Exam 3: The Income Statement

A service company receives a check from a customer as partial payment of his account balance.This transaction does not involve the sale of additional services.How should the entry be recorded?

A company does not need to record the receipt of a bill for utilities used during this year if the company will not pay the bill until next year.

This month,a company performed $517,000 of services and incurred total expenses of $438,000.The company was paid in cash for all its services and paid cash for all its expenses.These transactions would cause:

Expenses are the costs of operating a business that are paid for in the period covered by the income statement.

Supplies are expensed when:

Match the term and the definition.There are more definitions than terms. -Accrual Basis

Blake,Inc.pays its employees once a month and records the expense at the time of payment.On September 30,Blake paid its employees $12,210 for work performed in September.The entry to record the payment includes a:

Match the term and the explanation.There are more definitions than terms. -Revenue Recognition Principle

Which of the following is an expense of this period?

Which of the following statements about revenue and expense accounts is correct?

In its first year of operations,Jetway Airlines incurred and paid Salaries Expense of $40 million.On December 31,it accrued an additional Salaries Expense of $2 million.What should Jetway report in the income statement and balance sheet for its first year ended December 31?

If an apartment leasing company receives the rent for January 2018 from a tenant in December 2017,this will be reported by the leasing company as:

Which of the following is an operating activity?

A company has total revenue of $759,000 and total expenses of $445,500.If the company understates sales by $13,500,what is the effect on the company's net profit margin?

Match the term and the definition.There are more definitions than terms. -Revenue Recognition Principle

Match the term and the explanation.There are more definitions than terms. -Prepaid Expense

A dance studio accepts $1,500 to provide a series of dance lessons to a youth group during the month of July.The studio decides to record the revenue in July.The studio incurs rent,utilities,and salaries expenses in July.The studio decides to record those expenses in August,when it pays for them.One or both of these decisions:

Which of the following statements about cash basis accounting and accrual basis accounting is correct?

During 2018,a company provided services for cash of $33,600 and services on credit of $24,000.The company collected accounts receivable of $12,800 and incurred operating expenses of $36,320,$22,400 of which were paid during the year.The amount of net income (loss)for the year is:

The following account balances are taken from the December 31,2018,financial statements of ABZ Advertising Company.The company uses accrual basis accounting. Advertising Revenue 46,482 Cash 41,516 Accounts Receivable 7,296 Interest Expense 2,299 Accounts Payable 5,000 Operating Expenses 37,460 Deferred Revenue 1,178 Equipment 18,048 Income Tax Expense 2,326 The following activities occurred in 2019: 1.Performed advertising services on account,$55,000. 2.Received cash payments on account,$10,400. 3.Received deposits from customers for advertising services to be performed in 2020,$2,500. 4.Made payments to suppliers on account,$5,000. 5.Incurred $45,000 of operating expenses;$39,000 was paid in cash and $6,000 was on account and unpaid as of the end of the year. What is the balance in the Cash account at December 31,2019?