Question 1

Receiving cash from a customer for payment on account for a sale that was recorded previously will:

Accepted Answer

A)  have no effect on total assets. 
B)  increase total assets. 
C)  decrease total liabilities. 
D)  increase stockholder's equity. 
A)  have no effect on total assets. 
B)  increase total assets. 
C)  decrease total liabilities. 
D)  increase stockholder's equity.

Question 2

In an expanded accounting equation,revenues and expenses are an expanded part of:

Accepted Answer

A)  Retained Earnings. 
B)  Common Stock. 
C)  liabilities. 
D)  assets. 
A)  Retained Earnings. 
B)  Common Stock. 
C)  liabilities. 
D)  assets.

Question 3

The income statement measures the:

Accepted Answer

A)  amount of revenue earned during the current period. 
B)  the change in value of a company. 
C)  true values of revenues and expenses without using estimates. 
D)  amount of cash generated by the business. 
A)  amount of revenue earned during the current period. 
B)  the change in value of a company. 
C)  true values of revenues and expenses without using estimates. 
D)  amount of cash generated by the business.

Question 4

The Fastbank Motorcycle Service Company wins a $10 million bid to provide the repair services for a recall on a popular brand of motorcycles.No money is exchanged.The repair services are expected to be performed early next year.How will these events affect the balance sheet prepared at the end of this year?

Accepted Answer

A)  Accounts Receivable will increase by $10 million. 
B)  Both Accounts Receivable and Accounts Payable will each increase by $10 million. 
C)  Both Accounts Receivable and Stockholders' Equity will each increase by $10 million. 
D)  These events will not impact the balance sheet. 
A)  Accounts Receivable will increase by $10 million. 
B)  Both Accounts Receivable and Accounts Payable will each increase by $10 million. 
C)  Both Accounts Receivable and Stockholders' Equity will each increase by $10 million. 
D)  These events will not impact the balance sheet.

Question 5

When cash is paid for something that provides benefits only in future periods:

Accepted Answer

A)  an accrued liability must be recorded. 
B)  a journal entry does not need to be recorded at the time of the payment. 
C)  an asset must be recorded at the time of the payment. 
D)  an unearned expense must be recorded at the time of the payment. 
A)  an accrued liability must be recorded. 
B)  a journal entry does not need to be recorded at the time of the payment. 
C)  an asset must be recorded at the time of the payment. 
D)  an unearned expense must be recorded at the time of the payment.

Question 6

Net income is increased when accounts receivable are collected.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following represents a subtotal rather than an account?

Accepted Answer

A)  Advertising Expense 
B)  Service Revenue 
C)  Supplies Expense 
D)  Total Revenues 
A)  Advertising Expense 
B)  Service Revenue 
C)  Supplies Expense 
D)  Total Revenues

Question 8

The unadjusted trial balance:

Accepted Answer

A)  is a preliminary financial statement for external and internal users. 
B)  generally lists account names in alphabetical order. 
C)  is created to determine that total debits equal total credits. 
D)  indicates whether or not errors were made in recording transactions. 
A)  is a preliminary financial statement for external and internal users. 
B)  generally lists account names in alphabetical order. 
C)  is created to determine that total debits equal total credits. 
D)  indicates whether or not errors were made in recording transactions.

Question 9

The records of Dame Inc.included the account balances set forth in the table below as of September 30.
Part a.Complete the two columns in the table set forth below by indicating (column 1)whether it is reported in the income statement (I/S)or balance sheet (B/S)and (column 2)whether it is an asset (A),liability (L),stockholders' equity (SE),revenue (R),or expense (E)account.
   
Part b.Prepare an income statement for the year ended September 30.
Part c.Determine the company's net profit margin expressed as a percent.

Accepted Answer

Part a
 @#IMG-DLM& 
Part b
 @#IMG-DLM& 
Part c
Net

Question 10

Reporting revenues when they are earned and expenses when they are incurred is called ______ basis accounting.

