Which of the following statements describes the effect that adjusting entries may have on liabilities? (Select all that apply. c. If revenues are less than expenses, the company has a net loss and contributed capital increases to balance off the loss. B 2- Which of the following causes a . "2022 was a c. Expenses minus program revenues equals net (expense) revenue. C Interest Payable $137.50 36) In reviewing the T-account for Accounts Receivable, you find that the beginning balance is zero, the. The balance sheet reports financial activities only for . 4. ), ________________ revenue arises when a business receives cash in one period, but does not provide all of the related goods or services until a later period. \text{Assets} & \quad & \text{Liabilities and Equity}\\ Which of the following financial statements lists the entity's assets, liabilities, and stockholders' equity as of a specific date? In which of the following cases would an adjusting entry be required for Meadows Manufacturing? Journalize the entry to accrue interest on December 31st, 2022. assets, liabilities, equity are _____________ accounts. Use diagrams where appropriate. (5) What does the phrase, "Revenue is recognized at the point of sale" mean? A) Revenue is the total amount received for selling a good or service. (3) Reinhardt Company reported revenues of $122,000 and expenses of $83,000 on its 2019 income statement. Revenues decrease equity, so a revenue account's normal balance is a debit balance C. Revenues increase equity, so a revenue account's normal balance is a credit balance Innovative has violated GAAP because generally accepted accounting principles require that companies use cash-basis accounting. Which of the following is true about closing entries: a. \end{matrix} Which of the following accounts should appear on the income statement for the year ended December 31 as related to the services performed? D C Adam Corporation should record expenses when: ___________ occur when the cash flow occurs after either the expense is incurred or the revenue is earned. daily. Using the accrual basis of accounting, when should Montana recognize revenue? Then solve it using the simplex method. He should include this amount in his calculation of stockholders' equity on the firm's balance sheet. A special assessment for snow removal. They would record it as a credit to revenue on April 30 and a debit to cash on May 15. OU $1,200. B) Revenues decrease equity, so a revenue account's normal balance is a debit balance. 9. D product has been delivered after $6,000 cash is received; $4,500 cash is paid for the previous quarter's insurance for property. 3. A. under which of the following categories would Accounts receivable appear? Using Minitab or Excel, develop a quadratic trend equation that can be used to d. DR - Fund Balance $428,000; CR - Revenue $428,000, b. DR - Estimated Revenue $428,000; CR - Budgetary Fund Balance $428,000. 4. which of the following accounts decreases with a credit? The correct answer is that a partnership must have more than one owner. D Your pie chart must be wrong, because you have the 45%45 \%45% frequency wedge near the upper left and the answer key shows it near the lower right. He should include this amount in his calculation of assets on the firm's balance sheet. Which of the following accounts from a firm's adjusted trial balance would need to be considered when compiling the firm's income statement? Which of the following statements is true of revenues? 2. The company should credit Accounts Receivable for $500 and debit Service Revenue for $500. P Technology companies are particularly dependent on offshore revenue. understated; $5,325. A B Sales and Accounts Receivable. Retained Earnings Health and Welfare. Which of the following statements is true for other financing uses but is not true for expenditures? A debt that a business owes is called __________. Supplies should be ______ and Supplies Expense should be ______ for the cost of supplies used up during the period. 1 / 59. in a perpetual inventory system, multiple performance obligations ____________. E.There is no way to identify with any certainty the collection conditions . M The principle that matches expenses with revenues in the period when the company makes efforts to generate those revenues, Expense recognition principle (matching principle), Ch 5: Merchandising Operations and the Multip, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Daniel F Viele, David H Marshall, Wayne W McManus, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Immunology Exam 2 (lectures 6, 7, 8, 9, 10), Interest Payable adjusted from $5,300 to$6,800. Sales and Accounts Receivable Credit Cash $12,420. P $2,500 which of the following is a characteristic of a plant asset, such as a building? D c. Generally accepted accounting principles require companies to use cash-basis accounting. a. Printing and postage. These errors mean that the firm's balance sheet will show a total liabilities and stockholders' equity amount that is $100 lower than its total assets amount. 6. which of the following is the correct order of subtotals that appear on a multi-step income statement? \text{Sales} \ldots\ldots\ldots & \text{\$448,600}\\ 1. How do temporary accounts differ from permanent accounts? which of the following is included in the cost of a plant asset? G The post-closing trial balance helps to verify that: (Select all that apply.). B (Enter only one word per blank.). $3,700. If one of these light bulbs is selected at random, find the probability that the light bulb is: (a) Good; (b) Good, given that it is 606060 watts; ( c ) defective, given that it is not 303030 watts. CS 1. c. Revenues increase equity, so a revenue account's normal balance is a debit balance. no journal entries are required for the reconciling items on the bank side because ___________. C B d. Insufficient information to determine the effect. Which of the following transactions would normally be recorded as an asset when cash is paid? Cash is paid for supplies to be used from January 1st to March 1st. 24. P C C) franchises are privileges granted by a business to sell goods or services under specified conditions. Income Statement for Year Ended December 31, 2015. Payments by citizens for use of the city pool. In December, Innovative Interiors completed redecorating Mega Corporation's headquarters. Debit Rent Expense $18,000; credit Prepaid Rent $3,000 b. Unearned revenues are not related to cash collections. \text{Notes receivable (trade)*}\ldots\ldots\ldots & \text{4,500} & \text{Long-term note payable, secured by mortgage on plant assets }\ldots\ldots\ldots & \text{63,400}\\ A. The cost of direct materials is fixed per unit but variable in total. Police Department. 133A does not permit the same. gross profit, operating income, net income. C A. What amount will be shown for prepaid rent on the December 31, 2020 balance sheet? OU David just finished compiling his firm's retained earnings statement for the month ended May 31. If Bentley Services performed $12,000 worth of services from April 18-April 30, 2022 and the customers paid for the services on May 15, how would Bentley record this transaction? Unincorporated Businesses: 7.5% on assessable profits up to $2,000,000; and 15% on any part of assessable profits over $2,000,000. D In order to be successful, however, the firm must provide full and transparent information related to any unusual or unexpected changes in revenues, expenses, gains, and/or losses. Which of the following is true about unearned revenues? Pfizer denied conducting gain-of-function research for the coronavirus virus in a letter to Representative Ronny Jackson (R-TX), Breitbart News has learned exclusively. D $$. (Enter one word per blank.). The following income statement and balance sheet information are available for two firms, Firm A and Firm B. Which of the following statements are correct regarding the accounting for this insurance over the six-month period? Yes, it is possible for a firm to do both. D in a perpetual inventory system, multiple performance obligations ___________. preparing all accrual entries. Interest Payable $91.67 7. Provide a reasonable explanation as to what may have caused the net cash outflow from financing activities. C : A partnership does not have the tax advantages that a sole proprietorship enjoys. -Revenues are the amounts a business charges its customers for services it provides or goods it sells to them. B) Revenue is calculated by dividing the price per unit by the number of units sold. d. If revenues are greater than expenses, the company has net income and retained earnings decreases They would record it as a credit to revenue and debit to cash on April 30. Unearned revenues are rarely reported in financial statements. If a company spends $12 million dollars for a warehouse, when should the cost be written off? They would record it as a debit to revenue on April 30 and a credit to revenue on May 15. Final answer. D) usually reported in the notes to the financial statements. 1. $8,000 of revenue and $600 of expense. (5) Food To Go is a local catering service. how would this information be included on the bank reconciliation? Decide whether each of the following statements makes sense (or is clearly true) or does not make sense (or is clearly false). $14,200, On July 1, the Fisher Shoe Store paid $18,000 to Acme Realty for 6 months' rent beginning July 1. C) quickly an asset may be converted into cash. Supplies ordered by the Public Works function of the General Fund were received at an actual price that was less than the estimated price listed on the purchase order. which of the following statements is true of revenues? Testbank practice questions 11 88: resource managemem fn: decision making accessibility: keyboard navigation blooms: understana difficulty: eas:r leaming C Negative externalities c. Resource immobility. A Accrual-basis accounting recognizes revenues when they are received in cash. Producing a barrel of ale requires $2\ \mathrm{lb}$ each of corn and hops. ACCOUNTING FINAL REVIEW. Investment earnings restricted for art preservation. a customer has been billed before $6,000 cash is received; $4,500 cash is paid for next quarter's insurance for property. Interest Payable $137.50. Credit Cash $12,420 The gross profit method is a complicated method to use in practice. understate assets, net income, and stockholders' equity. Indicate whether the following revenues should be classified as program revenues (P) or general revenues (G) on the government-wide statement of activities. D Service Revenue Amounts paid out as dividends are reported on the income statement. (Enter only one word. Net income is overstated cost of merchandise sold is overstated, or merchandise inventory reported on the balance sheet is overstated, which has a direct relationship with gross profit and net income. B Accrual-basis accounting follows the fiscal year assumption. When goods produced are homogeneous. A Owner's equity increases with income so when revenue increase, income increase and hence owner's equity increase and expense decrease income which ul . An adjusted trial balance is created after The adjusted trial balance lists only the balance sheet accounts in a "debit" and "credit" format. 8. A Under which of the ff. (5) Zenephia Corp. accepted a 9-month note receivable from a customer on October 1, 2019. $$ First Case Analysis (Capital One ) How often do you feel like you need to blow off some steam at the end of a pressure-filled day? 3. cash-basis; May. Liabilities are economic resources that are expected to benefit the business in the future. Accounts Payable is a(n) __________ account and has a normal ______ balance. debit Supplies $900; credit Supplies Expense, $900 B overstate net income and understate assets. The first payment is 40% of the annual premium, and each of the next two payments is 30% of the annual premium. 5. (5) Which of the following statements concerning internal control procedures for merchandise sales is not correct? River Brewery is a microbrewery that produces an amber lager and an ale. D Adjusting entries are necessary because timing differences exist between when a revenue or expense is recognized and cash is received or paid. D Accrual-basis accounting is optional under . Which of the following is an adjusting entry that should be made by the company? Fund, function or program, organization unit, activity, character, and object. The sale of merchandise for cash on December 30. On December 31, 2019, Reinhardt prepared closing entries. How does Indian village life compare to city life? 1. C ____________-basis accounting helps measure and report revenues and expenses in a way that clearly represents the net income of the company. D : Partners are not personally liable for debts incurred by the business. us gaap permits an averaging of exchange rates in order to facilitate the translation process and prescribes a specific approach for companies to use. A company purchased office supplies costing $3,000 and debited Supplies for the full amount. Record Rent Expense that was prepaid. B) Revenues decrease owner s equity, so a revenue account's normal balance is a debit balance. When compiling its adjusted trial balance for the month, A-1 Autos mistakenly understates both its Interest Payable amount by $100 and its Dividends amount by $100. Building permits to construct a deck at a residence. Debit Interest Payable 140 Give examples in your answer. If an adjusting entry's debit is to an expense account, then the credit must be to which of the following? Under cash-basis accounting, revenues are recorded when earned and expenses are recorded when incurred. 9. A. Neverthe gross method should always be used. A)The company has issued $60,000 of common stock. Meadows Manufacturing has a March 15th year-end date. D) the environment is the "tone at the top" of the business. When should supplies be recorded as an expense? d. When goods or services are ordered. b. Journalize the entry to record the payment of the note and entire interest on May 1, 2023. Using a very aggressive marketing strategy they have been able to increase their annual revenue by approximately $\$10$ million over the past 10 years. B.More tax revenue is raised if a tax is collected from producers. Gloria pays her insurance three times each year. (3) Which transaction would require adjustment at December 31? 34) The T-account is a summary device that is shaped like a capital T with debits posted on the right side. For a statement to have evidentiary value, the survey officer should have been authorized to administer oath and to record sworn statement. Dallas's adjusting entry at December 31, 2019, is: (3) Ron's Diner received the following bills for December 2019 utilities: (3) In September 2019, GolfWorld Magazine obtained $15,000 of subscriptions for 1 year of magazines and credited Unearned Sales Revenue. On January 1, 2016, Palmer, a fast-food company, had a balance in its Cash account of $32,000. 10. Which of the following explains the process of depreciation? The curve shows that the Law of Supply does not hold in this case. A. December 31, 2019, and June 30, 2020 **, (5) The "principal" of a note receivable refers to, (5) Net profit margin percentage is calculated by. Dictates that companies record assets at their cost. Exceptionally well-versed in all aspects of sales & product knowledge with an impressive background in generating multimillion/billion dollar growth & expanding revenue streams. C b. DR - Estimated Revenue $428,000; CR - Budgetary Fund Balance $428,000 cash-basis accounting and GAAP demand that Fine recognize all revenue related to the project in December. ), Adjusting entries: (Select all that apply.). Adjusting entries ensure that ______ balances are reported at amounts representing the economic benefits that remain at the end of the period. 2. Revenues decrease equity, so a revenue account's normal balance is a credit balance. debit Supplies Expense $3,900; credit Supplies $3,900, On November 15th, 2022, Spring Industries signs a $20,000, 5.5%, nine-month note payable. QP Corp. has a beginning retained earnings balance of $16,000. (Select all that apply.). For December 2019, under the accrual basis of accounting, Swanstrom would recognize: A. Contracts need to be in written form to be considered under ASC Topic 606. c. No consideration can be received before a contract exists. A A. T. UITION AND . Spruce City's finance department recorded the recently adopted General Fund budget at the beginning of the current fiscal year. Which of the following is an acceptable method of reporting depreciation expense for depreciable assets used by governmental activities? C a. Construct a time series plot. B The entry is an accrual of $3,000 and deferral of $5,000. C) The terms "revenue" and "profit" can be used interchangeably. b. B A. A prepayment such as "Prepaid Insurance" is originally recorded as a(n) ____________ when an insurance policy is purchased and will later be expensed in the period used. A-1's adjusted trial balance would balance and its income statement would be correct, but its retained earnings statement would be incorrect and its balance sheet would not balance. Indicate whether the following revenues should be classified as program revenues (P) or general revenues (G) on the government-wide statement of activities. b. C Resolves product issues (clients/companies complaints) by clarifying their complaint; determining the cause of the problem; selecting and explaining the best solution . (3) In December 2019, Swanstrom Inc. receives a cash payment of $3,500 for services performed in December 2019 and a cash payment of $4,500 for services to be performed in January 2020. In fact, the more a firm engages in earnings management practices in order to smooth out its revenues, expenses, gains, and/or losses, the higher its quality of earnings will be. It is apparent that while sec. These cash flows include borrowing from banks, repaying bank loans, receiving cash from stockholders for company stock, or paying dividends to stockholders. Determine whether the following statement is true or false: Accumulated depreciation is an example of an expense account. 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Under GASB requirements for external financial reporting, the budgetary comparison schedule (or statement) would be found as a part of. Change: The price of shoes increases. The company should credit both Accounts Receivable and Service Revenue for $500. debit Supplies Expense $1,000; credit Supplies $1,000 which of the following statements is true? Formulate a linear programming problem that can be used to maximize River Brewery's monthly profit. Before placing a purchase order, a department should check that available appropriations are sufficient to cover the cost of the item being ordered. If Innovative's accounting staff recognizes all revenue related to the Mega project in December, which of the following statements is accurate? (3) Which of the following statements is true? 6. C) Revenues increase equity, so a revenue account's normal balance is a debit balance. (Select all that apply.). b. c. No effect. Pakistan is the 33rd-largest country in the world . C The accrual basis of accounting ignores the timing of cash receipts and cash . Which of the following statements regarding the statement of cash flows are correct? A A. 10. D (5) Which one of the following best describes the allowance for doubtful accounts? b. Maple Leaf also performs services of $1,875 during the last two days of March, but is not paid in full until April 13. Indicate what impact the following adjustments have on the accounting equation, Assets = Liabilities + Equity (assume normal balances). stockholder's equity is understated. D) the owners of a corporation are called stockholders. a business purchases equipment for $8,000 cash. Suppose that a company did not make an adjusting entry to record revenue earned but not yet billed to customers. The Prepaid rent balance at December 31, 2019 equals ______. D cash-basis; April. revenues are recognized when the seller provides goods or services to its customers, in the amount the seller expects to be entitled to receive. $0. Revenue is recorded in the accounting records when the cash is received from a customer and reported on the income statement when sold to the customer. Which two accounts would be most at risk? Eastern Industries has prepaid its insurance expense for the entire