Exam 3: Operating Decisions and the Accounting System

Explain why the net income reported on the income statement is usually not equal to net cash flows from operating activities on the statement of cash flows.

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

On December 31,2019,Pack-and-Deliver Company completed its first year of operations.The following information has been provided for the year: a.Sold packing supplies for $30,000 and provided $280,000 of delivery services. b.All packing supplies sales were for cash. c.Collected $212,000 of delivery service revenue. d.Paid $15,000 cash to rent packing equipment,with $10,000 for rental in 2019 and the remaining amount for rental in 2020. e.Spent $4,000 cash to repair delivery equipment during the year. f.Bought packing supplies at a total cost of $46,000 and paid for $25,000 of these supplies.There were $20,000 of these supplies that have not yet been sold or used. g.Paid employees $80,000 during the year. h.Paid $16,000 for advertising for the year. i.Used $14,000 in fuel for the delivery equipment. j.Sold investments for $8,000 that had been purchased earlier in the year for $7,000. k.Ordered $500 in spare parts and supplies. l.Income tax expense for the year is $18,000. Prepare an income statement for Pack-and-Deliver Company for the year ended December 31,2019.

The primary difference between revenues and gains is:

During 2019,Sensa Corporation incurred operating expenses amounting to $100,000,of which $75,000 was paid in cash;the balance will be paid during 2020.Which of the following is correct for the 2019 year-end balance sheet?

Which of the following statements is correct?

The trial balance needs to be prepared prior to preparation of the income statement.

Which of the following best describes operating revenues?

June's Printing Shop had the following information for office supplies: • Ordered $1,200 of supplies March 3 • Received half the order of supplies on March 16 • Used one-third of the received supplies during March What is the total amount that should be reported as supplies expense for the month of March?

Which of the following statements is false when Mama June Pizza Company paid $47,000 cash on accounts owed to suppliers?

Under accrual accounting,rent expense for February 2019 would be recognized on the income statement in February 2019 even though it had been paid for in January of 2019.

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

Which of the following statements is correct?

Which of the following journal entries is prepared by an auto repair shop when a customer will pay cash subsequent to delivery of goods or services?

The net profit margin ratio is a measure of how much profit was created per sales dollar.

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.

Which of the following statements is false?

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

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