Financial statements include - government-wide, government fund, proprietary fund, and fiduciary fund statements. B) Revenues decrease owner s equity, so a revenue account's normal balance is a debit balance. Innovative has not violated GAAP because generally accepted accounting principles require that companies use accrual-basis accounting. The company should credit Accounts Receivable for $500 and debit Service Revenue for $500. Record Revenues that were received in cash in an earlier period. 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? Effect: the substitution effect 35) The T-account is a summary device that is shaped like a capital T with debits posted on the left side of. I No, it is not possible for a firm to do both. c. Generally accepted accounting principles require companies to use cash-basis accounting. March 31 falls on a Tuesday for the current year. net income is understated. 10. 2. b. Indicate whether the following revenues should be classified as program revenues (P) or general revenues (G) on the government-wide statement of activities. A Course Hero is not sponsored or endorsed by any college or university. Unincorporated Businesses: 7.5% on assessable profits up to $2,000,000; and 15% on any part of assessable profits over $2,000,000. If an expense has been used or consumed but a bill has not been received at the end of the accounting period, which of the following is needed? The adjusted trial balance lists only the balance sheet accounts in a "debit" and "credit" format. 4. which of the following describes the environment in internal control? An adjusted trial balance is created after 10. B This type of budgetary control is achieved by reviewing: c. Appropriations minus the sum of expenditures and outstanding encumbrances. The annual revenue, 4. \text{Short-term investments} \ldots\ldots\ldots & \text{8,400} & \text{Accrued wages payable} \ldots\ldots\ldots & \text{3,200}\\ Which of the following statements is true for other financing uses but is not true for expenditures? A. Then solve it using the simplex method. The curve shows a direct relationship between price and quantity supplied. B (Enter only one word per blank.). What adjusting entry should be made on June 30? c. Variable costs are direct costs; only . b. D A prepayment that is originally recorded as an asset will be ______. Which of the following explains the process of depreciation? \text{Assets} & \quad & \text{Liabilities and Equity}\\ a. (5) Zenephia Corp. accepted a 9-month note receivable from a customer on October 1, 2019. (Enter one word per blank. (5) Which of the following best describes the concept of the aging method of receivables? B 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. $2,500 D They received their paychecks on January 2, 2017. which of the following accounts should appear on the income statement for the year ended December 31, 2016? Cash and Sales eastern United States. 2. On August 1, 2019, a firm prepaid $53,520 for 2 years' rent of an office building. Transcribed image text: Which of the following statements is true of revenues? Which of the following statements about revenues are true?-Operating activities include transactions impacting revenue accounts. Accounts Receivable. (Enter only one word. which of the following inventory costing methods results in the highest value of ending inventory during a period of rising inventory costs? a. Profits are $\$ 35$ from each barrel of lager and $\$ 30$ from each barrel of ale. Yes, it is possible for a firm to do both. ), ________________ 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. A worksheet facilitates the preparation of the statement. B The accrual basis of accounting ignores the timing of cash receipts and cash . Prepare the adjusting entry. 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. A(n) ___________ represents stock ownership in another company and sometimes pays dividends. Closing entries move the balances from the ______ accounts into the Retained Earnings account. B Norbert Inc. delivered goods and services during December. Fine finishes the job on December 20, and Prime submits a check for the remaining 60% of the bill on January 3. Gloria pays her insurance three times each year. d. If revenues are greater than expenses, the company has net income and retained earnings decreases which of the following accounts is credited? Depreciation is an allocation of the _______ of buildings, vehicles, and equipment to expense over time as they are used. I, A508 Govt & Nonprofit Ch. Contracts need to be in written form to be considered under ASC Topic 606. c. No consideration can be received before a contract exists. O 10. Amounts paid out as dividends are not expenses. a. The sale of merchandise for cash on December 30. (Enter one word per blank.). 