Exam 3: Operating Decisions and the Income Statement

Colby Corporation has provided the following information: Operating revenues were $199,700. Operating expenses were $111,000. Interest expense was $9,200. Gain from sale of plant and equipment was $3,300. Dividend payments to Colby's stockholders were $7,700. Income tax expense was $36,000. How much was Colby's net income?

Which of the following statements is false?

Which of the following describes the transaction resulting in a journal entry with a debit to Salaries payable and a credit to Cash?

On December 31,2010,Avery Corporation paid $10,000 for next year's insurance policy.This transaction should be recorded as follows by Avery:

Which of the following best describes the operating cycle?

The total asset turnover ratio measures sales dollars generated per dollar of assets and is a measure of efficient management of assets.

Which of the following statements is correct?

Smith Corporation has provided the following information: Cash sales totaled $125,000. Credit sales totaled $279,000. Cash collections from customers for services yet to be provided totaled $38,000. An $11,000 gain from the sale of plant and equipment occurred. Interest income totaled $7,700. How much were Smith's operating revenues?

The matching principle requires expenses to be recorded on the income statement when incurred in generating revenues.

Under accrual accounting,interest expense would be recognized on the income statement when the interest has accrued with the passage of time even though cash has not been paid.

The revenue principle requires four conditions to be met.Which of the following is one of the four conditions?

Mama June Pizza Company determined that dough,sauce,cheese and other ingredients costing $8,700 were used to make pizzas during July.Which of the following statements is false with respect to the use of the ingredients?

Which of the following would lengthen the operating cycle?

The time period assumption implies that the life of a business entity can be reported in time periods such as quarters and years.

Which of the following is correct when land costing $20,000 is sold for $29,000? The land was a component of plant and equipment on the balance sheet.

Which of the following statements is false?

McNeil Company owed its employees for services performed and recorded a liability for the wages owed the employees.Which of the following correctly describes the impact on the financial statements when the employee wages are subsequently paid?

Which of the following transactions would not be reported as cash flow from operations on a cash flow statement?

Which of the following is not a proper application of the revenue principle?

Which of the following journal entries is prepared when a customer pays cash subsequent to delivery of goods or services?