Question 10 out of 10 pointsHarvest Catering is a local catering service. Conceptually, when should Harvest recognize revenue from its catering service?AnswerSelected Answer: At the date the customer's payment is receivedCorrect Answer: At the date the meals are servedQuestion 210 out of 10 pointsA pool cleaning service signs a contract with a new customer on May 1. The pool is vacuumed and shocked for the customer on June 1, and the bill for the services is paid on July 1. Under the accrual basis, the business should recognize revenue on:AnswerSelected Answer: June 1Correct Answer: June 1Question 310 out of 10 pointsStarlight Associates, Inc. recorded salary expense of $100,000 in 2014. However, additional salaries of $5,000 had been earned, but not paid or recorded at December 31, 2014. After the adjustments are recorded and posted at December 31, 2014, the balances in the Salaries Expense and Salaries Payable accounts will be Salaries Expense ; Salaries PayableAnswerSelected Answer: $105,000; $5,000Correct Answer: $105,000; $5,000Question 410 out of 10 pointsMeasurement of the economic effects on an entity involves each of the following exceptAnswerSelected Answer: Recording the economic effects in the financial statementsCorrect Answer: Recording the economic effects in the financial statementsQuestion 50 out of 10 pointsZebra Company overstated its December 31, 2014 inventory by $5,200. Which statement is true concerning Zebras financial statement amounts for 2014?AnswerSelected Answer: Net income is understated.Correct Answer: The current ratio is overstated.Question 610 out of 10 pointsIf a company understates its ending inventory balance for 2012 by $15,500, what are the effects on its net income for 2012 and 2011? Effect on 2012 Net Income Effect on 2011 Net IncomeAnswerSelected Answer: Understated by $15,500 No effectCorrect Answer: Understated by $15,500 No effectQuestion 70 out of 10 pointsThe following information is reported in the operating activities section of Gateway's statement of cash flows for 2014: Net income$1,200,000Increase in inventories600,000Decrease in accounts payable400,000 Which one of the following conclusions can be assumed from the information provided?AnswerSelected Answer: Cash payments for merchandise purchases were less than the amount of merchandise purchased on credit during 2014.Correct Answer: Gateway purchased more merchandise than it sold in 2014.Question 80 out of 10 pointsA company using the periodic inventory system has the following account balances: Merchandise Inventory at the beginning of the year, $3,600; Freight-In, $650; Purchases, $10,700; Purchases Returns and Allowances, $1,950; Purchases Discounts, $330. The cost of merchandise purchased is equal toAnswerSelected Answer: $12,670Correct Answer: $9,070Question 910 out of 10 pointsThe comparative balance sheets for Spring Co. for 2014 and 2013 indicate that accounts receivable decreased during 2014. Spring uses the indirect method of preparing the operating activities section of its statement of cash flows. How will the decrease in accounts receivable be reported on the statement of cash flows?AnswerSelected Answer: It will be added to net income in the operating activities section.Correct Answer: It will be added to net income in the operating activities section.Question 1010 out of 10 pointsWhich one of the following is an accurate description of Allowance for Doubtful Accounts?AnswerSelected Answer: Contra accountCorrect Answer: Contra accountQuestion 1110 out of 10 pointsWhat is the impact on the cash flow statement from a decrease in accounts receivable, assuming the indirect method is used?AnswerSelected Answer: An increase in the cash flow from operating activitiesCorrect Answer: An increase in the cash flow from operating activitiesQuestion 1210 out of 10 pointsRefer to information for Satin Corporation If Satin uses 2% of net credit sales to estimate its bad debts, what will be the balance in the Allowance for Doubtful Accounts account after the adjustment for bad debts?AnswerSelected Answer: $31,800Correct Answer: $31,800Question 130 out of 10 pointsArena, Inc. uses straight-line depreciation for its equipment. Arena purchased equipment for $300,000 and estimated its useful life at 8 years. The bookkeeper failed to consider the residual value of $50,000. What is the impact on earnings per share and operating income of failing to consider the residual value?AnswerSelected Answer: Earnings per share will be overstated and operating income will be understated.Correct Answer: Both earnings per share and operating income will be understated.Question 1410 out of 10 pointsAll of the following are included in the acquisition cost of property, plant, and equipment except:AnswerSelected Answer: maintenance costsCorrect Answer: maintenance costsQuestion 150 out of 10 pointsGrover, Inc. purchased a crane at a cost of $80,000. The crane has an estimated residual value of $5,000 and an estimated life of 8 years, or 12,500 hours of operation. The crane was purchased on January 1, 2013 and was used 2,700 hours in 2013 and 2,600 hours in 2014. If Grover uses the units-of-production method, what is the depreciation rate per hour for the equipment?AnswerSelected Answer: $7.50Correct Answer: $6.00Question 160 out of 10 pointsEagles Nest sold equipment for $4,000 cash. This resulted in a $1,500 loss. What is the impact of this sale on the working capital?AnswerSelected Answer: Has no effect on working capitalCorrect Answer: Increases working capital