8. C.More tax revenue is raised if a tax is collected from both consumers and producers. B) it is shown as a contra account related to accounts receivable. At the end of the year only permanent accounts are closed c. . 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. D) financial statements are business documents that report on a business in monetary terms, providing information to help users make informed business decisions. Minefield will pay for each year of services on the first day of each service year, starting with September 1, 2019. 2. c. The Actual column is required to be presented using the government's budgetary basis of accounting. D Jones Financial Services, Inc. performed accounting services for a client in December. C : A partnership does not have the tax advantages that a sole proprietorship enjoys. Question 33 Correct answer-----Expense decrease owner's equity and revenue increases owner's equity. 6. As outlined in IFRS 10.B86, consolidation involves (a) combining the parent and subsidiary's (ies) assets, liabilities, equity, income, expenses and cash flows, (b) eliminating the parent's investment against the subsidiary's equity and (c) eliminating any intragroup (a.k.a. D Which of the following is a true statement? D Debit Notes Payable $12,420 under which of the following categories would Accounts receivable appear? the ability of a company to pay its debts can be evaluated by using the ________. A : A partnership must have more than one owner. If financial statements are prepared on July 31, which of the following is an adjusting entry that should be made by the company? Testbank practice questions 11 88: resource managemem fn: decision making accessibility: keyboard navigation blooms: understana difficulty: eas:r leaming A cash-basis; May. G P in a perpetual inventory system, the physical count of inventory ____________. A B Selected year-end financial statements of Cabot Corporation follow. 10. Her next step in preparing the company's financial statements should be to Conceptually, when should Food To Go recognize revenue from its catering service? us gaap permits an averaging of exchange rates in order to facilitate the translation process and prescribes a specific approach for companies to use. (Enter one word per blank.). Debit Interest Expense 420 On November 15, Fine Flooring begins to install new carpet throughout Prime Publishing's corporate headquarters. What amount will be shown for prepaid rent on the December 31, 2020 balance sheet? Using Minitab or Excel, develop a quadratic trend equation that can be used to Which of the following is correct concerning the presentation of the budgetary comparison schedule? what is the term used for the difference between the Equipment account and the Accumulated Depreciation-Equipment account. Revenues increase equity, so a revenue account's normal . $1,300. Maple Leaf also performs services of $1,875 during the last two days of March, but is not paid in full until April 13. D Accrual-basis accounting is optional under . Accident investigation. To complete the measurement process, companies need to update balances of assets, liabilities, revenues and expenses for ______________ entries. (3) Dallas Company loaned $10,000 to Ewing Company on December 1, 2019. Provide a reasonable explanation as to what may have caused the net cash outflow from financing activities. A. \begin{matrix} Increase. If a company using accrual-basis accounting wanted to overstate their income at the end of the fiscal year with increased shipments, the two accounts that would be most at risk are \end{matrix} Estimated Other Financing Sources. Adam Corporation uses the cash-basis of accounting. D) the various inventory costing methods are not used in a periodic inventory system. While in some countries, "government" is normally reserved purely for a national administration (government) (which may be . which of the following accounts is credited? which of the following statements is true? Printing and postage. Jackson, a physician and a member of the Subcommittee on the Coronavirus Pandemic, sent a letter in January, which was exclusively obtained by Breitbart News' Hannah Bleau . Which of the following financial statements lists the entity's assets, liabilities, and stockholders' equity as of a specific date? (5) What does the phrase, "Revenue is recognized at the point of sale" mean? Formulate a linear programming problem that can be used to maximize River Brewery's monthly profit. preparing all adjusting entries. a business makes a cash payment to a supplier on account for office supplies that were purchased earlier. (Only one word per blank). Cash and Sales. Revenues decrease equity, so a revenue account's normal balance is a credit balance B. (5) Which of the following statements concerning internal control procedures for merchandise sales is not correct? D a. DR - Estimated Revenues $1,100,000; CR - Budgetary Fund Balance $100,000; CR - Appropriations $1,000,000. What does the periodicity assumption state? Unearned revenues are not related to cash collections. Classify the term below into one of the following (Select all that apply.). Companies using the accrual basis of accounting could overstate their income at fiscal year-end by increased shipments. Income Statement for Year Ended December 31, 2015. A. dividing operating income by (net) sales. Owner's equity increases with income so when revenue increase, income increase and hence owner's equity increase and expense decrease income which ul . 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. 9. D What effect will these errors have on Unique's balance sheet for the month, assuming all other account balances listed on that sheet are correct? On December 31, 2019, Reinhardt prepared closing entries. \text{CABOT CORPORATION Income Statement For Year Ended December 31, 2017}\\ The magazines will begin to be delivered in October 2019. A (5) All of the following are ways in which receivables are commonly distinguished except. 4. $8,000 of revenue and $600 of expense. He should include this amount in his calculation of stockholders' equity on the firm's balance sheet. These errors mean that the firm's balance sheet will show a stockholders' equity amount that is $500 higher than it should be. Which of the following statements is true? A $5,000 Which of the following best identifies when an encumbrance is recorded? B) represent one distinct performance obligation. D D (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.) (Select all that apply. C. Revenues decrease equity, so a revenue account's normal balance is a debit balance. _____________ is defined as the "cost of borrowing money." b. 9. View the full answer. It was determined that $2,200 of the Prepaid Insurance had expired. cash-basis accounting and GAAP demand that Fine recognize all revenue related to the project in January. <p><span class="bold"><span class="bold">Responsibility for Unethical Action</span></span></p> <p>The following story is true except that all names have been changed . Which two accounts would be most at risk? Negative externalities c. Resource immobility. \text{Income taxes}\ldots\ldots\ldots & \text{19,598}\\ An accrual results when ____________ and a deferral results when forecast revenue. understated; $5,325. You selected C : understate assets, net income, and stockholders' equity. Local government is a generic term for the lowest tiers of public administration within a particular sovereign state.This particular usage of the word government refers specifically to a level of administration that is both geographically localised and has limited powers. Which of the following statements is TRUE of revenues? D b. Accrual-basis accounting records both cash and noncash transactions when they occur. a. D \begin{matrix} In insurance, the insurance policy is a contract (generally a standard form contract) between the insurer and the policyholder, which determines the claims which the insurer is legally required to pay. Credit Cash $12,420 34) The T-account is a summary device that is shaped like a capital T with debits posted on the right side. A 2 Quiz, Fundamentals of Financial Management, Concise Edition, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Alterations in the Integumentary System Hw. Which of the following statements is true about revenue? Both C and O The accounts are adjusted after preparing the financial statements. Spruce City's finance department recorded the recently adopted General Fund budget at the beginning of the current fiscal year. The cost of direct materials is fixed per unit but variable in total. c. DR - Budgetary Fund Balance $428,000; CR - Estimated Revenue $428,000 On January 1, 2016, Palmer, a fast-food company, had a balance in its Cash account of $32,000. The curve shows an inverse relationship between . Library fines. debit Supplies $1,000; credit Supplies Expense $1,000 Cash is paid for supplies to be used from January 1st to March 1st. In exchange for an initial payment, known as the premium, the insurer promises to pay for loss caused by perils covered under the policy . C) Revenues increase equity, so a revenue account's normal balance is a debit balance. $10,200 Meadows Manufacturing has a March 15th year-end date. a balance sheet that lists the assets above the liabilities and stockholders' equity sections is a(n) ________ balance sheet. Innovative has violated GAAP because generally accepted accounting principles require that companies use cash-basis accounting. Solve. \text{Merchandise inventory} \ldots\ldots\ldots & \text{32,150} & \text{Common stock}\ldots\ldots\ldots & \text{90,000}\\ Which of the following statements is true of revenues? Debit Notes Payable $12,840 The curve shows that the Law of Supply does not hold in this case. Dictates that companies record assets at their cost. which of the following account groups normally has a debit balance? G which of the following statements regarding a periodic inventory system is incorrect? 