Question 1

During 2019,Ocean Consulting had the following transactions with it clients (customers) : On February 1,2019,the company received cash of $10,000 from clients in payment of their account balances as of December 31,2018.
On November 1,2019,the company received $4,000 cash as payments in advance for services to be performed in 2020.
The company received a total of $26,000 in cash for services that were performed during 2019.
The company sent bills totaling $8,000 to clients for services performed during 2019;this amount was unpaid as December 31,2019.
As a result of these transactions during 2019,the firm's stockholders' equity will:

Accepted Answer

A)  increase by $40,000.
B)  decrease by $10,000.
C)  increase by $34,000.
D)  decrease by $4,000.E) None of the above
F) A) and B)

Question 2

Which of the following accounts has a normal credit balance?

Accepted Answer

A)  Accounts Receivable
B)  Equipment
C)  Utilities Expense
D)  Deferred RevenueE) A) and B)
F) All of the above

Question 3

Quail Company's customers made payments totaling $6,400 on their accounts.Which accounts are affected by this transaction?

Accepted Answer

A)  Service Revenue and Retained Earnings increase by $6,400.
B)  Cash and Service Revenue increase by $6,400.Liabilities and Customer Expense increase by $6,400.
C)  Cash increases by $6,400 and Accounts Receivable decreases by $6,400.
D)  Cash and liabilities decrease by $6,400.E) None of the above
F) B) and C)

Question 4

Expenses are increased with:

Accepted Answer

A)  debits because they decrease stockholders' equity.
B)  credits because they decrease stockholders' equity.
C)  credits because they increase stockholders' equity.
D)  debits because they increase stockholders' equity.E) All of the above
F) A) and B)

Question 5

Breezy Refunds Co.provides tax services on April 14th.They receive payment for their services on May 9.Which of the following is an appropriate journal entry for April 14th?

Accepted Answer

A)  No journal entry is made until payment is received.
B)  Debit Deferred Revenue and credit Tax Preparation Revenue.
C)  Debit Cash and credit Tax Revenue.
D)  Debit Accounts Receivable and credit Tax Preparation Revenue.E) B) and C)
F) A) and D)

Question 6

During June,Parker's Lawn Service mows 100 lawns a week.Parker received payment in advance,during May,for these services.The company uses the accrual basis of accounting.Which financial statement is impacted by these transactions?

Accepted Answer

A)  The income statement shows the effects of the transactions in June.
B)  The income statement shows the effects of the transactions in May.
C)  The revenue should be recognized equally in May and in June.
D)  The transactions have no effect on the balance sheet.E) B) and D)
F) All of the above

Question 7

Deferred Revenue is reported on the balance sheet as a liability.

Accepted Answer

A) True 
 B)False

Question 8

During January,services totaling $1,500 were performed on account for a customer.The company collected that $1,500 from the customer in March.The journal entry to record the receipt of cash from the customer is recorded with a debit to:

Accepted Answer

A)  Cash and a credit to Accounts Receivable.
B)  Cash and a credit to Accounts Payable.
C)  Cash and a credit to Revenue.
D)  Purchases and a credit to Cash.E) A) and B)
F) A) and C)

Question 9

When a company postpones reporting revenue until it fulfills its promise represented by a gift card,it has recorded.

Accepted Answer

A)  Accounts Receivable.
B)  Prepaid Revenue.
C)  Deferred Revenue.
D)  Accounts Payable.E) C) and D)
F) None of the above

Question 10

When cash is paid for something that provides benefits only in future periods:

Accepted Answer

A)  a liability must be recorded.
B)  a journal entry does not need to be recorded at the time of the payment.
C)  an asset must be recorded at the time of the payment.
D)  an unearned expense must be recorded at the time of the payment.E) C) and D)
F) A) and B)

Question 11

Power Enterprises uses accrual basis accounting.During October,the company recorded sales revenue of $150,000 from sales of goods to customers who promised to pay in November.During November,the company received payment from these customers of $135,000.No other transactions with customers took place during these two months.Which of the following statements is correct?

