STA: AICPA: FN: Measurement | ACBSP: GAAP | IMA: Financial Statement Analysis
TOP: Traditional Assumptions of the Accounting Model KEY: Bloom's: Application
NOT: Time: 3 min.
28. The following data relate to Rocket Company for the year ended December 31, 2012. Rocket Company uses the cash basis.
| Sales on credit | $180,000 |
| Cost of inventory sold on credit | 130,000 |
| Collections from customers | 170,000 |
| Purchase of inventory on credit | 140,000 |
| Payment for purchases | 150,000 |
| Selling expenses (accrual basis) | 20,000 |
| Payment for selling expenses | 25,000 |
Which of the following amounts represents income for Rocket Company for the year ended December 31, 2012?
| a. | $30,000 |
| b. | $5,000 loss |
| c. | $40,000 |
| d. | $45,000 |
| e. | $50,000 |
ANS: B PTS: 1 DIF: Difficulty: Easy
NAT: BUSPROG: Communication
STA: AICPA: FN: Measurement | ACBSP: GAAP | IMA: Financial Statement Analysis
TOP: Traditional Assumptions of the Accounting Model KEY: Bloom's: Application
NOT: Time: 3 min.
29. The following data relate to Gorr Company for the year ended December 31, 2012. Gorr Company uses the accrual basis.
| Sales for cash | $200,000 |
| Sales for credit | 220,000 |
| Cost of inventory sold | 180,000 |
| Collections from customers | 300,000 |
| Purchases of inventory on credit | 190,000 |
| Payment for purchases | 180,000 |
| Selling expenses (accrual basis) | 50,000 |
| Payment for selling expenses | 60,000 |