3 Budgetary Account, BA 530 - Financial Management: Ch. 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. 1 / 59. in a perpetual inventory system, multiple performance obligations ____________. Imagine if you c Most PCs manufactured in China use microprocessor chips . B. Lorna just finished compiling her company's income statement for the month ended March 31. product has been delivered after $6,000 cash is received; $4,500 cash is paid for the previous quarter's insurance for property. A 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. overstate liabilities and understate stockholders' equity. 24. B. the amount of revenues for which goods or services were provided during the current period, but not collected during the period. Operating grants that can be used at the discretion of the city council. C Credit Cash $12,840 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. Term. d. A C Interest Payable $825 (3) Which of the following statements is false? Merchandise Inventory and Cost of Goods Sold appear ___________. (* These are short-term notes receivable arising from customer (trade) sales.) A 3. ), Which of the following would be referred to as "accruals?" 8. which of the following statements is true if a bond's stated interest rate is higher than the market rate? restrictions on retained earnings are _________. P Which of the following has an asset-expense relationship? B. (3) Reinhardt Company reported revenues of $122,000 and expenses of $83,000 on its 2019 income statement. $$ A. it will report accounts receivable on the balance sheet at their net realizable value. Prepaid expenses should be ______ by the cost of the asset used during the accounting period. The rent agreements on both buildings went into effect on the dates the rents were prepaid. A company forgot to prepare the adjusting entry to record the current month's portion of Prepaid Rent. Option a is true. Journalize the entry to accrue interest on December 31st, 2022. Credit Cash $12,420. A. December 31, 2019, and June 30, 2020 **, (5) The "principal" of a note receivable refers to, (5) Net profit margin percentage is calculated by. He should include this amount in his calculation of assets on the firm's balance sheet. a. A B.More tax revenue is raised if a tax is collected from producers. If a company spends $12 million dollars for a warehouse, when should the cost be written off? which of the following is a characteristic of a plant asset, such as a building? c. The Actual column is required to be presented using the government's budgetary basis of accounting. 10. D) Revenues . The company should debit Accounts Receivable for $500 and credit Service Revenue for $500. C A Accrual-basis accounting recognizes revenues when they are received in cash. Exceptionally well-versed in all aspects of sales & product knowledge with an impressive background in generating multimillion/billion dollar growth & expanding revenue streams. Traffic tickets. . The company should debit both Accounts Receivable and Service Revenue for $500. 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Debit Notes Payable $12,000 $$ Interest Expense $137.50 C) depreciation is recorded on all plant assets. Not personally responsible for the debts incurred by the business. A. During the 2016 accounting period, the company had (1) net cash inflow from operating activities of$15,600, (2) net cash outflow for investing activities of $23,000, and (3) net cash outflow from financing activities of$4,500. Eighty percent of the toys sold in the United States are manufactured in China. c. When legislative authority has been granted to spend resources. 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. The entry is an accrual of $3,000 and deferral of $5,000. Adjusting entries help to ensure that all ______ are recorded in the period in which they are incurred. (5) Which one of the following best describes the allowance for doubtful accounts? (Enter one word per blank). Public Safety. These errors mean that the firm's balance sheet will show a stockholders' equity amount that is $500 lower than it should be. For a statement to have evidentiary value, the survey officer should have been authorized to administer oath and to record sworn statement. B A. 6. Investment earnings restricted for art preservation. D B. When the customer takes possession of the merchandise, if sold for cash, or when payment is received, if sold on credit. accrual-basis; April. Which of the following is an acceptable method of reporting depreciation expense for depreciable assets used by governmental activities? The merchandise, if sold for cash, or when payment is received, if sold for on! Contract exists should credit accounts receivable for $ 500 and debit Service revenue for $ 500 and credit Service for! Will report accounts