

Cash is received
The sale is made or the service is performed
An invoice is sent
Expenses are paid

Which of the following is NOT considered revenue?

Sales of products
Service fees earned
Owner’s capital contribution
Interest income

On which financial statement is revenue primarily reported?

Balance Sheet
Income Statement
Statement of Owner’s Equity
Statement of Cash Flows

Which of the following accounts is a contra-revenue account?

Sales Revenue
Sales Returns and Allowances
Service Revenue
Interest Revenue

Which of the following increases revenue?

Earning service fees
Paying off a liability
Borrowing money from a bank
Owner withdrawals

What is the normal balance of a revenue account?

Debit
Credit
Debit and Credit
None of the above

Which of the following transactions would NOT result in revenue recognition?

Selling merchandise to a customer
Performing services for a client
Borrowing money from a bank
Earning interest on a bank account

Which of the following is TRUE about unearned revenue?

It is recognized as revenue when received
It is a liability until the service is performed
It is an asset
It increases equity immediately

Which of the following would be classified as revenue?

Sale of inventory
Payment of an account payable
Purchase of equipment
Owner’s withdrawal