Acct. exam 1 review Qs – Flashcards

Ensuring that accounting information is updated each period is the purpose of the: a. Matching principle b. Revenue recognition principle c. Periodicity (time-period) concept. d. Expense principle

In accounting, the Matching Principle means to match which of the following? a. Revenues to Expenses b. Expenses to Liabilities c. Expenses to Revenues d. Revenues to Liabilities

The adjustment that allocates the cost of a fixed asset over the periods benefited by it use is a. Prepaid expense b. Unearned revenue c. Depreciation d. Accrual

Which of the following accounts would not be found in an adjusting entry? a. Prepaid Rent b. Cash c. Unearned Revenue d. Accounts Receivable

Closing entries are prepared for all of the following except a. Dividends b. Revenues c. Expenses d. Assets

Which of the following describes how assets are listed on the balance sheet? a. in alphabetical order b. from least liquid to most liquid c. from most liquid to least liquid d. in order of magnitude, lowest value to highest value

A trial balance a. proves that debits and credits are equal in the ledger. b. supplies a listing of open accounts and their balances that are used in preparing financial statements. c. is normally prepared three times in the accounting cycle. d. all of these.

The basis for classifying assets as current or noncurrent is conversion to cash within a. the accounting cycle or one year, whichever is shorter. b. the operating cycle or one year, whichever is longer. c. the accounting cycle or one year, whichever is longer. d. the operating cycle or one year, whichever is shorter.

Which of the following would not be a correct form for an adjusting entry? a. A debit to an asset and a credit to a liability b. A debit to a liability and a credit to a revenue c. A debit to a revenue and a credit to a liability d. A debit to an expense and a credit to a liability

The current assets section of the balance sheet should include a. machinery. b. patents. c. inventory. d. goodwill.

If prepaid insurance expires over time (is used up) this asset account becomes a(n) ____. a. Liability b. Another asset c. Revenue d. Expense

Which of the following statements about closing entries is NOT true? a. all expense accounts will be reduced b. all revenue accounts will be reduced c. retained earnings will be reduced for an amount equal to the period's net income d. after closing entries are recorded, all temporary accounts will have a zero balance

Which of the following is not one of the items required to be shown in the heading of a financial statement? a. the title of the financial statement b. the date with appropriate terminology c. the name of the business entity d. the financial statements preparer's name

The matching principle controls a. how costs are allocated between Cost of Sales (sometimes called Cost of Goods Sold) and general and administrative expenses. b. where on the income statement expenses should be presented. c. when costs are recognized as expenses on the income statement d. the ordering of current assets and current liabilities on the balance sheet.

Which of the following accounts is a contra account? a. buildings b. notes payable c. accounts receivable d. accumulated depreciation

Which of the following accounts have a normal debit balance? a. Assets and Revenues b. Liabilities and Revenues c. Expenses and Assets d. Liabilities and Retained Earnings

Which of the following are DECREASED with a debit? a. Assets and Revenues b. Liabilities and Revenues c. Expenses and Assets d. Liabilities and Retained Earnings

Transactions are originally recorded in a(n) a. Ledger b. Journal c. Expanded Accounting Equation d. Trial Balance

1. Journalizing a transaction means: a. Calculating the balance in an account b. Analyzing the source documents c. Copying the information from the journal to the ledger d. Recording the information in a journal entry

1. Which of the following statements about expenses is CORRECT? a. Expenses increase stockholders' equity, so an expense account's normal balance is a credit balance. b. Expenses decrease stockholders' equity, so an expense account's normal balance is a credit balance. c. Expenses increase stockholders' equity, so an expense account's normal balance is a debit balance. d. Expenses decrease stockholders' equity, so an expense account's normal balance is a debit balance.

For Accounts payable, the classification of the account and its normal balance are: a. Stockholders' equity and a credit balance. b. Assets and a debit balance. c. Liabilities and a credit balance. d. Assets and a credit balance.

The process of transferring information from the journal to the ledger is called a. Footing b. Journalizing c. Posting d. Recording

Which of the following is the correct order of steps to journalize an entry? a. Identify each account affected, determine increase or decrease in each account, record the transaction. b. Identify each account affected, record the transaction, determine increase or decrease in each account. c. Record the transaction, identify each account affected, determine increase or decrease in each account. d. Determine increase or decrease in each account, identify each account affected, record the transaction.

