Statement 1: The worksheet of a merchandising entity has more accounts than that of a service entity. Statement 2: The reversing entries for merchandising entities are different from that of a service entity. Only Statement 1 is correct. Only Statement 2 is correct. Both statements are correct. Both statements are incorrect. Statement 1: A loss occurs when there are more expenses than revenue. Statement 2: An income statement cannot be prepared correctly until all the accounts have been adjusted. Only Statement 1 is correct. Only Statement 2 is correct. Both statements are correct. Both statements are incorrect.

Statement 1: The worksheet of a merchandising entity has more accounts than that of a service entity. Statement 2: The reversing entries for merchandising entities are different from that of a service entity. Only Statement 1 is correct. Only Statement 2 is correct. Both statements are correct. Both statements are incorrect. Statement 1: A loss occurs when there are more expenses than revenue. Statement 2: An income statement cannot be prepared correctly until all the accounts have been adjusted. Only Statement 1 is correct. Only Statement 2 is correct. Both statements are correct. Both statements are incorrect.

College Accounting (Book Only): A Career Approach

13th Edition

ISBN:9781337280570

Author:Scott, Cathy J.

Publisher:Scott, Cathy J.

Chapter6: Bank Accounts, Cash Funds, And Internal Controls

Section: Chapter Questions

Problem 8QY

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Similar questions

Which of the following statement is False for Multi-step income statement of a merchandise business? a. It helps in analyzing how well the company is performing b. It divides the expenses into Selling, General and administration expenses c. Users can see how much expense is incurred in selling the product and how much is in administering business d. It divides operating expense into Direct and Indirect expenses.
1. What is a Statement of Comprehensive Income? 2. Why are the accounts found under the SCI are called temporary accounts? 3. What are the two forms of SCI? Differentiate one from the other. 4. What is the difference between the SCI of a service entity from a merchandising entity? 5. What is the formula in computing Net Income (Loss) for Service Entities? 6. What is the formula in computing Net Sales? 7. What is the formula in computing Cost of Goods Sold?
2. Write TRUE if the statement is correct and if false, write the word or phrase that makes the statement correct. 1. The revenue earned by a service business for rendering services for a fee is commonly referred to as Service income or Service Revenue 2. A Statement of Comprehensive Income may be presented using a “multi-step statement" presentation only? 3. Revenue includes both income and gains. 4. If expenses are greater than income, the difference is net loss. 5.The revenue earned by the merchandising business from its sales of goods is commonly referred to as Sales.
Why is it expected that the initial debit and credit totals of the income statement accounts do not balance on a 10-column worksheet? Select one: a. None of the choices available. b. This is expected because the company should report an asset. c. This is not expected and it shows that there is definitely an error made. d. This is expected because the company should report an income or a loss.
Which of the following statement is False for a Simple-Step Income Statement? a. Total expenses cannot be calculated b. Net Sales can be calculated c. Net Profit can be calculated d. Cost of goods sold will be taken under total expenses
Activity 1: TRUE OR FALSE. Write True if the statement is correct and False if it is not. ____ 1. The SCI is a picture of the result of operations of the company as of the cut-off date.____ 2. The major elements of the SCI are income and expenses.____ 3. Cost of sales is computed as cost of goods available for sale less ending inventory.____ 4. Expenses recognition strictly requires the matching expenses against revenue.____ 5. Goods returned by customers are immediately deducted to the Sales Revenue account.____ 6. In periodic inventory accounting, inventory is determined by conducting a physical count of merchandise owned.____ 7. Expenses decrease assets and therefore have credit normal balances.____ 8. Depreciation expense is a line account found in an SCI prepared following the multi-step format. ____ 9. Revenue result in increase in equity and therefore has a credit normal balance____ 10.All accounts in SCI is also called nominal accounts. Activity 2: Problem 1: The Happy…
Which of the following statement is False for a Simple-Step Income Statement? a. Net Profit can be calculated b. Cost of goods sold will be taken under total revenue c. Selling expenses will be calculated under total expenses d. General and Administration expenses will be taken under total expenses
Determine the effect of the following errors on a companys total revenue, total expenses, and net income. Indicate the effect by writing O for Overstated (too much), U for Understated (too little), or NA for Not Affected.
I have a couple of questions. PLEASE answer thoroughly and explain.1) Are all types of revenue accounts listed on the Income Statement only? And are they always temporary accounts with a credit balance? Do ALL of them affect only RE or do revenues affect other statements and accounts. If so what are they and how do they affect them?2) What role does Cost of Goods Sold play? What is it and why is it listed under Sales and Labor Revenue and deducted from Sales and Labor Revenue? Will there always be a Cost of Goods Sold on the Income Statement. How do you arrive at Gross Profit on the Income Statement if there is not a Cost of Goods Sold? What other accounts if any does Cost of Goods Sold affect? Can you give me an example of Cost of Goods Sold?3) Do expenses like revenues appear only on the Income Statement? What other accounts do they affect, if any? Are they credit balances as well? . Do expenses affect only the RE and are they debited or credited to RE?3)How do you…
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