Question 1

Which of the following journal entries correctly records a transaction where services were provided to a customer on account?

Accepted Answer

A)  Cash
$ \quad $Revenues 
B)  Unearned revenue
$ \quad $Revenues 
C)  Accounts receivable
$ \quad $$ \quad $Revenues 
D)  Revenues
$ \quad $Unearned revenues 
A)  Cash
$ \quad $Revenues 
B)  Unearned revenue
$ \quad $Revenues 
C)  Accounts receivable
$ \quad $$ \quad $Revenues 
D)  Revenues
$ \quad $Unearned revenues

Question 2

A gain resulting from the sale of plant and equipment does not create operating income on the income statement.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is correct?

Accepted Answer

A) Expense accounts result in decreases in net income and stockholders' equity and therefore have credit balances. 
B) Revenue accounts result in increases in net income and stockholders' equity and therefore have debit balances. 
C) Loss accounts result in decreases in net income and stockholders' equity and therefore have debit balances. 
D) Gain accounts result in increases in net income and stockholders' equity and therefore have debit balances. 
A) Expense accounts result in decreases in net income and stockholders' equity and therefore have credit balances. 
B) Revenue accounts result in increases in net income and stockholders' equity and therefore have debit balances. 
C) Loss accounts result in decreases in net income and stockholders' equity and therefore have debit balances. 
D) Gain accounts result in increases in net income and stockholders' equity and therefore have debit balances.

Question 4

Recording revenues on the income statement which were previously reported as unearned revenues on the balance sheet results in a decrease in liabilities and an increase in net income,retained earnings and stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 5

Salary expense is recognized on the income statement when the salaries are paid rather than when the employee provides the services.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following best describes the time period assumption?

Accepted Answer

A) It assumes we value a business as of the end of every month. 
B) It is the cutoff point for asset and liability recognition. 
C) It implies that financial statements are prepared at the end of a business entity's operating cycle. 
D) It assumes we divide the long life of a business into a series of shorter time periods for accounting and reporting purposes. 
A) It assumes we value a business as of the end of every month. 
B) It is the cutoff point for asset and liability recognition. 
C) It implies that financial statements are prepared at the end of a business entity's operating cycle. 
D) It assumes we divide the long life of a business into a series of shorter time periods for accounting and reporting purposes.

Question 7

Which of the following is an example of revenue or expense to be recognized in the current period's income statement?

Accepted Answer

A) Cash received from a client before the service is provided. 
B) Inventory being held by a retail store. 
C) Wages owed to employees who worked during the period. 
D) Cash collected from an accounts receivable. 
A) Cash received from a client before the service is provided. 
B) Inventory being held by a retail store. 
C) Wages owed to employees who worked during the period. 
D) Cash collected from an accounts receivable.

Question 8

Lantz Company has provided the following information:
 Cash sales totaled $255,000.
 Credit sales totaled $479,000.
 Cash collections from customers for services yet to be provided totaled $88,000.
 A $22,000 loss from the sale of plant and equipment occurred.
 Interest income was $7,700.
 Interest expense was $19,900.
 Cost of goods sold was $336,000.
Rent expense was $36,000.
 Salaries expense was $49,000.
Other operating expenses totaled $79,000.
How much was Lantz's income before income taxes?

Accepted Answer

A) $553,800 
B) $465,800 
C) $487,800 
D) $531,800 
A) $553,800 
B) $465,800 
C) $487,800 
D) $531,800

Question 9

Mama June Pizza Company sold land costing $39,000 for $51,000 cash.Which of the following statements concerning the land sale is correct?

Accepted Answer

A) The land account was credited for $51,000. 
B) The revenue account was debited for $51,000. 
C) Operating income increased $12,000. 
D) Income before income taxes increased $12,000. 
A) The land account was credited for $51,000. 
B) The revenue account was debited for $51,000. 
C) Operating income increased $12,000. 
D) Income before income taxes increased $12,000.

Question 10

Which of the following does not correctly describe the cash basis of accounting?

Accepted Answer

A) It is not accepted for external reporting purposes. 
B) Revenues are recognized when cash is collected from customers. 
C) Expenses are recognized when they are paid for. 
D) Cash payments for long-term assets are recognized as an expense at the time of payment. 
A) It is not accepted for external reporting purposes. 
B) Revenues are recognized when cash is collected from customers. 
C) Expenses are recognized when they are paid for. 
D) Cash payments for long-term assets are recognized as an expense at the time of payment.

Question 11

A company purchased $20,000 of inventory during February and will pay for it during March.Which of the following statements is false assuming the inventory was sold during March?