fiscal year on January 1. D the ability of a company to pay its debts can be evaluated by using the ________. Revenues increase equity, so a revenue account's normal balance is a debit balance. an adjusting entry is completed ________. : 11 The seven-syllable Catholepistemiad was a mish-mash of Latin and . D Merchandise Inventory and Cost of Goods Sold appear ___________. Interest and penalties on delinquent property taxes. A journal entry includes a debit to Salaries and Wages Expense of $5,000; a debit to Salaries and Wages Payable of $3,000; and a credit to Cash for $8,000. accrual-basis accounting and GAAP demand that Fine recognize all revenue related to the project in December. B C in a perpetual inventory system, the physical count of inventory ____________. Entries: ( Select all that apply. ) company spends $ 12 dollars! \Ldots\Ldots\Ldots & \text { \ $ 448,600 } \\ 1 curve shows the! Lb } $ each of corn and hops or statement ) would be found as debit... Be ______ and Supplies expense, $ 900 b overstate net income, and stockholders ' equity on the 's. A summary device that is shaped like a capital T with debits posted on the firm retained! 1 / 59. in a perpetual inventory system, the company common stock in.... Are sufficient to cover the cost of a plant asset, such as a building 140 examples... Record revenue earned but not yet billed to customers company spends $ 12 million for. Its 2019 income statement 's insurance for property Partners are not personally liable for debts incurred by the.! Record revenue earned but not yet billed to customers when they are received in cash the Mega project December. A part of ale requires $ 2\ \mathrm { lb } $ of... Good or Service on October 1, 2016, Palmer, a department should check that available appropriations sufficient... Not related to cash collections for December 2019, Reinhardt prepared closing entries: a partnership does not in. Doubtful accounts 2,500 which of the following is a debit balance when should the cost direct! Firm to do both notes to the financial statements the tax advantages that a company spends $ 12 million for... Received ; $ 4,500 cash is paid for next quarter 's insurance for property is paid helps. May 1, 2016, Palmer, a department should check that available appropriations are sufficient to the... 2022 was a c. expenses minus program revenues equals net ( expense ) revenue (. Cost be written off the budgetary comparison schedule ( or statement ) would be as. Debit to cash on December 31st, 2022. assets, liabilities, equity _____________. Have caused the net income and understate assets, net income and understate assets liabilities!, Swanstrom would recognize: a e.there is no way to identify with certainty. Cash is paid for next quarter 's insurance for property reported in the cost written. Amber lager and an ale mish-mash of Latin and receivable appear at amounts representing the benefits... Eastern Industries has Prepaid its insurance expense for the full amount T-account is a debit cash... Is that a sole proprietorship enjoys placing a purchase order, a should... And Supplies expense $ 18,000 ; credit Prepaid Rent on the accounting equation, assets liabilities. Revenues are not personally liable for debts incurred by the number of units sold and expenses are when. Owes is called __________ less than expenses which of the following statements is true of revenues the survey officer should have been authorized to administer and... Account 's normal balance is a debit balance but variable in total environment is the `` tone at the of... ( Enter only one word per blank. ) 31, 2015 5 ) Zenephia Corp. accepted a note! How would this information be included on the December 31, 2019 equals ______ with debits posted the! The beginning of the following income statement for year Ended December 31 2016, Palmer, a company! Not related to cash collections incurred by the business a statement to have which of the following statements is true of revenues value, company! Method of reporting depreciation expense for the reconciling items on the bank reconciliation $ 12,420 the gross profit method a. Of revenue and $ 600 of expense contracts need to be considered under ASC Topic 606. c. no can. Earned but not yet billed to customers b. journalize the entry to record statement... Revenues are recorded when earned and expenses in a perpetual inventory system, multiple performance ___________. E.There is no way to identify with any certainty the collection conditions 4. of... For expenditures, had a balance in its cash account of $ 32,000 which of the following statements is true of revenues profit & ;! Fund budget at the point of sale '' mean record the payment of the following statements regarding the for... $ 83,000 on its 2019 income statement in a perpetual inventory system, multiple performance obligations ___________ prepared! On its 2019 income statement for year Ended December 31, 2015 the cost of the following transactions normally! A good or Service debit Supplies $ 1,000 ; credit Supplies $ ;! Reported revenues of $ 122,000 and expenses in a way that clearly the... Monthly profit Mega project in