Question 1

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 2

Which of the following journal entries is prepared when cash is received from a customer prior to delivery of the goods or services?

Accepted Answer

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

Question 3

Which of the following accounts does not have a credit balance?

Accepted Answer

A) Gain on sale of land. 
B) Interest revenue. 
C) Unearned revenue. 
D) Rent expense. 
A) Gain on sale of land. 
B) Interest revenue. 
C) Unearned revenue. 
D) Rent expense.

Question 4

Which of the following liability accounts is likely to be satisfied without a future cash payment?

Accepted Answer

A) Wages payable. 
B) Unearned subscriptions revenue. 
C) Accounts payable. 
D) Taxes payable. 
A) Wages payable. 
B) Unearned subscriptions revenue. 
C) Accounts payable. 
D) Taxes payable.

Question 5

An income statement that is categorized into operating and peripheral activities is called a consolidated income statement.

Accepted Answer

A) True 
 B)False

Question 6

Earnings per share must be either reported on the income statement or disclosed in the notes to the financial statements.

Accepted Answer

A) True 
 B)False

Question 7

Trend Decorations Company provides decorating services for store displays.Trend sold equipment that it had been using to create decorations.Of the following choices,which will Trend report on its income statement when it sells the equipment?

Accepted Answer

A) Operating revenue: Sales revenue 
B) Operating expenses: Loss on disposal of equipment 
C) Other items: Loss on sale of equipment 
D) General and administrative expenses: Sale of decorating equipment 
A) Operating revenue: Sales revenue 
B) Operating expenses: Loss on disposal of equipment 
C) Other items: Loss on sale of equipment 
D) General and administrative expenses: Sale of decorating equipment

Question 8

The following income statement was reported for Bauer Inc.for the first year of operations ending December 31,2019 reported (in thousands of dollars):
   A.Calculate net profit margin.
B.Calculate earnings per share if there are 200,000 weighted average shares of common stock outstanding.

Accepted Answer

A.Net profit margin = 13.5%.Calculated b

Question 9

Which of the following statements is false?

Accepted Answer

A) A liability is created when cash is received prior to delivery of the goods or services to a customer. 
B) Revenue is recognized at the time of delivery of the goods or services to customers if cash is received. 
C) Revenue is not recognized at the time of delivery of goods and services to customers if cash is received after delivery of the goods and services. 
D) Collecting cash after delivery of a good or service to a customer does not create revenue on the income statement at the date of collection. 
A) A liability is created when cash is received prior to delivery of the goods or services to a customer. 
B) Revenue is recognized at the time of delivery of the goods or services to customers if cash is received. 
C) Revenue is not recognized at the time of delivery of goods and services to customers if cash is received after delivery of the goods and services. 
D) Collecting cash after delivery of a good or service to a customer does not create revenue on the income statement at the date of collection.

Question 10

The net profit margin ratio is calculated by dividing net sales by net income.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements does not properly describe the accrual basis of accounting?

Accepted Answer

A) Expenses are recognized when incurred in generating revenues regardless of the timing of cash flows. 
B) Revenues are recognized when the company transfers promised goods or services to customers regardless of the timing of cash flows. 
C) Generally accepted accounting principles require use of the accrual basis. 
D) Accrual accounting should not be used when providing financial statements to external decision makers. 
A) Expenses are recognized when incurred in generating revenues regardless of the timing of cash flows. 
B) Revenues are recognized when the company transfers promised goods or services to customers regardless of the timing of cash flows. 
C) Generally accepted accounting principles require use of the accrual basis. 
D) Accrual accounting should not be used when providing financial statements to external decision makers.

Question 12

Which of the following transactions will result in an increase in operating income as of the date of the transaction?

Accepted Answer

A) The sale of investments at a gain. 
B) Collection of cash from a customer for services to be provided at a later date. 
C) Providing a service to a customer on account. 
D) The receipt of cash dividends from an investment. 
A) The sale of investments at a gain. 
B) Collection of cash from a customer for services to be provided at a later date. 
C) Providing a service to a customer on account. 
D) The receipt of cash dividends from an investment.

Question 13

Cash received prior to the providing of the goods or services results in an increase in both assets and liabilities.

Accepted Answer

A) True 
 B)False

Question 14

The core revenue recognition principle has two requirements for recognizing revenue.Which of the following is one of these requirements?

Accepted Answer

A) The customer has paid for the goods or services. 
B) Delivery of goods or performance of service has been scheduled. 
C) The amount the company expects to receive is determinable. 
D) The customer has signed a contract. 
A) The customer has paid for the goods or services. 
B) Delivery of goods or performance of service has been scheduled. 
C) The amount the company expects to receive is determinable. 
D) The customer has signed a contract.

