Question 1

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

Part b

Part c
Net...

Question 2

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.E) B) and C)
F) A) and D)

Question 3

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.E) A) and B)
F) A) and C)

Question 4

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.E) A) and B)
F) A) and C)

Question 5

Net income is increased when accounts receivable are collected.

Accepted Answer

A) True 
 B)False

Question 6

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.E) A) and B)
F) B) and C)

Question 7

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 sheetE) A) and B)
F) B) and C)

Question 8

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.E) A) and B)
F) B) and D)

Question 9

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.E) B) and C)
F) A) and B)

Question 10

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 expenseE) A) and B)
F) A) and C)

Question 11

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.E) B) and D)
F) All of the above

Question 12

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

Accepted Answer

A)   Advertising Expense
B)   Service Revenue
C)   Supplies Expense
D)   Total RevenuesE) None of the above
F) A) and D)

Question 13

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.E) All of the above
F) None of the above

Question 14

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 15

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.E) All of the above
F) C) and D)

Question 16

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.E) B) and C)
F) None of the above

Question 17

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.E) C) and D)
F) A) and C)

Question 18

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 $2,500E) A) and B)
F) A) and D)

Question 19

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.E) B) and C)
F) B) and D)

Question 20

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)   costE) A) and B)
F) A) and C)

Exam 3: Reporting Operating Results on the Income Statement

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

Correct Answer
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Correct Answer
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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?

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

Correct Answer
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The unadjusted trial balance:

Correct Answer
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Net income is increased when accounts receivable are collected.

Correct Answer
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Correct Answer
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Which statements about the unadjusted trial balance is not correct?

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

Correct Answer
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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:

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

Correct Answer
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The expense recognition principle ("matching") matches:

Correct Answer
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The income statement measures the:

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

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

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

Correct Answer
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Correct Answer
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Part a

Part b

Part c
Net...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified

Exam 3: Reporting Operating Results on the Income Statement

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The unadjusted trial balance:

Correct AnswerverifiedShow Answer

Net income is increased when accounts receivable are collected.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which statements about the unadjusted trial balance is not correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The expense recognition principle ("matching") matches:

Correct AnswerverifiedShow Answer

The income statement measures the:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedPart a Part b Part cNet...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct Answer
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Correct Answer
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Correct Answer
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Part a

Part b

Part c
Net...
View Answer

Correct Answer
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Correct Answer
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