Accepted Answer

A)  accrual 
B)  cash 
C)  expense recognition 
D)  cost 
A)  accrual 
B)  cash 
C)  expense recognition 
D)  cost

Question 11

When employees work for a company in June but are not paid until July,the June financial statements will include ______ on the:

Accepted Answer

A)  Salaries and Wages Payable; balance sheet 
B)  Prepaid Salaries and Wages; income statement 
C)  Salaries and Wages Payable; income statement 
D)  Prepaid Salaries and Wages; balance sheet 
A)  Salaries and Wages Payable; balance sheet 
B)  Prepaid Salaries and Wages; income statement 
C)  Salaries and Wages Payable; income statement 
D)  Prepaid Salaries and Wages; balance sheet

Question 12

The expense recognition principle ("matching")matches:

Accepted Answer

A)  cash receipts with cash disbursements. 
B)  expenses with the revenues to which they relate. 
C)  assets with liabilities. 
D)  prepaid expenses with unearned revenues. 
A)  cash receipts with cash disbursements. 
B)  expenses with the revenues to which they relate. 
C)  assets with liabilities. 
D)  prepaid expenses with unearned revenues.

Question 13

During June,the Grass is Greener Company mows 100 lawns a week; the company was paid in advance during May by those customers.The company uses the accrual basis of accounting.How will these events affect the company's financial statements?

Accepted Answer

A)  The income statement shows the effects of the transactions in May. 
B)  The income statement shows the effects of the transactions in June. 
C)  The balance sheet shows no effect from the transactions in May. 
D)  The balance sheet shows no effect from these transactions in May or June. 
A)  The income statement shows the effects of the transactions in May. 
B)  The income statement shows the effects of the transactions in June. 
C)  The balance sheet shows no effect from the transactions in May. 
D)  The balance sheet shows no effect from these transactions in May or June.

Question 14

Which of the following would increase the net profit margin ratio in the current year?

Accepted Answer

A)  Postpone routine maintenance work that was to be done this year. 
B)  Increase the amount of research and development in the last month of the year. 
C)  Postpone the purchase of supplies to the first month of the following year. 
D)  Postpone dividends to stockholders. 
A)  Postpone routine maintenance work that was to be done this year. 
B)  Increase the amount of research and development in the last month of the year. 
C)  Postpone the purchase of supplies to the first month of the following year. 
D)  Postpone dividends to stockholders.

Question 15

When a company makes a payment for amounts owed from prior purchases,it will record a debit to ______ and a credit to ______:

Accepted Answer

A)  Accounts Payable; Cash 
B)  An expense; Cash 
C)  Accounts Payable; Retained Earnings 
D)  Cash; an expense 
A)  Accounts Payable; Cash 
B)  An expense; Cash 
C)  Accounts Payable; Retained Earnings 
D)  Cash; an expense

Question 16

The following account balances are taken from the December 31, 2015, financial statements of ABZ Advertising Company.The company uses accrual basis accounting.
   
The following activities occurred in 2016:
1.Performed advertising services on account, $55,000.
2.Received cash payments on account, $10,400.
3.Received deposits from customers for advertising services to be performed in 2017, $2,500.
4.Made payments to suppliers on account, $5,000.
5.Incurred $45,000 of operating expenses; $39,000 was paid in cash and $6,000 was on account and unpaid as of the end of the year.
-Use the information above to answer the following question.Which of the following is the journal entry that will be used to record activity #3?

Accepted Answer

A)  Debit Cash and credit Unearned Revenue for $2,500 
B)  Debit Unearned Revenue and credit Advertising Revenue for $2,500 
C)  Debit Cash and credit Accounts Receivable for $2,500 
D)  Debit Unearned Revenue and credit Receivable for $2,500 
A)  Debit Cash and credit Unearned Revenue for $2,500 
B)  Debit Unearned Revenue and credit Advertising Revenue for $2,500 
C)  Debit Cash and credit Accounts Receivable for $2,500 
D)  Debit Unearned Revenue and credit Receivable for $2,500

Question 17

It is possible for a company to be profitable,yet not have enough cash to pay its bills.

Accepted Answer

A) True 
 B)False

Question 18

Which statements about the unadjusted trial balance is not correct?

