Question 1

The correct entry by Seconds Best to record the sale in the previous month is:

Accepted Answer

A)   Option A
B)   Option B
C)   Option C
D)   Option DE) B) and C)
F) C) and D)

Question 2

Your company bought a 30-second advertisement that aired during the Super Bowl at a cost of $1.2 million. It is legally obligated to pay for the ad but has not yet done so. How does the purchase and use of the ad time affect your company's balance sheet?

Accepted Answer

A)   It increases both assets and liabilities by $1.2 million.
B)   It increases assets and decreases stockholders' equity by $1.2 million each.
C)   It does not affect the balance sheet.
D)   It increases liabilities and decreases stockholders' equity by $1.2 million each.E) B) and C)
F) None of the above

Question 3

Unearned Revenue is an alternative name for the stockholders' equity account typically known as Retained
Earnings.

Accepted Answer

A) True 
 B)False

Question 4

What is the amount of Accounts receivable at the end of 2011?

Accepted Answer

A)   $51,896
B)   $55,000
C)   $44,600
D)   $46,070E) A) and B)
F) None of the above

Question 5

A company reported Sales revenue, all from credit sales, of $40,000 on the Income Statement for the current year. The balance sheet includes the following:  What is the amount of cash that was collected during the year?

Accepted Answer

A)   $11,450
B)   $51,450
C)   $43,700
D)   $38,200E) B) and C)
F) All of the above

Question 6

Which of the following is true about expenses?

Accepted Answer

A)   Expenses are not reported if they are not paid.
B)   Expenses are reported in the period in which they are incurred to generate revenue.
C)   Expenses increase stockholders' equity.
D)   Expenses are only reported in the period they are paidE) B) and C)
F) C) and D)

Question 7

This month, Grass is Greener Lawn Service pays cash for $4,000 of grass fertilizer to be used two months from now. What journal entry will Grass is Greener record this month?

Accepted Answer

A)   Debit cash for $4,000 and credit supplies expense for $4,000.
B)   Debit supplies expense for $4,000 and credit accounts payable for $4,000.
C)   Debit supplies for $4,000 and credit cash for $4,000.
D)   Debit retained earnings for $4,000 and credit accounts payable for $4,000.E) A) and D)
F) B) and D)

Question 8

What is the amount of total revenue to be reported on the Income Statement for the month of January?

Accepted Answer

A)   $45,000
B)   $9,000
C)   $29,000
D)   $25,000E) C) and D)
F) A) and D)

Question 9

On the 15th of the month, a company receives $8,000 in payments from customers. $1,000 is for services performed on that day and the remaining is payment for services performed in the previous month. The $8,000 cash receipt would be recorded as a:

Accepted Answer

A)   debit of $7,000 to Accounts Receivable, debit of $1,000 to Service Revenue, and a credit of $8,000 to Cash.
B)   debit of $8,000 to Cash, a credit of $7,000 to Accounts Receivable, and a credit of $1,000 to Service Revenue.
C)   debit of $7,000 to Accounts Receivable, a debit of $1,000 to Unearned Revenue, and a credit of $8,000 to Cash.
D)   debit of $8,000 to Cash, debit of $1,000 to Service Revenue, and a credit of $7,000 to Accounts Receivable.E) C) and D)
F) A) and B)

Question 10

During April, the Grass is Greener Company buys and pays for a six-month supply of fertilizer in order to receive a bulk discount. The cost of fertilizer is recorded:

Accepted Answer

A)   immediately as an expense.
B)   as a liability, which will later be reduced as the fertilizer used.
C)   partially as an expense and partially as a liability.
D)   as an asset, which will later be reduced as the fertilizer is used.E) B) and C)
F) A) and B)

Question 11

What is the amount to be reported as total liabilities on the balance sheet at the end of January?

Accepted Answer

A)   $4,750
B)   $4,150
C)   $8,150
D)   $8,500E) A) and B)
F) A) and C)

Question 12

What is the amount of Law Services Revenue to be reported on the Income Statement for the year 2010?