The normal sequence of information in an accounting system is: a. Ledger, journal, source document b. Journal source document, ledger c. Source document, journal, ledger d. Source document, ledger, journal

A business person starts a company by giving the company $20,000 cash and receiving stock. How would you record the information for the business? a. Cash 20,000 Retained Earnings 20,000 b. Cash 20,000 Common Stock 20,000 c. Common Stock 20,000 Cash 20,000 d.Cash 20,000 Service Revenue 20,000

A business buys $600 of supplies on account. How would you record the transaction? a. Supplies 600 Cash 600 b. Accounts Receivable 600 Supplies 600 c. Supplies Expense 600 Cash 600 d. Supplies 600 Accounts Payable 600

A company purchases a $100,000 Building, makes a down payment of $15,000 and signs a Note for the rest. How would you record the transaction? a. Building 100,000 Cash 15,000 Accounts Payable 85,000 b. Building 100,000 Cash 15,000 Common Stock 85,000 c. Building 100,000 Cash 100,000 d.Building 100,000 Cash 15,000 Note Payable 85,000

In the T-Account LEDGER, where would you find the ending balance of an account? a. On the debit side b. On the credit side c. On the increase side for that account d. On the decrease side for that account.

ABC Company made a payment on account of $350. How would you record this transaction? a. Cash 350 Accounts Receivable 350 b. Cash 350 Accounts Payable 350 c. Accounts Payable 350 Cash 350 d.Accounts Receivable 350 Cash 350

ABC Company received a payment on account of $350. How would you record this transaction? a. Cash 350 Accounts Receivable 350 b. Cash 350 Accounts Payable 350 c. Accounts Payable 350 Cash 350 d.Accounts Receivable 350 Cash 350

Which of the following is TRUE? a. Assets = Liabilities + Contributed Capital - Retained Earnings b. Assets - Liabilities = Contributed Capital + Retained Earnings c. Assets + Retained Earnings = Liabilities + Contributed Capital d. Assets - Liabilities + Contributed Capital = Retained Earnings

Which of the following accounts is NOT a Liability a. Accounts Payable b. Unearned Revenue c. Accounts Receivable d. Notes Payable

Which of the following is the equation for the Income Statement? a. Revenues + Expenses = Net Income b. Revenues - Expenses = Net Income c. Revenues + Assets = Net Income d. Revenues - Expenses + Assets = Net Income

Which of the following is a possible order for the preparation of the financial statements? a. Income Statement, Balance Sheet, Statement of Stockholders' Equity, Cash Flow b. Balance Sheet, Cash Flow, Statement of Stockholders' Equity, Income Statement c. Statement of Stockholders' Equity, Income Statement, Balance Sheet, Cash Flow d. Income Statement, Statement of Stockholders' Equity, Balance Sheet, Cash Flow

Which of the following accounts is NOT found on the Balance Sheet? a. Unearned Revenue b. Salaries Payable c. Salaries Expense d. Supplies

What are the basic business activities? A. Investing B. Operating C. Financing D. All of the above

Which of the following is NOT an operating activity? a. Purchasing Land b. Using office supplies c. Paying employee salaries d. Selling merchandise

Which of the following statements is FALSE? a. The two primary functions of accounting are to measure business activities of an entity and to communicate information about those activities to decision makers. b. Communication of financial information to decision makers is through the financial statements. c. Accounting is the language of business. d. There are five basic financial statements that are reported to external users

A debt that a corporation owes to an outside party is called: A) An asset. B) A liability. C) Stockholders' equity. D) Revenue.

Items such as buildings and land are: A) Liabilities. B) Equity. C) Assets. D) Revenues.

Accountants often refer to GAAP. What do the letters GAAP represent in accounting? A) Globally accepted and accurate policies B) Global accommodation accounting principles C) Generally accredited accounting policies D) Generally accepted accounting principles

Which of the following are likely to be users of financial accounting information? A) Taxing authorities B) Creditors C) Potential investors D) All of the above

Assets are $150,000 and total liabilities are $90,000. Total stockholders' equity will be: A) $180,000. B) $300,000. C) $240,000. D) $60,000.

Assets are $270,000 and stockholders' equity is $90,000. Liabilities will be: A) $60,000. B) $360,000. C) $270,000. D) $180,000.

A corporation pays cash dividends. How does the payment of these dividends affect the accounting equation? A) There is no effect on the assets, liabilities, or stockholders' equity. B) Assets decrease; stockholders' equity decreases. C) Assets increase; liabilities decrease. D) Assets decrease; stockholders' equity increases.

The business collects a $5,000 account receivable from its customer. How is the accounting equation affected? A) Assets increase $5,000; liabilities decrease $5,000. B) One asset increases by $5,000; another asset decreases $5,000. C) Assets increase $5,000; liabilities increase $5,000. D) Assets increase $5,000; stockholders' equity increases $5,000.

Net income is $29,000. Beginning retained earnings were $34,000. Ending retained earnings are $55,000. What amount of cash dividends was paid out? A) $18,000 B) $8,000 C) $5,000 D) $60,000