Exam 3: The Measurement Framework and Mechanics of Financial Accounting

The statement of cash flows (direct method) is prepared directly from

Which of the following represents two of the four criteria that must be met before revenue can be included in the income statement?

Match the descriptions listed in letters a through e below with the proper assumption numbered from below. -Stable dollar assumption

For each transaction numbered below, identify its effect on the accounting equation by selecting from a through h below.You may use each letter more than once or not at all. -Provided computer services to customers on account

On October 1, 2010, $20,000 of annual magazine subscriptions were sold by Boating Monthly.The subscribed magazines are delivered on the first day of each month beginning on October 1, 2010.The total cost of the subscribed magazines is $6,000 or $500 per monthly delivery.Using the four criteria necessary for revenue recognition, present an argument for not recognizing $10,000 of revenue during 2010.

For each transaction numbered below, identify its effect on the accounting equation by selecting from a through h below.You may use each letter more than once or not at all. -Purchased computer supplies on account

Guadalupe Company sold stock for cash and received cash for services performed during the current month.Which of the following summarizes the income statement impact of these transactions for the current month?

For each transaction numbered below, identify its effect on the accounting equation by selecting from a through h below.You may use each letter more than once or not at all. -Purchased computer equipment for cash

For each financial concept listed in below, identify in which category (listed in a through f) it should be matched.You may use each letter more than once or not at all. -Comparability

Dena, Inc.began operations during 2010.During January of 2010, the following transactions occurred: ·Received $80,000 from shareholders as initial investments ·Received cash of $50,000 for services performed during January ·Billed customers an additional $12,000 for services performed during January ·Borrowed $12,000 from NationsBank Company, and signed a one-year note payable ·Paid rent in the amount of $5,000 for January ·Paid dividends in January amounting to $8,000 ·Paid wages of $35,000 for January How much Net Income should Dena, Inc.report for January?

Large public accounting firms employ graduates from state-supported universities, many of who are graduates with accounting degrees.These firms' reliance on and use of the product of subsidized educational institutions seem to imply that these colleges and universities are important assets.However, they are not recognized as assets on the balance sheets of these public accounting firms.Which one of the four basic assumptions might be used to justify the exclusion of educational assets from the balance sheets of the public accounting firms?

Match the descriptions listed in letters a through e below with the proper assumption numbered from below. -Economic entity assumption

Match the descriptions listed in letters a through e below with the proper assumption numbered from below. -Fiscal period assumption

On May 1, 2009, $6,000 of annual magazine subscriptions were sold by Sophia, Inc.The subscribed magazines are delivered on the first day of each month beginning on May 1, 2009.The total cost of the subscribed magazines is $3,600 or $300 per month. A. Determine the amount of revenue during 2009. B. Explain how the matching concept is applied relative to the magazines.

For each financial concept listed in below, identify in which category (listed in a through f) it should be matched.You may use each letter more than once or not at all. -Revenue recognition criteria

Jackson Construction built a levee for the state of Mississippi over a three-year period.The contracted price for the levee was $1,200,000.The costs incurred by Jackson and the payments from the state over the three year period are as follows: - If revenue is recognized when payments are received, which of the following present the net income amounts reported in 2009, 2010, and 2011, respectively?

During 2010, Markham Company sold $20,000 of computer chips to a distributor on account.The distributor planned to sell those chips to a German company.The sold chips were shipped to a warehouse owned by Markham and were still there on December 31, 2010.Markham's CFO left two messages for the distributor but received no return calls.The distributor has had no prior dealings with Markham or any other manufacturer of computer chips.None of the past due balance of $20,000 has been paid.How much sales revenue associated with this transaction would be reported on the income statement for the year ending December 31, 2010? Explain your selection.

For each transaction numbered below, identify its effect on the accounting equation by selecting from a through h below.You may use each letter more than once or not at all. -Used computer supplies in the regular operations of the business (acquired during a previous accounting period)

Ramos Company ordered 500 toy wagons from Lamar, Inc.on May 1, 2010.Ramos Company paid for them on May 20 at a cost of $2 each.Ramos sold 50 of them on June 2, 2010, for $5 each to Gilloz Company.Gilloz Company paid Ramos on June 10. - On which date should Ramos Company recognize revenue?

For each financial concept listed in below, identify in which category (listed in a through f) it should be matched.You may use each letter more than once or not at all. -Consistency