Accepted Answer

A)   $19,000
B)   $22,000
C)   $24,000
D)   $17,000E) A) and B)
F) A) and C)

Question 13

A company incurred $5,000 in wages for employees for the year. $4,500 of these wages were paid by the end of the year. Choose the TRUE statement.

Accepted Answer

A)   Wages payable on the income statement will be $4,500.
B)   Wages expense on the income statement will be $500.
C)   Wages expense on the balance sheet will be $5,000.
D)   Wages payable on the balance sheet will be $500.E) A) and B)
F) C) and D)

Question 14

Which of the following accounts does not have a normal debit balance?

Accepted Answer

A)   Wages Expense
B)   Service Revenue
C)   Accounts Receivable
D)   CashE) C) and D)
F) All of the above

Question 15

Which of the following is true?

Accepted Answer

A)   Credits increase both assets and liabilities.
B)   Credits increase assets and decrease liabilities.
C)   Credits increase liabilities and decrease assets.
D)   Credits decrease both assets and liabilities.E) B) and C)
F) C) and D)

Question 16

Which of the following accounts does not have a normal credit balance?

Accepted Answer

A)   Contributed capital
B)   Accounts payable
C)   Revenue
D)   ExpenseE) B) and C)
F) All of the above

Question 17

Expenses are the same as expenditures.

Accepted Answer

A) True 
 B)False

Question 18

A company's revenue recognition policy:

Accepted Answer

A)   affects the income statement but not the balance sheet.
B)   defines when its revenue should be collected.
C)   is usually described in the notes to a company's financial statements.
D)   states that revenues should not be recorded until payments are received from customers.E) None of the above
F) All of the above

Question 19

Which of the following is a true statement?

Accepted Answer

A)   Revenue accounts are a subset of assets, and expense accounts are a subset of liabilities.
B)   Both revenue accounts and expense accounts are subsets of contributed capital.
C)   Both revenue accounts and expense accounts are subsets of retained earnings.
D)   Revenue accounts are a subset of cash, and expense accounts are a subset of accounts payable.E) A) and B)
F) A) and C)

Question 20

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) A) and B)

Exam 3: Reporting Operating Results on the Income Statement

What is the amount to be reported as total liabilities on the balance sheet at the end of January?

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What is the amount of Accounts receivable at the end of 2011?

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Unearned Revenue is an alternative name for the stockholders' equity account typically known as Retained Earnings.

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Which of the following accounts does not have a normal credit balance?

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Which of the following is true?

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A company reported Sales revenue, all from credit sales, of $40,000 on the Income Statement for the current year. The balance sheet includes the following: What is the amount of cash that was collected during the year?

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A company incurred $5,000 in wages for employees for the year. $4,500 of these wages were paid by the end of the year. Choose the TRUE statement.

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During April, the Grass is Greener Company buys and pays for a six-month supply of fertilizer in order to receive a bulk discount. The cost of fertilizer is recorded:

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A company's revenue recognition policy:

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Your company bought a 30-second advertisement that aired during the Super Bowl at a cost of $1.2 million. It is legally obligated to pay for the ad but has not yet done so. How does the purchase and use of the ad time affect your company's balance sheet?

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What is the amount of total revenue to be reported on the Income Statement for the month of January?

Correct AnswerverifiedShow Answer

The correct entry by Seconds Best to record the sale in the previous month is:

Correct AnswerverifiedShow Answer

This month, Grass is Greener Lawn Service pays cash for $4,000 of grass fertilizer to be used two months from now. What journal entry will Grass is Greener record this month?

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What is the amount of Law Services Revenue to be reported on the Income Statement for the year 2010?

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Expenses are the same as expenditures.

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Which of the following is true about expenses?

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Which of the following is a true statement?

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The unadjusted trial balance:

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Which of the following accounts does not have a normal debit balance?

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On the 15th of the month, a company receives $8,000 in payments from customers. $1,000 is for services performed on that day and the remaining is payment for services performed in the previous month. The $8,000 cash receipt would be recorded as a:

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