Financial Acounting Chapter 3 Quiz

Accounts Receivable had a beginning balance of $8,420 and an ending balance of $6,990. Collections on account were $19,200. What was the amount of services that were performed on account?

$17,770

During 2022, a company provided services for cash of $33,600 and services on credit of $24,000. The company collected accounts receivable of $12,800 and incurred operating expenses of $36,320, $22,400 of which were paid during the year. The amount of net income (loss) for the year is:

$21,280

Which of the following statements about the income statement is not correct?

Amounts received from customers in payment of their accounts arising from service in the prior month would be revenues in the income statement for the current month.

The basic accounting equation may be expanded to include the income statement effects of operating activities. Which of the statements below is correct regarding the expanded accounting equation?

Expenses are increased by debits and revenues are increased by credits.

Which of the following statements about cash basis accounting and accrual basis accounting is correct?

If payment is received at the same time a service is provided, it does not matter whether cash basis accounting or accrual basis accounting is used; both would record the transaction with the same journal entry.

Which of the following statements about the income statement and balance sheet accounts is correct?

Income statement accounts are temporary accounts, while balance sheet accounts are permanent accounts.

Which of the following September transactions would impact the September income statement?

Providing services to new customers

The Fastbank Motorcycle Service Company wins a $10 million bid to provide the repair services for a recall on a popular brand of motorcycles. No money is exchanged. The repair services are expected to be performed early next year. Which of the steps of the five-step model for revenue recognition is not yet complete?

Recognize revenue when (or as) each performance obligation is satisfied.

Which activity is not part of the operating cycle?

Repaying a bank loan used to purchase manufacturing equipment

If an apartment leasing company receives the rent for January 2022 from a tenant in December 2021, this will be reported by the leasing company as:

a liability in 2021.

The expense recognition principle matches:

expenses with the revenues to which they relate.

Dividing the long life of a company into shorter periods such as months, quarters, or years for reporting purposes is called the:

time period assumption.