Exam 3: Operating Decisions and the Accounting System

A landlord collected $5,000 cash from a tenant for December 2019's rent but the contract rate set for the tenant's December rent is $8,000.Which of the following is true with respect to the landlord's financial statements using generally accepted accounting principles?

The following information has been provided by Flatiron Company for the year ended December 31,2019: 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 for rent,wages,and insurance totaled $91,000; Cash collected from customers was $220,000. Calculate Flatiron's operating income.

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. • Supplies expense was $336,000. • Rent expense for the store was $36,000. • Wages expense was $49,000. • Other operating expenses totaled $79,000. • Unearned revenue was $4,000. - What is the amount of Lantz's income from operations (operating income)?

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 of these items was included in operating income?

Which of the following accounts normally have a debit balance?

Which of the following journal entries correctly records the receipt of a utility bill,which will be paid for in later weeks?

A gain resulting from the sale of buildings and equipment is not reported as operating income on the income statement.

Expense accounts have debit balances because they decrease net income,retained earnings,and stockholders' equity.

Cash paid to suppliers for inventory is an investing activity.

A company purchased supplies for cash,which will be consumed during future months.Which of the following correctly describes the impact of the supplies purchase on the financial statements?

Describe earnings per share,including how it's computed and how earnings per share is used to evaluate a company.

On December 31,2019,Avery Corporation paid $10,000 for next year's insurance policy.This transaction should be recorded as follows by Avery:

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

Which of the following expenses does not affect the reporting of operating income?

Which of the following statements is false?

Mama June Pizza Company determined that dough,sauce,cheese and other ingredients costing $8,700 were used to make pizzas during July.Which of the following statements is false with respect to the use of the ingredients?

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?

Describe the debit and credit logic pertaining to items reported on the income statement.

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. • Supplies expense was $336,000. • Rent expense for the store was $36,000. • Wages expense was $49,000. • Other operating expenses totaled $79,000. • Unearned revenue was $4,000. - What is the amount of Lantz's total operating expenses?

Describe the difference between operating items and other items reported on the income statement while providing examples of each.