Exam 3: Operating Decisions and the Accounting System

Purchasing a six-month insurance policy results in a debit to insurance expense and a credit to cash at the date of purchase.

Application of generally accepted accounting principles requires that the accrual basis of accounting be used for reporting revenues and expenses on the income statement.

According to the expense recognition principle,wages expense is recognized on the income statement when the wages are paid rather than when the employee provides the work.

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

Which of the following is not reported as an operating expense on the income statement?

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

The following information has been provided by Hable Company: • Advertising expense $9,900 • Interest expense $3,700 • Rent expense for store $12,000 • Loss on sale of property and equipment $5,700 • Cost of goods sold $21,300 • Depreciation expense $7,100 • Prepaid insurance $1,000 - How much were Hable's total expenses in calculating operating income?

Boone's Cleaning Service performed cleaning services during December 2019,but had not collected any cash from its customers as of December 31,2019.What impact did performing these services have on the accounting equation?