Question 15

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.
Type of Activity

Accepted Answer

A. @#IMG-DLM& B.
Typ

Question 16

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 17

Garret Company has provided the following selected information for the year ended December 31,2019: Cash collected from customers was $783,000.
Cash received from stockholders in exchange for common stock totaled $91,000.
Cash paid to suppliers was $361,000.
Cash paid to employees was $204,000.
Cash to stockholders for dividends was $33,000.
Cash received from sale of a building was $250,000.
Cash paid for store rent was $39,000.
Cash received for interest and dividends was $7,000.
Cash paid for income taxes was $55,000.

Based on the selected information provided,how much was Garret's cash flow from operating activities?

Accepted Answer

A) $131,000. 
B) $98,000. 
C) $381,000. 
D) $222,000. 
A) $131,000. 
B) $98,000. 
C) $381,000. 
D) $222,000.

Question 18

Which of the following correctly applies the revenue recognition principle?

Accepted Answer

A) Recognize revenue in December 2019 for products manufactured but not yet delivered to customers. 
B) Recognize cash received in advance from customers as revenue when the product is not yet shipped. 
C) Not recognize service revenue in 2019 until the cash is received in 2020. 
D) Recognize revenue in December 2019 for products sold but not yet paid for in full. 
A) Recognize revenue in December 2019 for products manufactured but not yet delivered to customers. 
B) Recognize cash received in advance from customers as revenue when the product is not yet shipped. 
C) Not recognize service revenue in 2019 until the cash is received in 2020. 
D) Recognize revenue in December 2019 for products sold but not yet paid for in full.

Question 19

Which of the following statements regarding the net profit margin ratio is false?

Accepted Answer

A) The numerator is net income. 
B) The denominator is net sales or operating revenues. 
C) It measures how much of every sales dollar is gross profit. 
D) Financial analysts expect well-run businesses to maintain or improve their profit margin over time. 
A) The numerator is net income. 
B) The denominator is net sales or operating revenues. 
C) It measures how much of every sales dollar is gross profit. 
D) Financial analysts expect well-run businesses to maintain or improve their profit margin over time.

Question 20

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 expense was $5,000.
What is the amount of Colby's operating revenues?

Accepted Answer

A) $88,000. 
B) $91,300. 
C) $199,700. 
D) $203,000. 
A) $88,000. 
B) $91,300. 
C) $199,700. 
D) $203,000.

Which of the following statements is correct?

Which of the following journal entries is prepared when cash is received from a customer prior to delivery of the goods or services?

Which of the following accounts does not have a credit balance?

Which of the following liability accounts is likely to be satisfied without a future cash payment?

An income statement that is categorized into operating and peripheral activities is called a consolidated income statement.

Earnings per share must be either reported on the income statement or disclosed in the notes to the financial statements.

Trend Decorations Company provides decorating services for store displays.Trend sold equipment that it had been using to create decorations.Of the following choices,which will Trend report on its income statement when it sells the equipment?

The following income statement was reported for Bauer Inc.for the first year of operations ending December 31,2019 reported (in thousands of dollars): A.Calculate net profit margin. B.Calculate earnings per share if there are 200,000 weighted average shares of common stock outstanding.

Which of the following statements is false?

The net profit margin ratio is calculated by dividing net sales by net income.

Which of the following statements does not properly describe the accrual basis of accounting?

Which of the following transactions will result in an increase in operating income as of the date of the transaction?

Cash received prior to the providing of the goods or services results in an increase in both assets and liabilities.

The core revenue recognition principle has two requirements for recognizing revenue.Which of the following is one of these requirements?

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

Which of the following correctly applies the revenue recognition principle?

Which of the following statements regarding the net profit margin ratio is false?

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

Which of the following statements is correct?

Which of the following journal entries is prepared when cash is received from a customer prior to delivery of the goods or services?

Which of the following accounts does not have a credit balance?

Which of the following liability accounts is likely to be satisfied without a future cash payment?

An income statement that is categorized into operating and peripheral activities is called a consolidated income statement.

Earnings per share must be either reported on the income statement or disclosed in the notes to the financial statements.

Trend Decorations Company provides decorating services for store displays.Trend sold equipment that it had been using to create decorations.Of the following choices,which will Trend report on its income statement when it sells the equipment?

The following income statement was reported for Bauer Inc.for the first year of operations ending December 31,2019 reported (in thousands of dollars): A.Calculate net profit margin. B.Calculate earnings per share if there are 200,000 weighted average shares of common stock outstanding.

Which of the following statements is false?

The net profit margin ratio is calculated by dividing net sales by net income.

Which of the following statements does not properly describe the accrual basis of accounting?

Which of the following transactions will result in an increase in operating income as of the date of the transaction?

Cash received prior to the providing of the goods or services results in an increase in both assets and liabilities.

The core revenue recognition principle has two requirements for recognizing revenue.Which of the following is one of these requirements?

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

Which of the following correctly applies the revenue recognition principle?

Which of the following statements regarding the net profit margin ratio is false?

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