Question 1

Income from operations is:

Accepted Answer

A)   sometimes called the "bottom line."
B)   sometimes used in the ROI calculation.
C)   usually used in the ROE calculation.
D)  usually calculated after income tax expense.

Question 2

The term, "earned," in revenue recognition refers to which of the following?

Accepted Answer

A)   The entity has completed, or substantially completed, the activities it must perform to be entitled to the revenue benefits.
B)   The product or service has been exchanged for cash, claims to cash, or an asset that is readily convertible to a known amount of cash or claims to cash.
C)   The entity has received an irrevocable order for goods or services.
D)  Cash has been received with an irrevocable order for goods or services.

Question 3

In the statement of cash flows, an increase in the accounts receivable balance from the beginning of the period to the end of the period would:

Accepted Answer

A)   be added to net income because this represents earned revenues that have not been collected.
B)   be subtracted from net income because this represents earned revenue provided by operating earnings.
C)   be added to net income because this means that revenues were less than cash collected.
D)  be subtracted from net income because this means that revenues were more than cash collected.

Question 4

Which of the following is not a principal category of "Other operating expenses" frequently reported on the income statement?

Accepted Answer

A)   Cost of goods sold
B)   Selling expenses
C)   General and administrative expenses
D)  Research and development expenses

Question 5

When the periodic inventory system is used:

Accepted Answer

A)   operating profit from the sale of an item from inventory is known when the item is sold.
B)   gross profit from the sale of an item from inventory is known when the item is sold.
C)   cost of goods sold can be calculated by subtracting the ending inventory amount from the sum of beginning inventory and net purchases.
D)  a physical inventory must be taken in order to estimate the cost of goods sold.

Question 6

Use the appropriate information from the data provided below to calculate operating income for the year ended December 31, 2017.

Accepted Answer

The answer of Use the appropriate information from the data...

Question 7

Net sales for the year were $300,000 and cost of goods sold was $174,000 for the company's existing products. A new product is presently under development and has an expected selling price of not more than $55 per unit in order to remain competitive with similar products in the marketplace.Required:
(a.) Calculate gross profit and the gross profit ratio for the year.(b.) What is the maximum cost per unit that can be incurred to manufacture the new product so that the product can be priced competitively and will not result in a reduction to the company's gross profit ratio?

Accepted Answer

Gross profit ratio = $126,000/$300,000 =...

Question 8

The gross profit ratio is useful to the manager for each of the following purposes except that:

Accepted Answer

A)   it can be used to determine the selling price to set for an item.
B)   it can be used to estimate the amount of inventory lost in a fire.
C)   it can be used to determine the amount available from a given amount of revenue to cover operating expenses.
D)  it can be used to estimate the amount of operating expenses for a period.

Question 9

The concept of matching revenue and expense refers to the fact that:

Accepted Answer

A)   expenses for a period equal the revenues for the period.
B)   all costs incurred in the process of earning revenues during a period are recorded as expenses in that period.
C)   all cash disbursements during a period are subtracted from all cash receipts during the period.
D)  costs incurred in the process of earning revenues during a period are deferred and expensed in a future period.

Question 10

Revenue may be recognized:

Accepted Answer

A)   from the sale of a company's own common stock.
B)   if a company trades inventory at its usual selling price for newspaper advertising.
C)   if management believes the market value of land held for future development has increased during the year.
D)  in 2016 from the sale of subscriptions of a magazine to be published in 2017.

Question 11

Presented below is a partially completed balance sheet for Baldin, Inc., at December 31, 2017, together with comparative data for the year ended December 31, 2016. From the Statement of Cash Flows for the year ended December 31, 2017, you determine that:
• Net income for the year ended December 31, 2017, was $106,000.• Dividends paid during the year ended December 31, 2017, were $42,000.• Accounts receivable increased $14,000 during the year ended December 31, 2017.• The cost of new buildings acquired during 2017, was $85,000.• No buildings were disposed of during 2017.• The land account was not affected by any transactions during the year, but the fair value of the land at December 31, 2017, is $210,000.Required:
(a.) Complete the December 31, 2017, balance sheet.(b.) Prepare a statement of cash flows for the year ended December 31, 2017.

Accepted Answer

The answer of Presented below is a partially completed balance...

Question 12

Sparkle Cleaners, Inc., had net income of $258,025 for its fiscal year ended September 30, 2017. During the year, the company had outstanding 12,000 shares of 8%, $50 par value preferred stock, and 135,500 shares of common stock. Calculate the basic earnings per share of common stock for the 2017 fiscal year.

Accepted Answer

The answer of Sparkle Cleaners, Inc., had net income of...

Exam 9: The Income Statement and the Statement of Cash Flows

Correct Answer
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In the statement of cash flows, an increase in the accounts receivable balance from the beginning of the period to the end of the period would:

Correct Answer
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Income from operations is:

Correct Answer
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Correct Answer
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Gross profit ratio = $126,000/$300,000 =...
View Answer

The term, "earned," in revenue recognition refers to which of the following?

Correct Answer
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Revenue may be recognized:

Correct Answer
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The concept of matching revenue and expense refers to the fact that:

Correct Answer
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Which of the following is not a principal category of "Other operating expenses" frequently reported on the income statement?

Correct Answer
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When the periodic inventory system is used:

Correct Answer
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Use the appropriate information from the data provided below to calculate operating income for the year ended December 31, 2017.

Correct Answer
verified

Correct Answer
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The gross profit ratio is useful to the manager for each of the following purposes except that:

Correct Answer
verified

Exam 9: The Income Statement and the Statement of Cash Flows

Correct AnswerverifiedShow Answer

In the statement of cash flows, an increase in the accounts receivable balance from the beginning of the period to the end of the period would:

Correct AnswerverifiedShow Answer

Income from operations is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedGross profit ratio = $126,000/$300,000 =...View AnswerShow Answer

The term, "earned," in revenue recognition refers to which of the following?

Correct AnswerverifiedShow Answer

Revenue may be recognized:

Correct AnswerverifiedShow Answer

The concept of matching revenue and expense refers to the fact that:

Correct AnswerverifiedShow Answer

Which of the following is not a principal category of "Other operating expenses" frequently reported on the income statement?

Correct AnswerverifiedShow Answer

When the periodic inventory system is used:

Correct AnswerverifiedShow Answer

Use the appropriate information from the data provided below to calculate operating income for the year ended December 31, 2017.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The gross profit ratio is useful to the manager for each of the following purposes except that:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified
Gross profit ratio = $126,000/$300,000 =...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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