episode 08 exercise 01

Part 1

In this section, you'll find a number of questions and activities. After you've made your selections, click on the "How did I do?" button to view the correct answers and explanations for the questions.

The following exercises will test your understanding of the revenue recognition and matching principles.

1.	CanGo's existing products include customizable CDs, which customers can order online with a credit card. As soon as an order is received, CanGo can include it in income.


2.	The amount of revenue that CanGo records for the sale of a book is dependent on the amount of cash that CanGo receives.


3.	The matching principle requires that CanGo include on the income statement all revenues related to the expenses shown on that statement.


4.	If CanGo has no revenues for a period, the matching principle provides that it should not show any expenses for that period.


5.	If CanGo correctly matches revenues and expenses, it will always have zero net income.

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