Accepted Answer

A) The company's accounts payable will include the $20,000 on the February month-end balance sheet. 
B) The statement of cash flows will report an operating cash outflow of $20,000 during March. 
C) The income statement will report cost of goods sold of $20,000 during February. 
D) The company's inventory will include the $20,000 on the February month-end balance sheet. 
A) The company's accounts payable will include the $20,000 on the February month-end balance sheet. 
B) The statement of cash flows will report an operating cash outflow of $20,000 during March. 
C) The income statement will report cost of goods sold of $20,000 during February. 
D) The company's inventory will include the $20,000 on the February month-end balance sheet.

Question 12

Describe transactions which have an impact on the statement of stockholders' equity.

Accepted Answer

Transactions that have an impact on the

Question 13

Describe the transaction which created the following journal entries (amounts omitted):
 1. Cash
Unearned revenue
2. Utilities expense
Utilities payable
3. Accounts receivable
Sales Revenue
4. Salaries expense
Cash
5. Unearned Revenue
Sales revenue

Accepted Answer

The transaction that created the followi

Question 14

The following information has been provided by Flatiron Company for the year ended December 31,2011:
 Net income was $71,000;
Income tax expense was $47,000;
 Dividends declared and paid totaled $7,500;
 Interest expense was $8,700;
 Loss on sale of plant assets was $15,000;
 Operating expenses totaled $91,000;
 Cash collected from customers was $220,000.
How much was Flatiron's operating income?

Accepted Answer

To calculate Flatiron Company's operatin

Question 15

The statement of stockholders' equity links the income statement to the balance sheet.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is correct?

Accepted Answer

A) Recording revenues results in an increase in assets or a decrease in liabilities. 
B) Recording revenues results in an increase in assets or a decrease in stockholders' equity. 
C) Recording expenses results in a decrease in assets or a decrease in liabilities. 
D) Recording expenses results in an increase in assets or an increase in liabilities. 
A) Recording revenues results in an increase in assets or a decrease in liabilities. 
B) Recording revenues results in an increase in assets or a decrease in stockholders' equity. 
C) Recording expenses results in a decrease in assets or a decrease in liabilities. 
D) Recording expenses results in an increase in assets or an increase in liabilities.

Question 17

A company receives a $50,000 cash deposit from a customer on October 15 but will not deliver the goods until November 20.Which of the following statements is true?

Accepted Answer

A) Cash will be reported on the statement of cash flows for the month of November. 
B) Revenue will be recorded and reported on the income statement for October. 
C) A liability will be reported on the balance sheet at the end of October. 
D) A prepaid asset will be reported on the balance sheet at the end of October. 
A) Cash will be reported on the statement of cash flows for the month of November. 
B) Revenue will be recorded and reported on the income statement for October. 
C) A liability will be reported on the balance sheet at the end of October. 
D) A prepaid asset will be reported on the balance sheet at the end of October.

Question 18

During 2010,Sensa Corporation incurred operating expenses amounting to $100,000 of which $75,000 was paid in cash; the balance will be paid during 2011.Which of the following is correct for the 2010 year-end balance sheet?

Accepted Answer

A) Stockholders' equity decreases $75,000 and assets decrease $75,000. 
B) Assets decrease $100,000 and stockholders' equity decreases $100,000. 
C) Assets decrease $100,000, liabilities increase $25,000, and stockholders' equity decreases $100,000. 
D) Stockholders' equity decreases $100,000, assets decrease $75,000, and liabilities increase $25,000. 
A) Stockholders' equity decreases $75,000 and assets decrease $75,000. 
B) Assets decrease $100,000 and stockholders' equity decreases $100,000. 
C) Assets decrease $100,000, liabilities increase $25,000, and stockholders' equity decreases $100,000. 
D) Stockholders' equity decreases $100,000, assets decrease $75,000, and liabilities increase $25,000.

Question 19

The following accounts for Carthage Enterprises,Inc.are listed randomly.Enter the number associated with each transaction to identify the accounts that would be used in the journal entry for each transaction given below. $$\begin{array} { l l l l } 
\text { 1. } & \text { Accounts payable } & 9 . & \text { Income taxes payable } \
\text { 2. } & \text { Accounts receivable } & 10 . & \text { Prepaid expenses } \
\text { 3. } & \text { Supplies } & 11 . & \text { Operating expenses } \
\text { 4. } & \text { Building } & 12 . & \text { Prepaid insurance } \
\text { 5. } & \text { Cash } & 13 . & \text { Retained earnings } \
6 . & \text { Contributed capital } & 14 . & \text { Service revenue } \
\text { 7. } & \text { Dividends } & 15 . & \text { Unearned revenue } \
8 . & \text { Income tax expense } & &
\end{array}$$

Accepted Answer

The answer of The following accounts for Carthage Enterprises,Inc.are listed...

