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Exam 3: Operating Decisions and the Income Statement

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Question 51

True/False

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

A) True
B) False

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Question 52

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When the board of directors declares a cash dividend either retained earnings or the dividends account can be debited.

A) True
B) False

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Question 53

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Boone's Cleaning Service performed cleaning services during December,2010,but had not collected any cash from its customers as of December 31,2010.What impact did performing these services have on the accounting equation?

Which of the following statements does not properly describe the accrual basis of accounting?

Complete the chart below for Monticello Corporation by placing an X in the appropriate boxes to indicate how the transaction should be recorded.

Blazon Corporation's retained earnings increased $79,000 during 2011.Blazon declared $19,000 of dividends and paid $15,000 of the dividends declared during 2011.How much was Blazon's 2011 net income assuming that Blazon's stockholders invested an additional $30,000 during 2011?

Which of the following accounts normally have a debit balance?

Colby Company has provided the following selected information for the year ended December 31,2011: Cash collected from customers was $392,000. Cash received from stockholders in exchange for stock totaled $46,000. Cash paid to suppliers was $183,000. Cash paid to employees was $102,000. Cash received from a long-term bank loan was $75,000. Cash to stockholders for dividends was $17,000. Cash received from sale of a building was $125,000. Cash paid for rent was $19,000. Cash received for interest and dividends was $4,000. Cash paid for income taxes was $28,000. Based on the selected information provided,how much was Colby's cash flow from operations?

Which of the following describes the reporting of interest expense on the income statement?

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

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

Indicate the sequential order of the following steps in the accounting information processing cycle: Analyzing transactions Preparing financial statements Developing a trial balance Collecting original data Posting to the accounts Journalizing transactions

An example of operating revenues would be the revenue created by the sale of an automobile by a car dealership.

Expense accounts have debit balances because they result in decreases in net income,retained earnings and stockholders' equity.

Beemer Corporation has provided the following information pertaining to the year ended December 31,2011: Stockholders' equity as of January 1 was $789,000. Dividends declared during the year totaled $71,000 of which $60,000 were paid during the year. Stockholders invested $113,000 cash into the business in exchange for new shares of stock. Stockholders' equity as of December 31 was $1,030,000. How much was Beemer's 2011 net income?

Which of the following journal entries is prepared when a customer pays cash prior to delivery of the goods or services?

Lantz Company has provided the following information: Cash sales totaled $255,000. Credit sales totaled $479,000. Cash collections from customers for services yet to be provided totaled $88,000. A $22,000 loss from the sale of plant and equipment occurred. Interest income was $7,700. Interest expense was $19,900. Cost of goods sold was $336,000. Rent expense was $36,000. Salaries expense was $49,000. Other operating expenses totaled $79,000. How much was Lantz's operating income?

Describe the difference between operating revenues and gains from the sale of plant and equipment while providing examples of each.

Using cash to purchase office supplies which will be consumed later results in an increase in expenses and a decrease in assets as of the time of purchase.

Cash collected prior to the providing of the good or service results in an increase in both assets and liabilities.