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Exam 3: Operating Decisions and the Accounting System

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Question 31

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Which of the following liability accounts is likely to be satisfied without a future cash payment?

A) Wages payable.
B) Unearned subscriptions revenue.
C) Accounts payable.
D) Taxes payable.

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

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Question 32

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Which of the following statements is false?

A) A liability is created when cash is received prior to delivery of the goods or services to a customer.
B) Revenue is recognized at the time of delivery of the goods or services to customers if cash is received.
C) Revenue is not recognized at the time of delivery of goods and services to customers if cash is received after delivery of the goods and services.
D) Collecting cash after delivery of a good or service to a customer does not create revenue on the income statement at the date of collection.

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

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Question 33

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Earnings per share must be either reported on the income statement or disclosed in the notes to the financial statements.

Garret Company has provided the following selected information for the year ended December 31,2019: Cash collected from customers was $783,000. Cash received from stockholders in exchange for common stock totaled $91,000. Cash paid to suppliers was $361,000. Cash paid to employees was $204,000. Cash to stockholders for dividends was $33,000. Cash received from sale of a building was $250,000. Cash paid for store rent was $39,000. Cash received for interest and dividends was $7,000. Cash paid for income taxes was $55,000. Based on the selected information provided,how much was Garret's cash flow from operating activities?

The following income statement was reported for Bauer Inc.for the first year of operations ending December 31,2019 reported (in thousands of dollars): A.Calculate net profit margin. B.Calculate earnings per share if there are 200,000 weighted average shares of common stock outstanding.

The core revenue recognition principle has two requirements for recognizing revenue.Which of the following is one of these requirements?

Which of the following statements regarding the net profit margin ratio is false?

Which of the following statements is correct?

An income statement that is categorized into operating and peripheral activities is called a consolidated income statement.

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

Part A.Perform transaction analysis for Blake Company regarding the following transactions for the month of March.Indicate the account affected by the transaction as well as the increase (+)or decrease (-)to the components of the accounting equation and the amount. Part B.Determine whether the transactions A-F above affected cash flows during March.If so,determine the type of activity as an operating activity,an investing activity,or a financing activity.If cash is not affected use "no effect." Place an X under the appropriate column for each transaction. Type of Activity

Trend Decorations Company provides decorating services for store displays.Trend sold equipment that it had been using to create decorations.Of the following choices,which will Trend report on its income statement when it sells the equipment?

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

The net profit margin ratio is calculated by dividing net sales by net income.

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

Which of the following correctly applies the revenue recognition principle?

Cash received prior to the providing of the goods or services results in an increase in both assets and liabilities.

Which of the following transactions will result in an increase in operating income as of the date of the transaction?

Describe the operating activities section of the cash flow statement and provide three examples of operating activities cash flows.

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 expense was $5,000. What is the amount of Colby's operating revenues?