Accepted Answer

A)  An unadjusted trial balance is the same as a balance sheet. 
B)  An unadjusted trial balance lists all the accounts with their current balances. 
C)  An unadjusted trial balance can verify the equality of debits and credits. 
D)  An unadjusted trial balance can be prepared at any point in time. 
A)  An unadjusted trial balance is the same as a balance sheet. 
B)  An unadjusted trial balance lists all the accounts with their current balances. 
C)  An unadjusted trial balance can verify the equality of debits and credits. 
D)  An unadjusted trial balance can be prepared at any point in time.

Question 19

The following transactions occurred during July:
1.Received $800 cash for services performed during July.
2.Received $5,000 cash from the issuance of common stock to owners.
3.Received $400 from a customer as payment for services performed during June.
4.Billed $3,500 to customers for services performed on account in July.
5.Borrowed $2,500 from the bank and signed a promissory note.
6.Received $1,000 from a customer for services to be performed during August.
-Use the information above to answer the following question.What is the amount of revenue that will be reported on the income statement for the month ended July 31?

Accepted Answer

A)  $5,300. 
B)  $5,700. 
C)  $4,300. 
D)  $7,200. 
A)  $5,300. 
B)  $5,700. 
C)  $4,300. 
D)  $7,200.

Question 20

On May 29,Lox,Stock & Bagel,Inc.received a $100 bill for advertising run in May.The bill will be paid in June.The entry to record in May includes a $100:

Accepted Answer

A)  debit to Prepaid Advertising. 
B)  credit to Prepaid Advertising. 
C)  credit to Accounts Payable. 
D)  credit to Cash. 
A)  debit to Prepaid Advertising. 
B)  credit to Prepaid Advertising. 
C)  credit to Accounts Payable. 
D)  credit to Cash.

Receiving cash from a customer for payment on account for a sale that was recorded previously will:

In an expanded accounting equation,revenues and expenses are an expanded part of:

The income statement measures the:

When cash is paid for something that provides benefits only in future periods:

Net income is increased when accounts receivable are collected.

Which of the following represents a subtotal rather than an account?

The unadjusted trial balance:

Reporting revenues when they are earned and expenses when they are incurred is called ______ basis accounting.

When employees work for a company in June but are not paid until July,the June financial statements will include ______ on the:

The expense recognition principle ("matching")matches:

During June,the Grass is Greener Company mows 100 lawns a week; the company was paid in advance during May by those customers.The company uses the accrual basis of accounting.How will these events affect the company's financial statements?

Which of the following would increase the net profit margin ratio in the current year?

When a company makes a payment for amounts owed from prior purchases,it will record a debit to and a credit to :

It is possible for a company to be profitable,yet not have enough cash to pay its bills.

Which statements about the unadjusted trial balance is not correct?

On May 29,Lox,Stock & Bagel,Inc.received a $100 bill for advertising run in May.The bill will be paid in June.The entry to record in May includes a $100:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 3: Reporting Operating Results on the Income Statement

Receiving cash from a customer for payment on account for a sale that was recorded previously will:

In an expanded accounting equation,revenues and expenses are an expanded part of:

The income statement measures the:

When cash is paid for something that provides benefits only in future periods:

Net income is increased when accounts receivable are collected.

Which of the following represents a subtotal rather than an account?

The unadjusted trial balance:

Reporting revenues when they are earned and expenses when they are incurred is called ______ basis accounting.

When employees work for a company in June but are not paid until July,the June financial statements will include ______ on the:

The expense recognition principle ("matching")matches:

During June,the Grass is Greener Company mows 100 lawns a week; the company was paid in advance during May by those customers.The company uses the accrual basis of accounting.How will these events affect the company's financial statements?

Which of the following would increase the net profit margin ratio in the current year?

When a company makes a payment for amounts owed from prior purchases,it will record a debit to ______ and a credit to ______:

It is possible for a company to be profitable,yet not have enough cash to pay its bills.

Which statements about the unadjusted trial balance is not correct?

On May 29,Lox,Stock & Bagel,Inc.received a $100 bill for advertising run in May.The bill will be paid in June.The entry to record in May includes a $100:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

When a company makes a payment for amounts owed from prior purchases,it will record a debit to and a credit to :