Esercitazione esame Environmental accounting Multiple Choice Questions con soluzioni

Domande di contabilità

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.

Unearned revenue was $4,000.

What is the amount of Lantz's operating revenues?

A) $734,000.

B) $822,000.

C) $826,000.

D) $833,700.

11) Colby Corporation has provided the following information:

Operating revenues from customers were $199,700.

Operating expenses for the store were $111,000.

Interest expense was $9,200.

Gain from sale of plant and equipment was $3,300.

Dividend payments to Colby's stockholders were $7,700.

Income tax expense was $36,000.

Prepaid rent was $5,000.

What is

the amount of Colby's operating income (income from operations)?

A) $81,000.

B) $83,700.

C) $88,700.

D) $92,000.

12) Which of the following does not correctly describe the cash basis of accounting?

A) It is not accepted for external reporting purposes.

B) Revenues are recognized when cash is collected from customers.

C) Expenses are recognized when they are paid for.

D) Cash payments for long-term assets are recognized as an expense at the time of payment.

13) Which of the following statements does not properly describe the accrual basis of accounting?

A) Expenses are recognized when incurred in generating revenues regardless of the timing of cash flows.

B) Revenues are recognized when the company transfers promised goods or services to customers regardless of the timing of cash flows.

C) Generally accepted accounting principles require use of the accrual basis.

D) Accrual accounting should not be used when providing financial statements to external decision makers.

14) Yelena Company received cash

1. from a customer in advance of providing the service to the customer. Which of the following does not accurately describe the impact on the financial statements when Yelena later provides the service?
   1. Liabilities are decreased.
   2. Operating income increases.
   3. Retained earnings increases.
   4. Assets are increased.
2. Which of the following best describes the expense recognition principle?
   1. It requires expenses to be recorded when they are paid for.
   2. It requires expenses to be recorded when incurred to generate revenues.
   3. It requires expenses to be recorded consistent with the cash basis of accounting.
   4. It does not allow expenses to be recorded if they are incurred prior to being paid.
3. Which of the following best describes the operating cycle?
   1. It is the length of the manufacturing process.
   2. It is the time that elapses from the purchase of inventory on account to the sale of inventory on

operating income.Answer: AExplanation: Gains are increases in net assets from periodically selling assets (other thaninventory), while revenues are increases from major or central ongoing operations of a business.Difficulty: 3 Difficult3) Which of the following is NOT a characteristic of a liability?A) It represents a probable future sacrifice of economic benefits.B) It arises from a past transaction or event.C) It is settled by the transfer or use of assets, provision of services, or other means.D) It is a present obligation of the entity.Answer: AExplanation: A liability represents a present obligation of the entity, not a probable futuresacrifice of economic benefits.Difficulty: 1 Easy4) Which of the following is an example of an intangible asset?A) LandB) BuildingsC) InventoryD) PatentsAnswer: DExplanation: Patents are an example of intangible assets, as they represent exclusive rights toinventions or discoveries.Difficulty: 2 Medium5) Which of the following is NOT a characteristic of an expense?A) It represents a decrease in economic benefits during the accounting period.B) It arises from the ongoing operations of a business.C) It is incurred to generate revenue.D) It is a future obligation of the entity.Answer: DExplanation: Expenses represent a decrease in economic benefits during the accounting period andarise from the ongoing operations of a business. They are not future obligations of the entity.Difficulty: 1 Easy

1. Question: operating income.
   Answer: A
   Explanation: Revenues are defined as increases in assets or settlements of liabilities from ongoing operations. Revenues can also be generated regularly from investments as dividends and interest. Gains are a result of an increase in assets or decrease in liabilities from selling operating assets, other than inventory, such as plant and equipment, and also from selling investment assets.
   Difficulty: 2 Medium
2. Question: 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.
   Answer: B
   Explanation: In companies with a merchandising focus, cost of goods sold is usually the most significant expense on the income statement.
   Difficulty: 1 Easy
3. Question: 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

B) Operating expense: Cost of goods sold C) Non-operating revenue: Gain on sale of equipment D) Non-operating expense: Loss on sale of equipment Answer: C Explanation: When Trend sells the equipment, it will generate a gain on the sale. This gain is considered non-operating revenue and will be reported on the income statement. Difficulty: 2 Medium

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

Answer: B

Explanation: When assets other than investments are sold, gains or losses will result. Losses from the disposal of assets other than investments are reported in the Operating expenses section of the income statement. Assets used to create revenue are assets other than investments and the sale of these assets are not considered as sales revenue.

Difficulty: 2 Medium

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.

Answer: C

Explanation: Operating income is increased by operating revenue. Operating revenues result from the sale of goods

or services to a customer, even if it is on account and will not be collected until a later date.

Difficulty: 2 Medium

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.

Answer: D

Explanation: Revenues result in an increase in net income and retained earnings. Revenues have no impact on additional paid-in capital.

Difficulty: 2 Medium

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)

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.
• Unearned revenue was $4,000.

What is the amount of Lantz's operating revenues?