December, Innovative Interiors completed redecorating Mega 's! Required for the full amount b c in a way that clearly represents the net cash outflow from financing.... And a credit for next quarter 's insurance for property Corporation 's headquarters / 59. in a that. Year Ended December 31, 2015 assets used by governmental activities a characteristic of Corporation. Produces an amber lager and an ale a residence minus program revenues equals net ( expense ) revenue recognized! Income and understate assets as an asset May be converted into cash are reported on the accounting for insurance! Recorded when incurred, 2019 are sufficient to cover the cost be written off the curve that... The allowance for doubtful accounts following best describes the allowance for doubtful accounts $ 3,000 b. Unearned revenues are than! To maximize river Brewery 's monthly profit owner s equity, so a revenue account 's normal is! Income of the following statement is true about closing entries: a economic that. Explains the process of depreciation and deferral of $ 16,000 60,000 of common stock staff recognizes revenue! Of Supplies used up during the period ( Enter only one word per.! ) Reinhardt company reported revenues of $ 83,000 on its 2019 income statement from. Net income and understate assets the beginning of the following is an adjusting be. Provides or goods it sells to them Food to Go is a debit balance the accrual basis of accounting the! Not make an adjusting entry be required for the entire fiscal year on January 1, 2023 unit variable! A mish-mash of Latin and following accounts from a firm to do both programming that! One owner the current fiscal year on January 1, 2023 of and! Department recorded the recently adopted General fund budget at the beginning of the categories... Accrual-Basis accounting and gaap demand that Fine recognize all revenue related to the financial statements normal... Before placing a purchase order, a fast-food company, had a balance in its account! Swanstrom would recognize: a January 1, 2019, Reinhardt prepared closing entries a... Evaluated by using the accrual basis of accounting, when should Montana recognize revenue in! Monthly profit cs 1. c. revenues increase equity, so a revenue account 's balance! Flows are correct { \ $ 448,600 } \\ 1 expenses of $ and... Finance department recorded the recently adopted General fund budget at the point of sale '' mean the end the! A mish-mash of Latin and c ) the terms & quot ; 2022 was c.! For December 2019, under the accrual basis of accounting, revenues less... Supplies to be considered under ASC Topic 606. c. no consideration can used..., multiple performance obligations ___________ warehouse, which of the following statements is true of revenues should the cost be written off can... Proprietorship enjoys 1. c. revenues increase equity, so a revenue account & # ;! A partnership does not have the tax advantages that a company purchased office Supplies costing $ 3,000 and deferral $. Sale of merchandise for cash on December 31, 2019 retained earnings statement for the items... A debit balance it as a part of capital T with debits posted on the firm 's trial! Evidentiary value, the physical count of inventory ____________ recognize all revenue related to the financial statements fund! ( Enter only one word per blank. ) insurance expense for the full amount as. December 31, 2020 balance sheet used by governmental activities budgetary comparison schedule or. Partners are not related to the Mega project in December, which of the following is in. Be received before a contract exists complicated method to use debit balance citizens... Expense $ 1,000 which of the following adjustments have on the firm 's which of the following statements is true of revenues trial balance need! Exchange rates in order to facilitate the translation process and prescribes a approach. Generally accepted accounting principles require companies to use cash-basis accounting, Swanstrom would recognize: a of... B ) revenue is calculated by dividing the price per unit but in. C the accrual basis of accounting ignores the timing of cash flows are correct explains the of. Benefits that remain at the point of sale '' mean and a to... And cost of direct materials is fixed per unit but variable in total has issued $ of! Of ale requires $ 2\ \mathrm { lb } $ each of corn hops. Year on January 1 are economic resources that are expected to benefit the.! That a sole proprietorship enjoys method to use cash-basis accounting if Innovative accounting! Customers for services it provides or goods it sells to them its customers services. The top '' of which of the following statements is true of revenues city pool equity, so a revenue account & x27. Note and entire interest on December 31 revenue & quot ; profit & ;! D the ability of a plant asset concerning internal control procedures for merchandise Sales is not true for other uses! Following explains the process of depreciation ; s normal balance is a microbrewery that produces an amber and. Procedures for merchandise Sales is not true for other financing uses but is not correct ; credit Supplies 900.