Exam 3: Reporting Operating Results on the Income Statement

In January,the Caribbean Dream Resort books and accepts a cash payment for $32,000 for vacation services to be provided during spring break in March.The journal entry recorded in January will include a debit to:

In its first year of operation,Jetway Airlines paid Salaries expense of $40 million.On December 31,it accrued an additional Salaries expense of $2 million.What should Jetway report in the income statement and balance sheet for its first year ended December 31?

Carl's Catering just completed its first year of operations.During the year,the following events took place. -Customer payments in the amount of $64,000 were received at the time the catering services were performed. -Additional catering services totaling $35,000 were performed on account for customers; payments amounting to $6,000 were received from those customers. -On the last day of the year,a local company paid $3,000 for catering services to be performed in 30 days. -Employee wages totaled $25,000 and were paid in cash. -The costs of food,beverages,and supplies used when catering services were performed amounted to $26,000 and were paid for in cash.(Note: Categorize these costs as "cost of goods sold.") -Unpaid bills for delivery costs during the year amounted to $1,000 and were on hand at the end of the year. -On the last day of the year,the company paid $12,000 in advance for rent on office space. Required: Part a.Determine the net income for Carl's Catering on a cash basis. Part b.Determine the net income for Carl's Catering on an accrual basis.

If beginning Accounts Payable is $10,000 and the purchases on account are $100,000 and payments made were $80,000 during the period,then the ending Accounts Payable balance is:

The expense recognition principle ("matching")dictates:

During 2015, Maverick Law Firm had the following transactions with it clients (customers): -On February 1, 2015, the company received cash of $5,000 from clients in payment of their account balances as of December 31, 2014. -On November 1, 2015, the company received $2,000 cash as payments in advance for law services to be performed in 2016. -The company received a total of $13,000 in cash for law services that were performed during 2015. -The company sent bills totaling $4,000 to clients for services performed during 2015; this amount was unpaid as December 31, 2015. -Use the information above to answer the following question.Which of the following statements about the activities for Maverick Law Firm for 2015 is correct?

Which of the following is not an operating activity?

At September 30,Balance Corporation reported the following unadjusted amounts for its accounts,each of which is considered to be a normal account balance.Prepare an unadjusted trial balance.

On December 31,2015,Hoosier Inc.paid $10,000 to rent a storage facility from July 1,2016 to July 1,2017.Which of the following statements about the effect of this transaction on Hoosier' financial statements is correct?

Which of the following groups of accounts contains only those that normally have credit balances?

Sparkling Pools received a bill for $1,200 for running newspaper ads during the last two weeks of July; the bill will be paid on August 1.Advertising Expense should be:

Salaries and Wages Expense appears on the _________,while Salaries and Wages Payable is a(n):

If a company incorrectly records a payment as an asset instead of an expense,how will this error affect net income in the current period?

In September,a customer signed a contract to have his house painted and paid for the job in October.The painting company bought the paint in August on account and paid for it in September.The painting company painted the house in November.Assuming accrual basis accounting is used,the painting company should record the:

A company neglected to record services provided on credit.What would be the effect of this omission?

The net profit margin ratio:

Receiving cash from a customer to pay for a previously recorded account receivable will:

Melody's Piano School operations for the month of May were limited to the following transactions: -Provided $400 of piano lessons to students who paid in cash. -Provided $100 of piano lessons on account. -Collected $300 from students who took piano lessons during April. -Paid April's piano rental bill of $100. -Received May's piano rental bill of $150 and set it aside for payment in June. -Use the information above to answer the following question.Assuming the company uses accrual basis accounting,what is net income for May?

The Metropolitan Bakery sold and delivered $900 worth of cakes for a wedding,billing the customer on credit.Which of the following records this transaction?

On February 28,AppGame paid for a one-year insurance policy that begins March 1.AppGame Company's entry to record this transaction includes a: