Question 1

Toy Shop Inc.has provided the following income statements:
  (1)Compute net profit margin for each year.
(2)Discuss some of the events that could have caused the changes to the net profit margin based on the income statement information above.

Accepted Answer

(1)In 2020, (3.8%);in 2019,4.5%;and in 2...

Question 2

Daring Dolls,Inc.received an order to provide SuperDolls for a big department store.The store paid Daring Dolls in advance for the order of SuperDolls.Which of the following describes what will occur when Daring Dolls recognizes revenue?

Accepted Answer

A)  Cash will be increased.
B)  Accounts receivable will be increased.
C)  Unearned revenue will be decreased.
D)  Unearned revenue will be increased.E) None of the above
F) B) and D)

Question 3

Which of the following best describes the expense recognition principle?

Accepted Answer

A)  It requires expenses to be recorded when they are paid for.
B)  It requires expenses to be recorded when incurred to generate revenues.
C)  It requires expenses to be recorded consistent with the cash basis of accounting.
D)  It does not allow expenses to be recorded if they are incurred prior to being paid.E) A) and D)
F) None of the above

Question 4

Which of the following transactions would be reported as cash flow from operating activities on a cash flow statement?

Accepted Answer

A)  Cash paid to purchase equipment.
B)  Cash paid to acquire land.
C)  Cash paid for dividends to the company's stockholders.
D)  Cash paid for wages.E) None of the above
F) A) and D)

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Which of the following journal entries is correct when a company has incurred an expense for work performed but has not yet paid for theses wages to employees?

Accepted Answer

A)   
B)   
C)   
D)   E) All of the above
F) A) and B)

Question 7

According to the revenue recognition principle,revenue is recognized at the time that cash is collected from a customer for services to be provided in the future.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following accounts normally have a credit balance?

Accepted Answer

A)  Unearned revenue;Prepaid rent;Sales revenue.
B)  Sales revenue;Expenses;Retained earnings.
C)  Sales revenue;Cash;Unearned revenue.
D)  Accounts payable;Retained earnings;Sales revenue.E) A) and B)
F) All of the above

Question 9

Which of the following is not a proper application of the revenue recognition principle?

Accepted Answer

A)  Recording the sale of merchandise on credit as sales revenue.
B)  Recording rent received in advance as unearned rent revenue.
C)  Recording interest revenue when cash is collected rather than when earned.
D)  Reducing the unearned service revenue account for service revenue performed at the end of the accounting period.E) All of the above
F) A) and B)

Question 10

Which of the following statements is false?

Accepted Answer

A)  An expense is a cost incurred to generate revenues.
B)  Selling assets at a gain does not result in earning revenue.
C)  Revenues are reported on the income statement as they are earned.
D)  Revenues result in an increase in net income and additional paid-in capital.E) A) and B)
F) A) and C)

Question 11

The expense recognition principle requires expenses to be recorded on the income statement in the same period they are incurred in generating revenues.

Accepted Answer

A) True 
 B)False

Question 12

A company purchased $20,000 of inventory during February and will pay for it during March.Which of the following statements is false,assuming the inventory was sold during March?

Accepted Answer

A)  The company's accounts payable will include the $20,000 on the February month-end balance sheet.
B)  The statement of cash flows will report an operating cash outflow of $20,000 during March.
C)  The income statement will report cost of goods sold of $20,000 during February.
D)  The company's inventory will include the $20,000 on the February month-end balance sheet.E) B) and C)
F) A) and D)

Question 13

Describe the transaction that created the following journal entries (amounts omitted).

Accepted Answer

1.Cash was received from a customer in a...

Question 14

Which of the following best describes the operating cycle?

Accepted Answer

A)  It is the length of the manufacturing process.
B)  It is the time that elapses from the purchase of inventory on account to the sale of inventory on account.
C)  It is the time that elapses from the completion of the manufacturing process to the cash collection from sale of the manufactured goods.
D)  It is the time that elapses from the cash payment to suppliers to collection of cash from customers.E) B) and C)
F) None of the above

Question 15

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 property and equipment occurred.
• Interest income was $7,700.
• Interest expense was $19,900.
• Supplies expense was $336,000.
• Rent expense for the store was $36,000.
• Wages expense was $49,000.
• Other operating expenses totaled $79,000.
• Unearned revenue was $4,000.
-
What is the amount of Lantz's income before income taxes?

Accepted Answer

A)  $553,800.
B)  $465,800.
C)  $199,800.
D)  $531,800.E) All of the above
F) B) and D)

Question 16

Zeppelin Company received cash during January for services to be provided in February.Which of the following statements does not accurately describe the impact on the financial statements when Zeppelin provides the services during February?

Accepted Answer

A)  Unearned revenue decreased and was debited.
B)  Revenue increased and was credited.
C)  Stockholders' equity will increase.
D)  Total assets will increase.E) B) and C)
F) A) and B)

Question 17

Which of the following businesses would most likely not report cost of goods sold on its income statement?

Accepted Answer

A)  A law firm.
B)  An automobile dealership.
C)  A pizza restaurant.
D)  A computer chip manufacturer.E) A) and C)
F) B) and C)

Question 18

A retail store would likely have a shorter operating cycle than an automobile manufacturer.

Accepted Answer

A) True 
 B)False

Question 19

What is the operating cycle? Describe a business entity with an operating cycle of less than six months and a business with an operating cycle of more than one year.