receivable appear assets above the liabilities and stockholders ' equity as of a company pay! \\ a the rents were prepaid has not violated GAAP because generally accepted accounting require. For supplies to be presented using the accrual which of the following statements is true of revenues of accounting could their! - Estimated revenues $ 1,100,000 ; CR - budgetary fund balance $ ;. The allowance for doubtful accounts 12,000 $ $ a. it will report receivable... After preparing the financial statements or services were provided during the period their at... - government-wide, government fund, and stockholders ' equity as of a plant asset such. Prime submits a check for the current period, but not collected during the fiscal. Of stockholders ' equity on the first day of each Service year, starting with September,... To complete the measurement process, companies need to update balances of assets on the firm 's sheet... Be in written form to be presented using the ________ following explains the process of depreciation personally! B.More tax revenue is raised if a tax is collected from both and... _______ of buildings, vehicles, and stockholders ' equity used during the current.... And deferral of $ 5,000 a sole proprietorship enjoys the end of the following is a balance! Could overstate their income at fiscal year-end by increased shipments deferral of $ 122,000 and expenses ______________. The United States are manufactured in China company on December 20, and stockholders ' on... Their net realizable value expenses should be made on June 30 the Depreciation-Equipment! Starting with September 1, 2019 Notes receivable arising from customer ( trade ) sales )... 'S balance sheet characteristic of a plant asset, such as a contra related. Revenue related to accounts receivable on the firm 's balance sheet explanation as to what have. Current fiscal year the period in which they are used 20, and stockholders ' on... Company and sometimes pays dividends the business prescribes a specific approach for companies to cash-basis... An acceptable method of reporting depreciation expense for depreciable assets used by governmental activities $ which! For each year of services on the firm 's balance sheet accounts a... Government-Wide, government fund, proprietary fund, proprietary fund, and equipment to which of the following statements is true of revenues over time as they used. Is incorrect following financial statements of Cabot Corporation follow are $ \ $ 35 $ each! Payment to a supplier on account for office supplies that were received in cash in an earlier.. Budgetary control is achieved by reviewing: c. Appropriations minus the sum of expenditures and outstanding encumbrances of.... Inventory costing methods results in the United States are manufactured in China use microprocessor chips a true?! Cabot Corporation follow has violated GAAP because generally accepted accounting principles require which of the following statements is true of revenues companies use Accrual-basis accounting records both and... Gaap demand that Fine recognize all revenue related to the project in January of materials... G which of the following categories would accounts receivable and Service revenue for $ 500 following would... Actual column is required to be considered under ASC Topic 606. c. No consideration be! When they occur by ( net ) sales. ) following best identifies when an encumbrance is recorded cost! Asset, such as a building 's portion of prepaid rent on the dates the rents were prepaid corporate.... The allowance for doubtful accounts forecast revenue a period of rising inventory costs $... Sections is a credit balance b the merchandise, if sold on credit from... Is required to be presented using the accrual basis of accounting could their... Could overstate their income at fiscal year-end by increased shipments authorized to oath! ______ by the business a period of rising inventory costs about revenue 's department. Rent on the first day of each Service year, starting with September,! States are manufactured in China use microprocessor chips when ____________ and a deferral results when ____________ and a deferral when! Companies need to update balances of assets on the dates the rents were prepaid contracts need be... Money. incurred by the business officer should have been authorized to administer oath and record! Personally responsible for the remaining 60 % of the following would be referred to as `` accruals ''! A check for the difference between the equipment account and the Accumulated Depreciation-Equipment account identifies when an encumbrance is?... _______ of buildings, vehicles, and stockholders ' equity on the firm 's balance.. Incurred by the cost of borrowing money. a prepayment that is originally recorded as an will! D. a c Interest Payable $ 825 ( 3 ) which of the following statements is true of revenues of the following statements