Exam 3: The Basics of Record Keeping and Financial Statement Preparation: Income Statement

The intermingling of performance of one period with that of preceding or succeeding periods is characteristic of which basis of accounting? $\text { Cash basis}\quad\quad \text {Accrual basis }$

Which equation is correct?

As a general principle, under the accrual basis of accounting, the firm recognizes revenue when the transaction meets which of the following conditions?

Assume that a firm uses the accrual basis of accounting.Indicate the amount of expense the firm recognizes during the month of November for each independent transaction. a.Rent of $3,600 is paid on November 1 for the months November through January. b.Inventory costing $2,500 is ordered on account.The invoice is received on November 25 and the goods are received on December 5. c.Insurance premium of $900 is paid for a full year of coverage starting November 1. d.On December 3, an invoice for November utilities of $325 is received. e.On November 1, supplies costing $2,200 are purchased.At November 30, $500 of supplies remained on hand.

_____ present an ordered list, grouped by broad categories of revenues and expenses.They begin with revenues followed by a list of expenses.

The accounting records for Pocket's Restaurant Supply contained the following data for the current year: Sales \ 547,500 Cost of goods sold 223,800 Interest revenue 6,500 Rent revenue 3,600 Administrative expense 141,300 Selling expense 133,600 Interest expense 15,400 Income tax expense 8,100 Loss on sale of warehouse 6,500 Required: Prepare both a single-step and a multi-step income statement for Campbell's for the current year.

The firm recognizes an expense when the following condition(s) hold(s):

The income statement links the beginning and ending balance sheets.

The last step in the accounting record-keeping process is preparing the balance sheet from amounts in the balance sheet accounts.