Question 1

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 $51,000. 
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 $51,000.

Question 2

Selling inventory to a customer on account results in an increase in an asset and an increase in revenues.

Accepted Answer

A) True 
 B)False

Question 3

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 pay 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 pay cash 
D) Relaxing credit terms and allowing customers more time to pay.

Question 4

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

Accepted Answer

A) Revenues are debited for $29,000. 
B) Cost of goods sold is credited for $20,000. 
C) Gain on sale of land is credited for $9,000. 
D) Operating income increases $29,000. 
A) Revenues are debited for $29,000. 
B) Cost of goods sold is credited for $20,000. 
C) Gain on sale of land is credited for $9,000. 
D) Operating income increases $29,000.

Question 5

Dividends declared decrease net income.

Accepted Answer

A) True 
 B)False

Question 6

A company purchased supplies for cash,which will be consumed during future months.Which of the following does not correctly describe the impact on the financial statements when the supplies are used during future months?

Accepted Answer

A) Total assets will remain unchanged. 
B) Total assets will decrease. 
C) Operating expenses will increase. 
D) Operating income will decrease. 
A) Total assets will remain unchanged. 
B) Total assets will decrease. 
C) Operating expenses will increase. 
D) Operating income will decrease.

Question 7

Which of the following statements is false?

Accepted Answer

A) Expense accounts have a debit balance. 
B) Revenue accounts have a credit balance. 
C) Gain accounts have a credit balance. 
D) Loss accounts have a credit balance. 
A) Expense accounts have a debit balance. 
B) Revenue accounts have a credit balance. 
C) Gain accounts have a credit balance. 
D) Loss accounts have a credit balance.

Question 8

Colby Corporation has provided the following information: • Operating revenues from customers were $199,700.
• Operating expenses for the store 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.
• Prepaid rent was $5,000.
-
What is the amount of Colby's income before income taxes?

Accepted Answer

A) $70,100. 
B) $75,100. 
C) $82,800. 
D) $92,000. 
A) $70,100. 
B) $75,100. 
C) $82,800. 
D) $92,000.

Question 9

During 2019,Sigma Company earned service revenue amounting to $700,000,of which $630,000 was collected in cash;the balance will be collected in January,2020.Also in 2019,there were collections of cash prior to the delivery of goods/services totaling $10,000.What amount should the 2019 income statement report for service revenue?

Accepted Answer

A) $630,000. 
B) $700,000. 
C) $70,000. 
D) $570,000. 
A) $630,000. 
B) $700,000. 
C) $70,000. 
D) $570,000.

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

World Coffee,Inc.has provided the following information pertaining to the store's month ended October 31,2019:
   Prepare an income statement through operating income for the month ended October 31,2019.

Accepted Answer

World Coffee,Inc.
In

Question 12

Interest expense is reported on the income statement as an operating expense.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following correctly describes the impact of collecting cash from customers for services to be provided in the future?

Accepted Answer

A) Assets and stockholders' equity increase. 
B) Assets and revenues increase. 
C) Assets and liabilities increase. 
D) Assets and operating income increase. 
A) Assets and stockholders' equity increase. 
B) Assets and revenues increase. 
C) Assets and liabilities increase. 
D) Assets and operating income increase.

Question 14

Colby Corporation has provided the following information: • Operating revenues from customers were $199,700.
• Operating expenses for the store 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.
• Prepaid rent was $5,000.
-
How much was Colby's net income?

Accepted Answer

A) $46,800. 
B) $39,100. 
C) $48,300. 
D) $52,700. 
A) $46,800. 
B) $39,100. 
C) $48,300. 
D) $52,700.

Question 15

The revenue recognition principle recognizes revenue when the goods or services are transferred to customers,regardless of the timing of the cash collection from customers.

Accepted Answer

A) True 
 B)False

Question 16

Describe the difference(s)with respect to the cash basis of accounting and the accrual basis of accounting.

Accepted Answer

The cash basis of accounting recognizes

Question 17

Which of the following journal entries is correct assuming that Mama June Pizza Company received cash for interest earned on investments?

Accepted Answer

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

Question 18

Collections from customers are cash flows from operating activities.

Accepted Answer

A) True 
 B)False

Question 19

Colby Corporation has provided the following information: • Operating revenues from customers were $199,700.
• Operating expenses for the store 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.
• Prepaid rent was $5,000.
-
What is the amount of Colby's operating income (income from operations)?

Accepted Answer

A) $81,000. 
B) $83,700. 
C) $88,700. 
D) $92,000. 
A) $81,000. 
B) $83,700. 
C) $88,700. 
D) $92,000.

Question 20

Unearned revenues are reported as liabilities on the balance sheet.

Accepted Answer

A) True 
 B)False

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

Selling inventory to a customer on account results in an increase in an asset and an increase in revenues.

Which of the following would lengthen the operating cycle?

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

Dividends declared decrease net income.

A company purchased supplies for cash,which will be consumed during future months.Which of the following does not correctly describe the impact on the financial statements when the supplies are used during future months?

Which of the following statements is false?

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

World Coffee,Inc.has provided the following information pertaining to the store's month ended October 31,2019: Prepare an income statement through operating income for the month ended October 31,2019.

Interest expense is reported on the income statement as an operating expense.

Which of the following correctly describes the impact of collecting cash from customers for services to be provided in the future?

The revenue recognition principle recognizes revenue when the goods or services are transferred to customers,regardless of the timing of the cash collection from customers.

Describe the difference(s)with respect to the cash basis of accounting and the accrual basis of accounting.

Which of the following journal entries is correct assuming that Mama June Pizza Company received cash for interest earned on investments?

Collections from customers are cash flows from operating activities.

Unearned revenues are reported as liabilities on the balance sheet.

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 Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

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Exam 3: Operating Decisions and the Accounting System

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

Selling inventory to a customer on account results in an increase in an asset and an increase in revenues.

Which of the following would lengthen the operating cycle?

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

Dividends declared decrease net income.

A company purchased supplies for cash,which will be consumed during future months.Which of the following does not correctly describe the impact on the financial statements when the supplies are used during future months?

Which of the following statements is false?

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

World Coffee,Inc.has provided the following information pertaining to the store's month ended October 31,2019: Prepare an income statement through operating income for the month ended October 31,2019.

Interest expense is reported on the income statement as an operating expense.

Which of the following correctly describes the impact of collecting cash from customers for services to be provided in the future?

The revenue recognition principle recognizes revenue when the goods or services are transferred to customers,regardless of the timing of the cash collection from customers.

Describe the difference(s)with respect to the cash basis of accounting and the accrual basis of accounting.

Which of the following journal entries is correct assuming that Mama June Pizza Company received cash for interest earned on investments?

Collections from customers are cash flows from operating activities.

Unearned revenues are reported as liabilities on the balance sheet.

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 Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters