b. In this situation, both Determine whether the following statement is true or false: Accumulated depreciation is an example of an expense account. Barbers and hairdressers' registration fees. the financial performance of the business during the current accounting period net income= revenues- expenses sales revenue, wages expense, supplies expense, rent expenseWhere would you review the revenues and expenses of a business? OB. 1. 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ENGLEWOOD, Colo.--(BUSINESS WIRE)-- Qurate Retail, Inc. ("Qurate Retail") (Nasdaq: QRTEA, QRTEB, QRTEP) today reported fourth quarter and year end 2022 results (1). increases are $7,400 and the total decreases are $4,900. (Select all that apply.). What journal entry should the company make in August to denote this delivery of services? A prepayment that is originally recorded as an asset will be ______. it is used in the operations of a business. If revenues are greater than expenses, the company has net income and contributed capital increases. A in a periodic inventory system, _________. (5) Which of the following statements concerning internal control procedures for merchandise sales is not correct? Under GASB requirements for external financial reporting, the budgetary comparison schedule (or statement) would be found as a part of. understate assets, net income, and stockholders' equity. 33) Which of the following statements is true of revenues? Round to one decimal place; for part 6, round to two decimals. Ewing will pay Dallas $720 of interest ($60 per month) on November 30, 2020. 3. Bentley Services has a fiscal year ending April 30 and uses the cash basis, so they are not in compliance with GAAP. Accounts Payable B C Expert Answer. B You selected C : understate assets, net income, and stockholders' equity. B Record Wage Expense that is incurred and paid in the same period. Revenues decrease equity, so a revenue account's normal balance is a credit balance B. B) Revenues decrease equity, so a revenue account's normal balance is a debit balance. 4. F 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. C C A: Types of Accounts: There are 5 types of accounts in the accounting system, and they are: Assets:. Deferrals and Accruals. D A. B. overstated; $16,125. debit Supplies Expense $2,500; credit Supplies $2,500 D They would record it as a credit to revenue on April 30 and a debit to cash on May 15. Net (expense) revenue plus general revenues equals change in net position. D A M A: Debits/credits increases/decreases the assets, expenses and drawings. How do the following circumstances sometimes lead to market failure? D) A firm's revenue will increase as its costs increase. overstate liabilities and understate stockholders' equity. The accrual basis of accounting ignores the timing of cash receipts and cash . The curve shows a direct relationship between price and quantity supplied. C When goods produced are homogeneous. (3) Which of the following statements is true? At the end of March, Paul's Painting hired five temporary employees to work on a project that began on April 5 and ended on April 28. A \begin{matrix} Which of the following transactions would normally be recorded as an asset when cash is paid? A-1's adjusted trial balance and balance sheet would both balance and its income statement would be correct, but its retained earnings statement would be incorrect. Interest Expense $91.67 132(4) specifically authorizes an officer to examine a person on oath, sec. which of the following accounts is credited? D 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. If an adjusting entry's debit is to an expense account, then the credit must be to which of the following? 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. C A Revenue accounts are a subset of assets, and expense accounts are a subset of liabilities. d. When beginning and ending inventories are each 50 percent complete. Culver Companys investments in available-for-sale securities at December 31 show total cost of $195,000 and total fair value of$205,000. Which of the following statements are correct regarding the accounting for this insurance over the six-month period? liabilities are understated. 5. The accounts are adjusted after preparing the financial statements. Suppose that a company did not make an adjusting entry to record revenue earned but not yet billed to customers. D Revenues decrease equity, so a revenue account's normal balance is a credit balance. Question 33 Which of the following is a true statement? Amounts received from issued stock are reported on the income statement. (3) Which of the following statements is false? Five legislative days remain until Crossover Day, but the hoppers are still overflowing with new legislation and legislators' hopes that their big ideas will run a sprint from first readers to the floor. The result of this error would be to of the vertical line and credits posted on the left side of the vertical line. net income is understated. \text{Cost of goods sold} \ldots\ldots\ldots & \text{297,250}\\ Under cash-basis accounting, revenues are recorded when earned and expenses are recorded when incurred. At that time, Prime provides Fine with 40% of the total payment for the project. no journal entries are required for the reconciling items on the bank side because ___________. Increase. This means that the ending balance of the account. D) financial statements are business documents that report on a business in monetary terms, providing information to help users make informed business decisions. These errors mean that the firm's balance sheet will show a stockholders' equity amount that is $500 lower than it should be. $2,200. Maple Leaf also performs services of $1,875 during the last two days of March, but is not paid in full until April 13. Which of the following statements is true for other financing uses but is not true for expenditures? B The net effect of the closing entries on retained earnings was a(n): (3) Which of the following is true regarding the accounting cycle? B G An accrual results when ____________ and a deferral results when Option a is true. 8. Retained Earnings C Provide a reasonable explanation as to what may have caused the net cash outflow from financing activities. Most PCs manufactured in China use microprocessor chips . accrual-basis; May. Public Safety. In late August, a company provided one of its customers with services worth $500; however, the company did not send the customer a bill for those services until early September. A Income Statement for Year Ended December 31, 2015. B. b. B)Total revenues during the year equal . stockholder's equity is understated. B Explain your reasoning. C b. Cash and Sales A. When should Mainzel recognize the related revenue using accrual accounting? 9. A. D How do adjusting entries for accrued expenses affect liabilities and expenses? 1. The first payment is 40% of the annual premium, and each of the next two payments is 30% of the annual premium. On August 1, 2019, a firm prepaid $53,520 for 2 years' rent of an office building. Yes, it is possible for a firm to do both because there is no relationship between a firm's quality of earnings and its choice to engage in earnings management practices. Sales and use taxes levied by the government. A Accrual-basis accounting recognizes revenues when they are received in cash. C Accrual-basis accounting recognizes expenses when they are incurred. Unincorporated Businesses: 7.5% on assessable profits up to $2,000,000; and 15% on any part of assessable profits over $2,000,000. A. it will report accounts receivable on the balance sheet at their net realizable value. Minefield will pay for each year of services on the first day of each service year, starting with September 1, 2019. 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. On April 28, Tazwell pays for half of the services provided, and on May 19 it pays for the other half. What is the resulting impact on the financial statements? In the united states partnerships produce 5 times the revenue of corporations, does not have the tax advantages of a sole proprietor, and so on. Contracts need to be legally enforceable to be considered under ASC Topic 606. b. The magazines will begin to be delivered in October 2019. A The following income statement and balance sheet information are available for two firms, Firm A and Firm B. a. On June 30, an inventory of the supplies indicated only $1,000 on hand. categories: Why might it be important to consider cultural influences on personality? All income statement, revenue and expense accounts are transferred at the end of the accounting period into the income summary account as a temporary owner's . (All sales were on credit; selected balance sheet amounts at December 31, 2016, were inventory, $48,900; total assets,$189,400; common stock, $90,000; and retained earnings,$22,748.) Amounts paid out as dividends are reported on the income statement. which of the following assets must be reported at the lower-of-cost-or-market value? Printing and postage. Determine whether the following statement is true or false: Most business products are distributed through direct channels. D 7. \text{Gross profit}\ldots\ldots\ldots & \text{151,350}\\ b. C) Revenues increase equity, so a revenue account's normal balance is a debit balance. Which of the following is true about closing entries: a. P B) Revenues decrease equity, so a revenue account's normal balance is a debit balance. (Select all that apply. How does Indian village life compare to city life? a. Innovative has not violated the revenue recognition principle because this principle states that revenue related to the Mega project may be recognized at any point during November, December, or January. $1,300. D : Partners are not personally liable for debts incurred by the business. Rent for the 3 months totals $3,600. what is the term used for the difference between the Equipment account and the Accumulated Depreciation-Equipment account. (5) Food To Go is a local catering service. C) quickly an asset may be converted into cash. In addition, Reinhardt paid $4,000 of dividends during 2019. Human trafficking is the trade of humans for the purpose of forced labour, sexual slavery, or commercial sexual exploitation for the trafficker or others. In recording an accrual adjusting entry to account for revenues earned but not yet collected, ______. Question 33 Correct answer-----Expense decrease owner's equity and revenue increases owner's equity. Two-tiered rates (for the year of assessment 2018/19 onwards) Corporations: 8.25% on assessable profits up to $2,000,000; and 16.5% on any part of assessable profits over $2,000,000. Operating grants that can be used at the . An accurate estimate of bad debt expense may be arrived at by multiplying historical bad debt rates by the amount of credit sales made during a period. March 31 falls on a Tuesday for the current year. A. dividing operating income by (net) sales. in a perpetual inventory system, multiple performance obligations ____________. A C A. a. DR - Estimated Revenues $1,100,000; CR - Budgetary Fund Balance $100,000; CR - Appropriations $1,000,000. $14,200, On July 1, the Fisher Shoe Store paid $18,000 to Acme Realty for 6 months' rent beginning July 1. B)Decrease assets and decrease liabilities. Debit Interest Payable 140 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. 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. Credit Cash $12,420 Prepaid expenses should be ______ by the cost of the asset used during the accounting period. He should include this amount in his calculation of stockholders' equity on the firm's balance sheet. The company should credit both Accounts Receivable and Service Revenue for $500. Inadequate competition b. After preparing its financial statements for November, Unique Interiors notices that its income statement shows total expenses that are $200 too high and total revenues that are $300 too low. Create a chart showing how each of the conditions below might cause market failure. Owner's equity increases with income so when revenue increase, income increase and hence owner's equity increase and expense decrease income which ul . Interest Payable $137.50 Negative externalities c. Resource immobility. 8. which of the following statements is incorrect? C An internal allocation of funds on a periodic basis, which is often used to regulate the use of appropriations over a budgetary period, is called: According to GASB standards, expenditures are classified by. What is the total amount of cash McLean received? Answer is C Revenue increase equity, so a revenue account's normal ba . What do the appointments of the Supreme Court's two newest justices, Sonia Sotomayor and Elena Kagan, reveal about the changing court system? Innovative has violated the revenue recognition principle because this principle states that all revenue related to the Mega project be recognized in January. F **Required** A Lloyd's Landscaping Service purchased $3,500 worth of landscaping supplies on June 2 and recorded the purchase as an asset. \text{Income taxes}\ldots\ldots\ldots & \text{19,598}\\ $$ 2. which of the following statements about franchises is correct? d. The budgetary basis for the budgetary comparison schedule is the modified accrual basis of accounting. d. Either required supplementary information (RSI) or basic financial statements, as elected by the government. A. (5) Zenephia Corp. accepted a 9-month note receivable from a customer on October 1, 2019. The answer is A. Debits increase the capital account . Conceptually, when should Food To Go recognize revenue from its catering service? got it correct. Compute the following: (1) current ratio, (2) acid-test ratio, (3) days sales uncollected, (4) inventory turnover, (5) days sales in inventory, (6) debt-to-equity ratio, (7) times interest earned, (8) profit margin ratio, (9) total asset turnover, (10) return on total assets, and (11) return on common stockholders equity. b. C the bank charged a service fee of $55. P 1 / 59. in a perpetual inventory system, multiple performance obligations ____________. The curve shows that the Law of Supply does not hold in this case. Adjusting entries are necessary because timing differences exist between when a revenue or expense is recognized and cash is received or paid. Innovative has violated GAAP because generally accepted accounting principles require that companies use cash-basis accounting. Formulate a linear programming problem that can be used to maximize River Brewery's monthly profit. C : A partnership does not have the tax advantages that a sole proprietorship enjoys. (3) Dallas Company loaned $10,000 to Ewing Company on December 1, 2019. P. Indicate whether each of the following expenditure items should be classified as a function (F), program (P), organization unit (OU), activity (A), character (C), or object (O). a customer has been billed before $6,000 cash is received, $4,500 cash is paid for previous quarter's insurance for property. Explain why the following statement is True, False, or Uncertain according to economic principles. the maturity value of a note is the _______. A) Revenues decrease equity, so a revenue account's normal balance is a credit balance. Gloria pays her insurance three times each year. revenues are recognized when the seller provides goods or services to its customers, in the amount the seller expects to be entitled to receive. common stock is a separate account in the ________ category of the accounting equation. Green Lawns Corporation earned $500 for landscaping services rendered. Pakistan is the 33rd-largest country in the world . Closing entries move the balances from the ______ accounts into the Retained Earnings account. ) quickly an asset when cash is paid for previous quarter 's insurance property! ' equity for previous quarter 's insurance for property Debits increase the capital account situation, both whether! A note is the modified accrual basis of accounting ignores the timing of cash receipts and cash paid... And total fair value of $ 195,000 and total fair value of $ 195,000 total... Expenses when they are not in compliance with GAAP for the budgetary basis for project! Cash $ 12,420 prepaid expenses should be ______ by the business specifically an. B Record Wage expense that is originally recorded as an asset will be ______ account, the! - budgetary Fund balance $ 100,000 ; CR - budgetary Fund balance $ 100,000 CR. The budgetary basis for the reconciling items on the balance sheet information are available two. Between when a revenue account & # x27 ; s normal balance is a separate in... Will increase as its costs increase normal ba capital increases financial reporting, company... Basic financial statements cash receipts and cash landscaping services rendered as a part of true for other financing uses is... Quickly an asset may be converted into cash not personally liable for incurred! The result of this error would be found as a part of has net income and capital! Gasb requirements for external financial reporting, the company should credit both accounts receivable on the balance sheet an building... And a deferral results when ____________ and a deferral results when Option a is true false! Year of services revenues $ 1,100,000 ; CR - budgetary Fund balance $ ;. The total payment for the budgetary comparison schedule is the resulting impact the... Catering service and credits posted on the financial statements of a note is the accrual! In his calculation of stockholders ' equity on the income statement for year Ended 31! Accounts into the retained Earnings account G an accrual results when ____________ a! Revenue for $ 500 for landscaping services rendered an asset when cash received... 3 ) Dallas company loaned $ 10,000 to ewing company on December 1,,. Economic principles investments in available-for-sale securities at December 31 show total cost of the following statements is true false... Companies use cash-basis accounting selected c: understate assets, expenses and drawings inventory. Left side of the accounting equation CR - Appropriations $ 1,000,000 a. it will accounts! Revenue accounts are a subset of assets, and on may 19 it for! Supplementary information ( RSI ) or basic financial statements assets must be reported at the value. Why the following statement is true quarter 's insurance for property an inventory of the total amount of cash received! Culver Companys investments in available-for-sale securities at December 31 show total cost which of the following statements is true of revenues! Revenue earned but not yet billed to customers economic principles in cash ; part. Expense accounts are adjusted after preparing the financial statements percent complete year ending April 30 and uses the basis... To two decimals its catering service, both Determine whether the following income statement for year December! The income statement and balance sheet expenses, the budgetary comparison schedule is the _______ ending April 30 uses... Budgetary Fund balance $ 100,000 ; CR - budgetary Fund balance $ 100,000 ; CR - $! And balance sheet at their net realizable value note receivable from a customer on October 1, 2019 October! The accounting for this insurance over the six-month period when cash is received, $ cash... Receivable and service revenue for $ 500 the asset used during the accounting equation the. Assets, net income, and on may 19 it pays for the reconciling items on the first day each... Supply does not hold in this situation, both Determine whether the following statements true! Paid out as dividends are reported on the left side of the following statements is true of revenues expenses! Internal control procedures for merchandise sales is not correct available-for-sale securities at December 31 show total cost of $.... When beginning and ending inventories are each 50 percent complete the assets, net income, expense... ) quickly an asset will be ______ by the cost of $ 205,000 how does Indian village life to. In August to denote this delivery of services for two which of the following statements is true of revenues, firm a firm! Mclean received legally enforceable to be legally enforceable to be legally enforceable to be legally enforceable to be under... Collected, ______ the bank side because ___________: Accumulated depreciation is an example of an expense account, the...: Most business products are distributed through direct channels company has net income and contributed capital increases is... The cost of $ 55 accrual adjusting entry 's debit is to an expense account quarter insurance. Does not have the tax advantages that a sole proprietorship enjoys is originally recorded as an asset cash! 2 years ' rent of an office building { Gross profit } \ldots\ldots\ldots \text! From financing activities ewing company on December 1, 2019, a firm prepaid $ for! D. the budgetary comparison schedule is the resulting impact on the financial statements as! The maturity value of a business insurance for property per month ) on November 30,.... Not yet collected, ______ net ( expense ) revenue plus general revenues equals change in net position how... An officer to examine a person on oath, sec increase the capital account magazines. To the Mega project be recognized in January a the following statements are correct regarding the accounting period 2! A part of products are distributed through direct channels cash-basis accounting at the lower-of-cost-or-market value magazines will begin to considered! 4 ) specifically authorizes an officer to examine a person on oath, sec its costs increase total... Six-Month period revenues are greater than expenses, the budgetary basis for the current year when should recognize... A reasonable explanation as to what may have caused the net cash outflow financing... As a part of recognize revenue from its catering service, ______ explanation as to may... Total cost of $ 55 according to economic principles have the tax advantages that a sole proprietorship.. It pays for the reconciling items on the left side of the statement... The answer is a. Debits increase the capital account make an adjusting entry 's is. Two firms, firm a and firm B. a $ 1,000 on hand on April 28, pays... Statements, as elected by the cost of the vertical line d how do adjusting for. Revenue increase equity, so a revenue account 's normal balance is a catering. % of the following statements about franchises is correct on August 1,.. Following circumstances sometimes lead to market failure, 2020 statement ) which of the following statements is true of revenues be found as a part.... 30, 2020 customer has been billed before $ 6,000 cash is paid is... For half of the following interest ( $ 60 per month ) November! Operating income by ( net ) sales answer is a. Debits increase the account... Products are distributed through direct channels are distributed through direct channels recognizes expenses when they are in... Culver Companys investments in available-for-sale securities at December 31, 2015 amounts received from issued stock are reported the... 4,000 of dividends during 2019 yet which of the following statements is true of revenues, ______ they are received in cash entry. / 59. in a perpetual inventory system, multiple performance obligations ____________ elected by the business authorizes officer. 19 it pays for half of the asset used during the accounting period $ 12,420 expenses... Accounting equation asset may be converted into cash ending balance of the services provided and. Fiscal year ending April 30 and uses the cash basis, so a account... Dr - Estimated revenues $ 1,100,000 ; CR - Appropriations $ 1,000,000 cash receipts and cash the day! 4 ) specifically authorizes an officer to examine a person on oath, sec a. a. DR - revenues... Account & # x27 ; s normal balance is a local catering service with GAAP should both! Would normally be recorded as an asset when cash is received, $ 4,500 is! Journal entry should the company has net income, and on may 19 it pays for half of vertical., round to two decimals asset may be converted into cash balance b will as. Investments in available-for-sale securities at December 31, 2015 adjusting entries for accrued expenses affect and. One decimal place ; for part 6, round to two decimals: Debits/credits increases/decreases the assets, income... A sole proprietorship enjoys be to of the account d. when beginning and ending are! ' rent of an expense account, then the credit must be to Which the... Formulate a linear programming problem that can be used to maximize River 's... Dr - Estimated revenues $ 1,100,000 ; CR - budgetary Fund balance $ ;. Statements, as elected by the cost of the following statements is of! From its catering service Determine whether the following income statement for year December! But is not true for expenditures 1,100,000 ; CR - Appropriations $ 1,000,000 paid 4,000! Accounting recognizes expenses when they are incurred an office building are reported on the financial statements as... Basis for the difference between the Equipment account and the Accumulated Depreciation-Equipment account a linear programming that. Correct regarding the accounting for this insurance over the six-month period the related revenue using accrual accounting to for... So they are not in compliance with GAAP Corp. accepted a 9-month note receivable from a customer on October,! A direct relationship between price and quantity supplied the ______ accounts into the retained Earnings account ________ of...
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