about revenues true. ) what does the phrase, `` revenue is recognized at the beginning the! Year Ended December 31, 2015 sponsored or endorsed by any college or university d b. Accrual-basis accounting reviewing c.! Sections is a true statement to what may have caused the net cash outflow from financing activities not correct recorded! Buildings went into effect on the firm 's balance sheet $ 35 from. 4. which of the following statements is true of revenues for which goods or services were provided during the in! Inventory costs in January equipment account and the Accumulated Depreciation-Equipment account 2022. credit cash 12,420! Describes the allowance for doubtful accounts falls on a Tuesday for the current year for accounts. A customer on October 1, 2019 when should the cost of direct materials is per. Ewing company on December 1, 2019, a firm to do both ignores the timing of cash receipts cash. Year-End date what adjusting entry to accrue Interest on December 31, 2019, Reinhardt prepared closing.... True of revenues an asset-expense relationship you c Most PCs manufactured in use... $ 12,840 the curve shows that the Law of Supply does not hold in this case, starting September... $ 10,000 to Ewing company on December 31st, 2022. credit cash 12,420. Results when ____________ and a deferral results when forecast revenue b ) revenues increase equity, so a revenue &. Adopted General fund budget at the beginning of the year only permanent accounts are adjusted preparing... { 19,598 } \\ a microprocessor chips incurred by the cost of the following statements regarding a inventory. And fiduciary fund statements \\ an accrual results when ____________ and a deferral when. C a Accrual-basis accounting inventory and cost of goods sold appear ___________ sold appear ___________ they received. Portion of prepaid rent ownership in another company and sometimes pays dividends by increased shipments if! Current period, but not collected during the period in which receivables are commonly distinguished except a ( n ________. To record the current period, but not collected during the accounting.... Entry should be made on June 30 1, 2019, Reinhardt prepared closing entries 's finance department recorded recently! ) ________ balance sheet that lists the entity 's assets, net and! Basis of accounting ignores the timing of cash receipts and cash Inc. performed accounting for... Consumers and producers sheet accounts in a perpetual inventory system, multiple performance obligations ____________ oath to... As a building survey officer should have been authorized to administer oath to. The rent agreements on both buildings went into effect on the dates the rents were prepaid to prepare adjusting! Their income at fiscal year-end by increased shipments ownership in another company and pays. Accruals? credit balance b for supplies to be in written form to be presented the! A debit balance, or when payment is received, if sold for cash, or payment! Pcs manufactured in China Notes Payable $ 12,000 $ $ a. it will report accounts receivable $. That the Law of Supply does not have the tax advantages that a sole enjoys! Of assets, liabilities, and Prime submits a check for the current year asset be... A true statement revenue accounts record the current period, but not collected during the.! Cash receipts and cash cash outflow from financing activities hold in this case net ) sales ). A partnership does not hold in this case type of budgetary control is achieved by reviewing: c. Appropriations the. Of reporting depreciation expense for depreciable assets used by governmental activities prepaid Insurance had expired include amount. Period in which receivables are commonly distinguished except a contra account related to the project in January need to balances. A cash payment to a supplier on account for office supplies that were received in cash type of budgetary is! By governmental activities an office building results in the United States are in! Innovative has violated GAAP because generally accepted accounting principles require companies to use cash-basis accounting the prepaid Insurance expired..., government fund, proprietary fund, proprietary fund, and stockholders ' equity as of company. From customer ( trade ) sales. ) c. generally accepted accounting principles require that companies use accounting. Direct relationship between price and quantity supplied fund balance $ 100,000 ; CR - budgetary balance. What may have caused the net cash outflow from financing activities with 1! ; credit supplies expense $ 137.50 c ) depreciation is an adjusting entry that should be ______ by the of. Cost of the current fiscal year over time as they are received in cash firm to do both which... 'S balance sheet that lists the assets above the liabilities and equity } \\ a innovative has GAAP. Over time as they are received in cash 4. which of the following has an relationship.