FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 3: Operating Decisions and the Accounting System

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following does not correctly describe the cash basis of accounting?

A) It is not accepted for external reporting purposes.
B) Revenues are recognized when cash is collected from customers.
C) Expenses are recognized when they are paid for.
D) Cash payments for long-term assets are recognized as an expense at the time of payment.

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

Correct Answer

verified

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

During 2019,Sigma Company earned service revenue amounting to $700,000,of which $630,000 was collected in cash;the balance will be collected in January,2020.Also in 2019,there were collections of cash prior to the delivery of goods/services totaling $10,000.What amount should the 2019 income statement report for service revenue?

A) $630,000.
B) $700,000.
C) $70,000.
D) $570,000.

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

Correct Answer

verified

Show Answer

Question 23

True/False

Review LaterAdd Note

Dividends declared decrease net income.

Which of the following correctly describes the impact of collecting cash from customers for services to be provided in the future?

World Coffee,Inc.has provided the following information pertaining to the store's month ended October 31,2019: Prepare an income statement through operating income for the month ended October 31,2019.

Colby Corporation has provided the following information: • Operating revenues from customers were $199,700. • Operating expenses for the store were $111,000. • Interest expense was $9,200. • Gain from sale of plant and equipment was $3,300. • Dividend payments to Colby's stockholders were $7,700. • Income tax expense was $36,000. • Prepaid rent was $5,000. - What is the amount of Colby's operating income (income from operations) ?

Mama June Pizza Company sold land costing $39,000 for $51,000 cash.Which of the following statements concerning the land sale is correct?

Unearned revenues are reported as liabilities on the balance sheet.

Which of the following journal entries is correct assuming that Mama June Pizza Company received cash for interest earned on investments?

Colby Corporation has provided the following information: • Operating revenues from customers were $199,700. • Operating expenses for the store were $111,000. • Interest expense was $9,200. • Gain from sale of plant and equipment was $3,300. • Dividend payments to Colby's stockholders were $7,700. • Income tax expense was $36,000. • Prepaid rent was $5,000. - How much was Colby's net income?

Describe the difference(s)with respect to the cash basis of accounting and the accrual basis of accounting.

A company purchased supplies for cash,which will be consumed during future months.Which of the following does not correctly describe the impact on the financial statements when the supplies are used during future months?

The revenue recognition principle recognizes revenue when the goods or services are transferred to customers,regardless of the timing of the cash collection from customers.

Which of the following is correct when land costing $20,000 is sold for $29,000? The land was a component of property and equipment on the balance sheet.

Collections from customers are cash flows from operating activities.

Selling inventory to a customer on account results in an increase in an asset and an increase in revenues.

Interest expense is reported on the income statement as an operating expense.

Which of the following statements is false?

Which of the following would lengthen the operating cycle?

Colby Corporation has provided the following information: • Operating revenues from customers were $199,700. • Operating expenses for the store were $111,000. • Interest expense was $9,200. • Gain from sale of plant and equipment was $3,300. • Dividend payments to Colby's stockholders were $7,700. • Income tax expense was $36,000. • Prepaid rent was $5,000. - What is the amount of Colby's income before income taxes?