Esercitazione esame Environmental accounting Multiple Choice Questions con soluzioni

Financial accounting: operating decisions and the accounting system

Multiple choice questions

1) Which of the following best describes the operating cycle?

• A) It is the length of the manufacturing process.
• B) It is the time that elapses from the purchase of inventory on account to the sale of inventory on account.
• C) It is the time that elapses from the completion of the manufacturing process to the cash collection from sale of the manufactured goods.
• D) It is the time that elapses from the cash payment to suppliers to collection of cash from customers.

2) The primary difference between revenues and gains is:

• A) Gains are increases in net assets from periodically selling assets (other than inventory), while revenues are increases from major or central ongoing operations of a business.
• B) Revenues increase operating income and gains have no impact on net income.
• C) Revenues cause increases in net assets as a result of infrequent activities and gains cause increases through ongoing activities.
• D) Gains result in an increase in operating income whereas revenues do not impact operating income.

3) Which of the following costs is most likely to be the largest expense reported on the income statement of a merchandiser, such as Walmart Stores, Inc.?

• A) Utilities expense.
• B) Cost of goods sold.
• C) Advertising expense.
• D) Income tax expense.

4) Which of the following describes the reporting of interest expense on the income statement?

• A) It is reported as an operating expense.
• B) It is a component of operating income.
• C) It is deducted from operating income.
• D) It is added to operating income.

5) Which of the following is not reported as an operating expense on the income statement?

• A) Wages expense.
• B) Rent expense.
• C) Interest expense.
• D) Cost of goods sold.

6) Trend Decorations Company provides decorating services for store displays. Trend sold equipment that it had been using to create decorations. Of the following choices, which will Trend report on its income statement when it sells the equipment?

• A) Operating revenue: Sales revenue
• B) Operating expenses: Loss on disposal of equipment
• C) Other items: Loss on sale of equipment
• D) General and administrative expenses: Sale of decorating equipment

7) Which of the following transactions will result in an increase in operating income as of the date of the transaction?

• A) The sale of investments at a gain.
• B) Collection of cash from a customer for services to be provided at a later date.
• C) Providing a service to a customer on account.
• D) The receipt of cash dividends from an investment.

8) Which of the following statements is false?

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

9) The following information has been provided by Hable Company:

• Advertising expense $9,900
• Interest expense $3,700
• Rent expense for store $12,000
• Loss on sale of property and equipment $5,700
• Cost of goods sold $21,300
• Depreciation expense $7,100
• Prepaid insurance $1,000

What is the amount included in the Other Items section of Hable's income statement?

• A) $19,300.
• B) $9,400.
• C) $3,700.
• D) $13,800.

10) Lantz Company has provided the following information:

• Cash sales totaled $255,000.
• Credit sales totaled $479,000.
• Cash collections from customers for services yet to be provided totaled $88,000.
• A $22,000 loss from the sale of property and equipment occurred.
• Interest income was $7,700.
• Interest expense was $19,900.
• Supplies expense was $336,000.
• Rent expense for the store was $36,000.
• Wages expense was $49,000.
• Other operating expenses totaled $79,000.