1. Which item is not correct with respect to the treatment of sustainable and transitory items and a company's income statement?

• Financial reporting assists statement users in forecasting future cash flows by providing an income statement format that segregates components of net income.

• Income statements prepared in accordance with GAAP differentiate between income components that are believed to be sustainable and those that are transitory.

• The income statement isolates a key figure called “income from sustainable operations.”

• Transitory items are disclosed separately on the income statement so that statement users can place less weight on these earnings components when forecasting future profitability.

• 2. Which of the following statements is correct regarding revenue and expense accounts?

• Multiple Choice

• These are really owners’ equity accounts.

• These are really contributed capital accounts.

• They have no impact on the balance sheet.

• These are balance sheet accounts.

• 3. T-account analysis can be used to gain insights into why accrual basis earnings and cash basis earnings differ and to:

  Multiple Choice

• journalize future transactions.

• reconstruct transactions that have occurred during a given reporting period.

• post transactions that have occurred during a given reporting period.

• determine the current market price of common stock.

• 4. Income statements are classified into sections to:

  Multiple Choice

• separate revenue recognized from deferred revenue.

• distinguish between sustainable and transitory income.

• separate real income from book income.

• distinguish between book income and taxable income.

• 5.Revenue is recognized when:

  Multiple Choice

• a contract is signed by both parties.

• the seller completes performance required by an agreement.

• the buyer completes payment required under an agreement.

• the buyer accepts delivery and completes required payments.

• 7.

  Earnings management can occur through a variety of manipulations including:

  Multiple Choice

• Manipulating accrual estimates to impact expenses.

• Misapplications of GAAP deemed immaterial on an account by account basis.

• Big bath restructuring charges.

• All of these answer choices are correct.

• 8.

  Adjusting entries are used in all but which of the following situations?

  Multiple Choice

• Prepayments.

• Deferred Revenue and Expenses.

• Accrued Revenue and Expenses.

• Prepayments, Deferred Revenue, Accrued Expenses, Accrued Revenue.

• 9.

  Which one of the following is part of other comprehensive income (OCI)?

  Multiple Choice

• Unrealized gains resulting from remeasuring foreign currency financial statements of majority-owned subsidiaries to U.S. dollar amounts.

• Gains on sales of treasury stock.

• Receipt of land donated by a governmental unit.

• Sale of common stock above par.

Assume that you work for a state agency and you are charged with generating additional sales tax revenue. You have obtained the own-price elasticities of demand for the following goods:

Coffee -0.25
Restaurant meals -2.60
Fresh green peas -2.80

a. If you had to impose a tax on only one of these three goods, which would you choose (and why) in order to maximize tax revenue?

b. Would the tax incidence tend to fall more on the consumer or the producer for this good (relative to taxes on the other two goods)?

In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows:

Assume that Westgate Construction’s contract with Santa Clara County does not qualify for revenue recognition over time.

Required:
1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years.
2-a. In the journal below, complete the necessary journal entries for the year 2021 (credit "Various accounts" for construction costs incurred).
2-b. In the journal below, complete the necessary journal entries for the year 2022 (credit "Various accounts" for construction costs incurred).
2-c. In the journal below, complete the necessary journal entries for the year 2023 (credit "Various accounts" for construction costs incurred).

1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. (Leave no cells blank - be certain to enter "0" wherever required. Loss amounts should be indicated with a minus sign.)

The figure below (Figure 1) illustrates an Atwood's machine. Let the masses of blocks A and B be 3.50 kg and 2.00 kg , respectively, the moment of inertia of the wheel about its axis be 0.400 kg⋅m2 and the radius of the wheel be 0.100 m

.

PART A

Find the linear acceleration of block A if there is no slipping between the cord and the surface of the wheel.

Express your answer in meters per second squared to three significant figures

PART B

Find the linear acceleration of block B if there is no slipping between the cord and the surface of the wheel.

Express your answer in meters per second squared to three significant figures.

PART C

Find the angular acceleration of the wheel C if there is no slipping between the cord and the surface of the wheel.

Express your answer in radians per second squared to three significant figures.

PART D

Find the tension in left side of the cord if there is no slipping between the cord and the surface of the wheel.

Express your answer in newtons to three significant figures.

PART E

Find the tension in right side of the cord if there is no slipping between the cord and the surface of the wheel.

Express your answer in newtons to three significant figures.

The owner of Haverty’s Furniture Company was studying the relationship between sales and the amount spent on advertising. The sales information for the last four months is repeated below:

Draw a scatter diagram and discuss whether or not it indicates that there is a relationship between the advertising expense and sales revenue.

Compute the coefficient of correlation. Interpret it.

Compute the coefficient of determination. Interpret it.

Test to determine whether the coefficient of correlation in the population is significantly different from zero. Use alpha 0.05.

Develop the estimated regression equation/the least squares line that could be used to predict the sales revenue based on the advertising expense. Interpret the regression coefficients.

Compute the standard error of estimate.

Test to determine whether the regression slope coefficient in the population is significantly different zero. Use alpha 0.05.

Are the results from part d and g consistent? Should they be? Justify your answer.

Estimate sales when $3 million is spent on advertising.

True/False? If False, Why?

1_General obligation bonds are less restrictive than revenue backed bonds with few limitations regarding the amount that can be issued.

2_When issuing revenue backed bonds, receipts from all issuing governments sources are pledged to pay the interest and principal back to the bond purchasers.

3_The theory of tax expenditures is what drives the rationale for investors to purchase State/local bonds of either type (general obligation/revenue backed)

4_The Federal American Recovery Act, signed into law by President Obama, provided a mechanism that achieved the goals of federal grant policy by correcting for externalities and providing for a macroeconomic stabilizing mechanism.

5_Intergovernmental grants do not provide a mechanism in which you can effectively substitute the granting government’s tax revenue for that of the recipient government.

6_Financing government expenditure through a user fee is similar to tax financing because in both revenue streams there is always a direct relationship between the amount of payment and the level of service received.

Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engagement, up to six months after services commence. Alsup recognizes service revenue for financial reporting purposes when the services are performed. For tax purposes, revenue is reported when fees are collected. Service revenue, collections, and pretax accounting income for 2017–2020 are as follows: Service Revenue Collections Pretax Accounting Income 2017 $ 610,000 $ 590,000 $ 150,000 2018 710,000 720,000 215,000 2019 675,000 650,000 185,000 2020 660,000 685,000 165,000 There are no differences between accounting income and taxable income other than the temporary difference described above. The enacted tax rate for each year is 40%. (Hint: You may find it helpful to prepare a schedule that shows the balances in service revenue receivable at December 31, 2017–2020.) Required: 1. Prepare the appropriate journal entry to record Alsup's 2018 income taxes, Alsup’s 2019 income taxes and Alsup’s 2020 income taxes.

Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engagement, up to six months after services commence. Alsup recognizes service revenue for financial reporting purposes when the services are performed. For tax purposes, revenue is reported when fees are collected. Service revenue, collections, and pretax accounting income for 2017–2020 are as follows:

service revenue collections pre tax accounting income

There are no differences between accounting income and taxable income other than the temporary difference described above. The enacted tax rate for each year is 40%.

(Hint: You may find it helpful to prepare a schedule that shows the balances in service revenue receivable at December 31, 2017–2020.) Required: 1. Prepare the appropriate journal entry to record Alsup's 2018 income taxes, Alsup’s 2019 income taxes and Alsup’s 2020 income taxes.

Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engagement, up to six months after services commence. Alsup recognizes service revenue for financial reporting purposes when the services are performed. For tax purposes, revenue is reported when fees are collected. Service revenue, collections, and pretax accounting income for 2017–2020 are as follows:

There are no differences between accounting income and taxable income other than the temporary difference described above. The enacted tax rate for each year is 40%.

(Hint: You may find it helpful to prepare a schedule that shows the balances in service revenue receivable at December 31, 2017–2020.)

Journal entry worksheet:

Record 2018 income taxes.

Record 2019 income taxes.

Record 2020 income taxes.

The following accounts, among others, appeared on ZZ Company's balance
sheet at January 1, 2020 and December 31, 2020:

                  January 1, 2020       December 31, 2020

Accounts receivable    48,000                63,000
Utilities payable      20,000                26,000
Notes payable          71,000                80,000
Common stock           30,000                90,000
Retained earnings      22,000                78,000

The following information was taken from ZZ Company's 2020 income
statement:

Sales revenue                   $500,000
Cost of goods sold               280,000
Other expenses                   120,000
Net income                      $100,000

Calculate the amount of cash collected from customers during 2020.