Question 20

Purchasing a six-month insurance policy results in a debit to insurance expense and a credit to cash as of the date of purchase.

Accepted Answer

A) True 
 B)False

Which of the following journal entries correctly records a transaction where services were provided to a customer on account?

A gain resulting from the sale of plant and equipment does not create operating income on the income statement.

Which of the following statements is correct?

Recording revenues on the income statement which were previously reported as unearned revenues on the balance sheet results in a decrease in liabilities and an increase in net income,retained earnings and stockholders' equity.

Salary expense is recognized on the income statement when the salaries are paid rather than when the employee provides the services.

Which of the following best describes the time period assumption?

Which of the following is an example of revenue or expense to be recognized in the current period's income statement?

Mama June Pizza Company sold land costing $39,000 for $51,000 cash.Which of the following statements concerning the land sale is correct?

Which of the following does not correctly describe the cash basis of accounting?

A company purchased $20,000 of inventory during February and will pay for it during March.Which of the following statements is false assuming the inventory was sold during March?

Describe transactions which have an impact on the statement of stockholders' equity.

Describe the transaction which created the following journal entries (amounts omitted): 1. Cash Unearned revenue 2. Utilities expense Utilities payable 3. Accounts receivable Sales Revenue 4. Salaries expense Cash 5. Unearned Revenue Sales revenue

The statement of stockholders' equity links the income statement to the balance sheet.

Which of the following statements is correct?

A company receives a $50,000 cash deposit from a customer on October 15 but will not deliver the goods until November 20.Which of the following statements is true?

During 2010,Sensa Corporation incurred operating expenses amounting to $100,000 of which $75,000 was paid in cash; the balance will be paid during 2011.Which of the following is correct for the 2010 year-end balance sheet?

Purchasing a six-month insurance policy results in a debit to insurance expense and a credit to cash as of the date of purchase.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Balance Sheet

Adjustments,Financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Natural Resources; and Intangibles

Reporting and Interpreting Liabilities

Reporting and Interpreting Bonds

Reporting and Interpreting Owners Equity

Reporting and Interpreting Investments in Other Corporations

Statement of Cash Flows

Analyzing Financial Statements

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Exam 3: Operating Decisions and the Income Statement

Which of the following journal entries correctly records a transaction where services were provided to a customer on account?

A gain resulting from the sale of plant and equipment does not create operating income on the income statement.

Which of the following statements is correct?

Recording revenues on the income statement which were previously reported as unearned revenues on the balance sheet results in a decrease in liabilities and an increase in net income,retained earnings and stockholders' equity.

Salary expense is recognized on the income statement when the salaries are paid rather than when the employee provides the services.

Which of the following best describes the time period assumption?

Which of the following is an example of revenue or expense to be recognized in the current period's income statement?

Mama June Pizza Company sold land costing $39,000 for $51,000 cash.Which of the following statements concerning the land sale is correct?

Which of the following does not correctly describe the cash basis of accounting?

A company purchased $20,000 of inventory during February and will pay for it during March.Which of the following statements is false assuming the inventory was sold during March?

Describe transactions which have an impact on the statement of stockholders' equity.

Describe the transaction which created the following journal entries (amounts omitted): 1. Cash Unearned revenue 2. Utilities expense Utilities payable 3. Accounts receivable Sales Revenue 4. Salaries expense Cash 5. Unearned Revenue Sales revenue

The statement of stockholders' equity links the income statement to the balance sheet.

Which of the following statements is correct?

A company receives a $50,000 cash deposit from a customer on October 15 but will not deliver the goods until November 20.Which of the following statements is true?

During 2010,Sensa Corporation incurred operating expenses amounting to $100,000 of which $75,000 was paid in cash; the balance will be paid during 2011.Which of the following is correct for the 2010 year-end balance sheet?

Purchasing a six-month insurance policy results in a debit to insurance expense and a credit to cash as of the date of purchase.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Balance Sheet

Adjustments,Financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Natural Resources; and Intangibles

Reporting and Interpreting Liabilities

Reporting and Interpreting Bonds

Reporting and Interpreting Owners Equity

Reporting and Interpreting Investments in Other Corporations

Statement of Cash Flows

Analyzing Financial Statements

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