Accepted Answer

The operating cycle is the time that ela...

Question 20

Expenses are the result of decreases in assets or increases in liabilities incurred in order to generate revenues.

Accepted Answer

A) True 
 B)False

Exam 3: Operating Decisions and the Accounting System

Which of the following best describes the expense recognition principle?

Correct Answer
verified

What is the operating cycle? Describe a business entity with an operating cycle of less than six months and a business with an operating cycle of more than one year.

Correct Answer
verified
The operating cycle is the time that ela...
View Answer

The expense recognition principle requires expenses to be recorded on the income statement in the same period they are incurred in generating revenues.

Correct Answer
verified

A company purchased $20,000 of inventory during February and will pay for it during March.Which of the following statements is false,assuming the inventory was sold during March?

Correct Answer
verified

A retail store would likely have a shorter operating cycle than an automobile manufacturer.

Correct Answer
verified

Daring Dolls,Inc.received an order to provide SuperDolls for a big department store.The store paid Daring Dolls in advance for the order of SuperDolls.Which of the following describes what will occur when Daring Dolls recognizes revenue?

Correct Answer
verified

Which of the following accounts normally have a credit balance?

Correct Answer
verified

Toy Shop Inc.has provided the following income statements: (1)Compute net profit margin for each year. (2)Discuss some of the events that could have caused the changes to the net profit margin based on the income statement information above.

Correct Answer
verified
(1)In 2020, (3.8%);in 2019,4.5%;and in 2...
View Answer

Expenses are the result of decreases in assets or increases in liabilities incurred in order to generate revenues.

Correct Answer
verified

Which of the following businesses would most likely not report cost of goods sold on its income statement?

Correct Answer
verified

Which of the following statements is false?

Correct Answer
verified

Which of the following best describes the operating cycle?

Correct Answer
verified

According to the revenue recognition principle,revenue is recognized at the time that cash is collected from a customer for services to be provided in the future.

Correct Answer
verified

Which of the following transactions would be reported as cash flow from operating activities on a cash flow statement?

Correct Answer
verified

Correct Answer
verified

Which of the following is not a proper application of the revenue recognition principle?

Correct Answer
verified

Zeppelin Company received cash during January for services to be provided in February.Which of the following statements does not accurately describe the impact on the financial statements when Zeppelin provides the services during February?

Correct Answer
verified

Describe the transaction that created the following journal entries (amounts omitted).

Correct Answer
verified
1.Cash was received from a customer in a...
View Answer

Which of the following journal entries is correct when a company has incurred an expense for work performed but has not yet paid for theses wages to employees?

Correct Answer
verified

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

Correct Answer
verified

Exam 3: Operating Decisions and the Accounting System

Which of the following best describes the expense recognition principle?

Correct AnswerverifiedShow Answer

What is the operating cycle? Describe a business entity with an operating cycle of less than six months and a business with an operating cycle of more than one year.

Correct AnswerverifiedThe operating cycle is the time that ela...View AnswerShow Answer

The expense recognition principle requires expenses to be recorded on the income statement in the same period they are incurred in generating revenues.

Correct AnswerverifiedShow Answer

A company purchased $20,000 of inventory during February and will pay for it during March.Which of the following statements is false,assuming the inventory was sold during March?

Correct AnswerverifiedShow Answer

A retail store would likely have a shorter operating cycle than an automobile manufacturer.

Correct AnswerverifiedShow Answer

Daring Dolls,Inc.received an order to provide SuperDolls for a big department store.The store paid Daring Dolls in advance for the order of SuperDolls.Which of the following describes what will occur when Daring Dolls recognizes revenue?

Correct AnswerverifiedShow Answer

Which of the following accounts normally have a credit balance?

Correct AnswerverifiedShow Answer

Toy Shop Inc.has provided the following income statements: (1)Compute net profit margin for each year. (2)Discuss some of the events that could have caused the changes to the net profit margin based on the income statement information above.

Correct Answerverified(1)In 2020, (3.8%);in 2019,4.5%;and in 2...View AnswerShow Answer

Expenses are the result of decreases in assets or increases in liabilities incurred in order to generate revenues.

Correct AnswerverifiedShow Answer

Which of the following businesses would most likely not report cost of goods sold on its income statement?

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

Which of the following best describes the operating cycle?

Correct AnswerverifiedShow Answer

According to the revenue recognition principle,revenue is recognized at the time that cash is collected from a customer for services to be provided in the future.

Correct AnswerverifiedShow Answer

Which of the following transactions would be reported as cash flow from operating activities on a cash flow statement?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not a proper application of the revenue recognition principle?

Correct AnswerverifiedShow Answer

Zeppelin Company received cash during January for services to be provided in February.Which of the following statements does not accurately describe the impact on the financial statements when Zeppelin provides the services during February?

Correct AnswerverifiedShow Answer

Describe the transaction that created the following journal entries (amounts omitted).

Correct Answerverified1.Cash was received from a customer in a...View AnswerShow Answer

Which of the following journal entries is correct when a company has incurred an expense for work performed but has not yet paid for theses wages to employees?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
verified
The operating cycle is the time that ela...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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(1)In 2020, (3.8%);in 2019,4.5%;and in 2...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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1.Cash was received from a customer in a...
View Answer

Correct Answer
verified

Correct Answer
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