Accepted Answer

A)  The Sales Revenue account will have a $135,000 balance at October 31.
B)  The Accounts Receivable account has a balance of $15,000 at November 30.
C)  The Accounts Payable account has a balance of $15,000 at October 31.
D)  The Sales Revenue account will have a $135,000 balance at November 30.E) None of the above
F) C) and D)

Question 12

A business purchased supplies for cash.The business will decrease its Cash account and:

Accepted Answer

A)  increase its Supplies account.
B)  decrease its Supplies account.
C)  increase its Supplies Payable account.
D)  decrease stockholder's equity by recording Supplies Expense for the amount of the payment.E) A) and B)
F) B) and D)

Question 13

Which of the following situations results in deferred revenue?

Accepted Answer

A)  Collected $100 from a customer who purchased goods a month ago.
B)  Received an order from a customer who will purchase and pay for goods in two weeks.
C)  Sold goods for $100 today with payment due from the customer in 30 days.
D)  Received $100 cash from a customer for an order of goods to be shipped next month.E) All of the above
F) A) and B)

Question 14

When Tulip Company delivers flowers to customers and bills its customer accounts,it should record a debit to ________ and a credit to ________.

Accepted Answer

A)  Accounts Payable;Sales Revenue
B)  Cash;Sales Revenue
C)  Accounts Receivable;Deferred Revenue
D)  Accounts Receivable;Sales RevenueE) B) and D)
F) A) and B)

Question 15

Which of the following practices would not be considered ethical?

Accepted Answer

A)  Failing to record an expense even though cash has been paid.
B)  Recording 31 days of sales in April.
C)  Using the cash basis of accounting.
D)  Adjusting the accounts after a trial balance has been prepared.E) None of the above
F) C) and D)

Question 16

Which of the following items is not a specific account in a company's chart of accounts?

Accepted Answer

A)  Income Tax Expense
B)  Sales Revenue
C)  Deferred Revenue
D)  Net IncomeE) B) and C)
F) B) and D)

Question 17

On October 10,a company paid $36,000 to a supplier.Of that amount,$6,000 was for supplies received on October 10 and $30,000 was for supplies that were purchased on account during September.The journal entry to record the $36,000 payment would include a debit to:

Accepted Answer

A)  Supplies for $30,000,a debit to Accounts Payable for $6,000,and a credit to Cash for $36,000.
B)  Supplies and a credit to Cash for $36,000.
C)  Supplies Expense and a credit to Cash for $36,000.
D)  Supplies for $6,000,a debit to Accounts Payable for $30,000,and a credit to Cash for $36,000.E) None of the above
F) A) and C)

Question 18

A net profit margin of 18.2% means that the company used 81.8 cents of each sales dollar to cover costs and expenses.

Accepted Answer

A) True 
 B)False

Question 19

In the fifth step of the revenue recognition model,"when" refers to "over a period of time" (e.g. ,monthly)whereas "as" refers to "a point in time" (e.g. ,at delivery).

Accepted Answer

A) True 
 B)False

Question 20

A performance obligation is any agreement between a seller and a customer that creates legal rights and obligations.

Accepted Answer

A) True 
 B)False

Exam 3: The Income Statement

Correct Answer
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On October 10,a company paid $36,000 to a supplier.Of that amount,$6,000 was for supplies received on October 10 and $30,000 was for supplies that were purchased on account during September.The journal entry to record the $36,000 payment would include a debit to:

Correct Answer
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A business purchased supplies for cash.The business will decrease its Cash account and:

Correct Answer
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A performance obligation is any agreement between a seller and a customer that creates legal rights and obligations.

Correct Answer
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Quail Company's customers made payments totaling $6,400 on their accounts.Which accounts are affected by this transaction?

Correct Answer
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Expenses are increased with:

Correct Answer
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Which of the following practices would not be considered ethical?

Correct Answer
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Deferred Revenue is reported on the balance sheet as a liability.

Correct Answer
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Which of the following accounts has a normal credit balance?

Correct Answer
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Which of the following items is not a specific account in a company's chart of accounts?

