Exam 3: The Income Statement

Daube Company's operations for the month of July are summarized as follows: A.Provided $10,000 of services on account. B.Received $8,000 cash from customers for services provided in July. C.Received $2,000 cash for services to be provided in August. D.Received $6,000 cash from customers on account for services provided in June. E.Paid June's warehouse rental bill on account in the amount of $2,000. F.Received July's warehouse rental bill of $3,000;set it aside to be recorded at a later date. Required: a.Determine the net income for July using the cash basis of accounting. b.Determine the net income for July using the accrual basis of accounting.

Which of the following accounts does not have a normal credit balance?

Which of the following statements about net profit margin is not correct?

Dividing the long life of a company into shorter periods such as months,quarters,or years for reporting purposes is called the:

Receiving cash from a customer for payment on account for a sale that was recorded previously will:

Which of the following would appear in the debit column on the unadjusted trial balance?

Which of the following groups of accounts contains only those that normally have credit balances?

Somerdale Corp.received an order from a customer on November 10.It manufactured the ordered items on November 15,shipped the goods on November 17,and received payment on December 2.Under the accrual basis of accounting,Somerdale should record revenue on:

During June,the Grass Is Greener Company mows 100 lawns a week;the company bills customers and full payment is due by July 15.The company uses the accrual basis of accounting.How will these events affect the company's financial statements?

Your company contracted for a 30-second commercial (an advertisement)that aired during the Super Bowl at a cost of $1.2 million.It is legally obligated to pay for the commercial,but has not yet done so.How is your company's balance sheet affected on the day the commercial aired?

The following information is available from the most recent financial statements of the Carolyn Co.: Total assets 400,000 Net income 60,000 Average total liabilities 200,000 Sales revenue 750,000 Total liabilities 250,000 Average total assets 350,000 What is the company's net profit margin?

Quartz Instruments had Retained Earnings of $145,000 at December 31,2018.Net income for 2019 was $90,000,and dividends for 2019 were $30,000.What amount of Retained Earnings should be reported at December 31,2019?

If the cash is received before the related goods or services are delivered,which of the following will be recorded?

Net income is based on estimates.

Which of the following statements about revenues and expenses is correct?

Which of the following items is reported on the income statement as an expense?

The basic accounting equation may be expanded to include the income statement effects of operating activities.Which of the statements below is correct regarding the expanded accounting equation?

During the year,Sand,Inc.had $120,000 in revenues,$48,000 in expenses,and paid $3,600 in dividends.Net income equals:

Which of the following statements about accrual basis accounting is not correct?

In accordance with the expense recognition principle,expenses are recorded in the period when the: