Question 1

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 purchased for sale to customers. 
C) Wages owed to employees who worked during the period. 
D) Cash collected from an account receivable. 
A)  Cash received from a client before the service is provided. 
B)  Inventory purchased for sale to customers. 
C) Wages owed to employees who worked during the period. 
D) Cash collected from an account receivable.

Question 2

Which of the following journal entries correctly records a transaction where services were provided to a customer on account? A. Cash
$\quad$Revenues
B. Unearned revenue
$\quad$Revenues
C. Accounts receivable
$\quad$Revenues
D. Revenues
$\quad$Accounts receivable

Accepted Answer

A)  Option A 
B)  Option B 
C) Option C 
D) Option D 
A)  Option A 
B)  Option B 
C) Option C 
D) Option D

Question 3

Using cash to purchase office supplies, which will be consumed later, results in an increase in expenses and a decrease in assets at the time of purchase.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following would lengthen the operating cycle?

Accepted Answer

A)  Faster collection of accounts receivables. 
B)  Selling inventory in a shorter period of time. 
C) Increasing the number of customers who paid cash. 
D) Relaxing credit terms and allowing customers more time to pay. 
A)  Faster collection of accounts receivables. 
B)  Selling inventory in a shorter period of time. 
C) Increasing the number of customers who paid cash. 
D) Relaxing credit terms and allowing customers more time to pay.

Question 5

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 property 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.
Unearned revenue was $4,000.
How much was Lantz's income before income taxes?

Accepted Answer

A)  $553,800. 
B)  $465,800. 
C) $199,800. 
D) $531,800. 
A)  $553,800. 
B)  $465,800. 
C) $199,800. 
D) $531,800.

Question 6

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 property and equipment occurred.
Interest income totaled $7,700.
How much were Smith's operating revenues?

Accepted Answer

A)  $404,000. 
B)  $411,700. 
C) $442,000. 
D) $460,700. 
A)  $404,000. 
B)  $411,700. 
C) $442,000. 
D) $460,700.

Question 7

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 property 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.
Unearned revenue was $4,000.
How much was Lantz's operating income?

Accepted Answer

A)  $221,800. 
B)  $322,000. 
C) $199,800. 
D) $234,000. 
A)  $221,800. 
B)  $322,000. 
C) $199,800. 
D) $234,000.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Which of the following journal entries is prepared when cash is received from a customer prior to delivery of the goods or services? A. Cash
$\quad$Revenues
B. Cash
$\quad$Unearned revenues
C. Unearned revenues
$\quad$Cash
D. Cash
$\quad$Accounts receivable

Accepted Answer

A)  Option A 
B)  Option B 
C) Option C 
D) Option D 
A)  Option A 
B)  Option B 
C) Option C 
D) Option D

Question 10

Unearned revenues are reported as liabilities on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 11

Complete the chart below for Monticello Corporation by placing an X in the appropriate boxes to indicate how the transaction should be recorded.

Accepted Answer

The answer of Complete the chart below for Monticello Corporation...

Question 12

Which of the following transactions would be reported as cash flow from operating activities on a cash flow statement?

Accepted Answer

A)  Cash paid to purchase equipment. 
B)  Cash paid to acquire land. 
C) Cash paid for dividends to the company's stockholders. 
D) Cash paid for wages. 
A)  Cash paid to purchase equipment. 
B)  Cash paid to acquire land. 
C) Cash paid for dividends to the company's stockholders. 
D) Cash paid for wages.

Question 13

Describe the difference between operating expenses and losses from the sale of plant and equipment while providing examples of each.

Accepted Answer

Operating expenses result from ongoing o

Question 14

Describe the operating activities section of the cash flow statement and provide three examples of operating activities cash flows.

Accepted Answer

The operating activities section of the

Question 15

Yelena Company received cash from a customer in advance of providing the service to the customer. Which of the following does not accurately describe the impact on the financial statements when Yelena later provides the service?

Accepted Answer

A)  Liabilities are decreased. 
B)  Operating income increases. 
C) Retained earnings increases. 
D) Assets are increaseD.When Yelena provides the service revenue is recognized and the unearned revenue account is reduced. Assets are not affected. 
A)  Liabilities are decreased. 
B)  Operating income increases. 
C) Retained earnings increases. 
D) Assets are increaseD.When Yelena provides the service revenue is recognized and the unearned revenue account is reduced. Assets are not affected.

Question 16

Part
A. Perform transaction analysis for Blake Company regarding the following transactions for the month of March. Indicate the account affected by the transaction as well as the increase (+) or decrease (-) to the components of the accounting equation and the amount.
   Part 
B. Determine whether the transactions A-F above affected cash flows during March. If so, determine the type of activity as an operating activity, an investing activity, or a financing activity. If cash is not affected use "no effect." Place an X under the appropriate column for each transaction.
 $$\begin{array} { | l | l | l | l | l | } 
\hline && { \text { Type of Activity } } \
\hline \text { Transaction } & \text { Operating } & \text { Investing } & \text { Financing } & \text { No effect } \
\hline \text { A. } & & & & \
\hline \text { B. } & & & & \
\hline \text { C. } & & & & \
\hline \text { D. } & & & & \
\hline \text { E. } & & & & \
\hline \text { F. } & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of Part
A. Perform transaction analysis for Blake Company...

Question 17

Why might managers be tempted to violate the revenue realization principle and the expense matching principle when preparing an income statement?

Accepted Answer

Managers want their companies to appear

Question 18

Investment income is reported as operating revenue and therefore increases operating income.

Accepted Answer

A) True 
 B)False

Question 19

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 20

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

Accepted Answer

A) True 
 B)False

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

Which of the following journal entries correctly records a transaction where services were provided to a customer on account? A. Cash $\quad$ Revenues B. Unearned revenue $\quad$ Revenues C. Accounts receivable $\quad$ Revenues D. Revenues $\quad$ Accounts receivable

Using cash to purchase office supplies, which will be consumed later, results in an increase in expenses and a decrease in assets at the time of purchase.

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 journal entries is prepared when cash is received from a customer prior to delivery of the goods or services? A. Cash $\quad$ Revenues B. Cash $\quad$ Unearned revenues C. Unearned revenues $\quad$ Cash D. Cash $\quad$ Accounts receivable

Unearned revenues are reported as liabilities on the balance sheet.

Complete the chart below for Monticello Corporation by placing an X in the appropriate boxes to indicate how the transaction should be recorded.

Which of the following transactions would be reported as cash flow from operating activities on a cash flow statement?

Describe the difference between operating expenses and losses from the sale of plant and equipment while providing examples of each.

Describe the operating activities section of the cash flow statement and provide three examples of operating activities cash flows.

Yelena Company received cash from a customer in advance of providing the service to the customer. Which of the following does not accurately describe the impact on the financial statements when Yelena later provides the service?

Why might managers be tempted to violate the revenue realization principle and the expense matching principle when preparing an income statement?

Investment income is reported as operating revenue and therefore increases operating income.

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?

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

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

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; Intangibles; and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bonds

Reporting and Interpreting Owners Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters

Exam 3: Operating Decisions and the Accounting System

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

Which of the following journal entries correctly records a transaction where services were provided to a customer on account? A. Cash \quad Revenues B. Unearned revenue \quad Revenues C. Accounts receivable \quad Revenues D. Revenues \quad Accounts receivable

Using cash to purchase office supplies, which will be consumed later, results in an increase in expenses and a decrease in assets at the time of purchase.

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 journal entries is prepared when cash is received from a customer prior to delivery of the goods or services? A. Cash \quad Revenues B. Cash \quad Unearned revenues C. Unearned revenues \quad Cash D. Cash \quad Accounts receivable

Unearned revenues are reported as liabilities on the balance sheet.

Complete the chart below for Monticello Corporation by placing an X in the appropriate boxes to indicate how the transaction should be recorded.

Which of the following transactions would be reported as cash flow from operating activities on a cash flow statement?

Describe the difference between operating expenses and losses from the sale of plant and equipment while providing examples of each.

Describe the operating activities section of the cash flow statement and provide three examples of operating activities cash flows.

Yelena Company received cash from a customer in advance of providing the service to the customer. Which of the following does not accurately describe the impact on the financial statements when Yelena later provides the service?

Why might managers be tempted to violate the revenue realization principle and the expense matching principle when preparing an income statement?

Investment income is reported as operating revenue and therefore increases operating income.

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?

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

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

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; Intangibles; and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bonds

Reporting and Interpreting Owners Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters

Which of the following journal entries correctly records a transaction where services were provided to a customer on account? A. Cash $\quad$ Revenues B. Unearned revenue $\quad$ Revenues C. Accounts receivable $\quad$ Revenues D. Revenues $\quad$ Accounts receivable

Which of the following journal entries is prepared when cash is received from a customer prior to delivery of the goods or services? A. Cash $\quad$ Revenues B. Cash $\quad$ Unearned revenues C. Unearned revenues $\quad$ Cash D. Cash $\quad$ Accounts receivable