Correct Answer
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Which of the following situations results in deferred revenue?

Correct Answer
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During January,services totaling $1,500 were performed on account for a customer.The company collected that $1,500 from the customer in March.The journal entry to record the receipt of cash from the customer is recorded with a debit to:

Correct Answer
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During June,Parker's Lawn Service mows 100 lawns a week.Parker received payment in advance,during May,for these services.The company uses the accrual basis of accounting.Which financial statement is impacted by these transactions?

Correct Answer
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When a company postpones reporting revenue until it fulfills its promise represented by a gift card,it has recorded.

Correct Answer
verified

When Tulip Company delivers flowers to customers and bills its customer accounts,it should record a debit to and a credit to .

Correct Answer
verified

A net profit margin of 18.2% means that the company used 81.8 cents of each sales dollar to cover costs and expenses.

Correct Answer
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Correct Answer
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Breezy Refunds Co.provides tax services on April 14th.They receive payment for their services on May 9.Which of the following is an appropriate journal entry for April 14th?

Correct Answer
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In the fifth step of the revenue recognition model,"when" refers to "over a period of time" (e.g. ,monthly)whereas "as" refers to "a point in time" (e.g. ,at delivery).

Correct Answer
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When cash is paid for something that provides benefits only in future periods:

Correct Answer
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Exam 3: The Income Statement

Correct AnswerverifiedShow Answer

On October 10,a company paid $36,000 to a supplier.Of that amount,$6,000 was for supplies received on October 10 and $30,000 was for supplies that were purchased on account during September.The journal entry to record the $36,000 payment would include a debit to:

Correct AnswerverifiedShow Answer

A business purchased supplies for cash.The business will decrease its Cash account and:

Correct AnswerverifiedShow Answer

A performance obligation is any agreement between a seller and a customer that creates legal rights and obligations.

Correct AnswerverifiedShow Answer

Quail Company's customers made payments totaling $6,400 on their accounts.Which accounts are affected by this transaction?

Correct AnswerverifiedShow Answer

Expenses are increased with:

Correct AnswerverifiedShow Answer

Which of the following practices would not be considered ethical?

Correct AnswerverifiedShow Answer

Deferred Revenue is reported on the balance sheet as a liability.

Correct AnswerverifiedShow Answer

Which of the following accounts has a normal credit balance?

Correct AnswerverifiedShow Answer

Which of the following items is not a specific account in a company's chart of accounts?

Correct AnswerverifiedShow Answer

Which of the following situations results in deferred revenue?

Correct AnswerverifiedShow Answer

During January,services totaling $1,500 were performed on account for a customer.The company collected that $1,500 from the customer in March.The journal entry to record the receipt of cash from the customer is recorded with a debit to:

Correct AnswerverifiedShow Answer

During June,Parker's Lawn Service mows 100 lawns a week.Parker received payment in advance,during May,for these services.The company uses the accrual basis of accounting.Which financial statement is impacted by these transactions?

Correct AnswerverifiedShow Answer

When a company postpones reporting revenue until it fulfills its promise represented by a gift card,it has recorded.

Correct AnswerverifiedShow Answer

When Tulip Company delivers flowers to customers and bills its customer accounts,it should record a debit to ________ and a credit to ________.

Correct AnswerverifiedShow Answer

A net profit margin of 18.2% means that the company used 81.8 cents of each sales dollar to cover costs and expenses.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Breezy Refunds Co.provides tax services on April 14th.They receive payment for their services on May 9.Which of the following is an appropriate journal entry for April 14th?

Correct AnswerverifiedShow Answer

In the fifth step of the revenue recognition model,"when" refers to "over a period of time" (e.g. ,monthly)whereas "as" refers to "a point in time" (e.g. ,at delivery).

Correct AnswerverifiedShow Answer

When cash is paid for something that provides benefits only in future periods:

Correct AnswerverifiedShow Answer

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When Tulip Company delivers flowers to customers and bills its customer accounts,it should record a debit to and a credit to .

Correct Answer
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