ACCT 2301 Exam 1 Ch 1-4 – Flashcards
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The gross increases in stockholders' equity attributable to business activities are called
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revenues
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Prior to the adjusting process, accrued expenses have
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been incurred, not paid, and not recorded
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The debt created by a business when it makes a purchase on account is referred to as an
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account payable
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The balance in the supplies account before adjustment at the end of the year is $6,250. The proper adjusting entry if the amount of supplies on hand at the end of the year is $1,500 would be
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debit Supplies Expense $4,750, credit Supplies $4,750
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Which of the following entries records the payment of an account payable?
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debit Accounts Payable; credit Cash
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The net book value of a fixed asset is determined by the original cost
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less accumulated depreciation
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Supplies are recorded as assets when purchased. Therefore, the credit to Supplies in the adjusting entry is for the amount of supplies
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used
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If a shareholder wanted to know how money flowed into and out of the company, which financial statement would the shareholder use?
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statement of cash flows
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By matching revenues and expenses in the same period in which they are incurred
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net income or loss will be properly reported on the income statement
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Which of the following groups are considered to be internal users of accounting information?
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employees and managers
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Which of the following entries records the collection of cash from cash customers?
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Cash debit, Fees Earned credit
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Net income will result when
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revenues (credits) > expenses (debits)
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The classified balance sheet will show which liability subsections?
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current and long-term
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Debts owed by a business are referred to as
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liabilities
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Prior to the adjusting process, accrued revenue has
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been earned and not recorded as revenue
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Which of the following is the proper adjusting entry, based on a prepaid insurance account balance before adjustment of $14,000 and unexpired insurance of $3,000, for the fiscal year ending on April 30?
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debit Insurance Expense, $11,000; credit Prepaid Insurance, $11,000
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How does receiving a bill to be paid next month for services received affect the accounting equation?
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liabilities increase, stockholders' equity decreases
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The assets section of the balance sheet normally presents assets in
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the order in which they will be converted into cash or used in operations
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How will the following adjusting journal entry affect the accounting equation?
Unearned Subscriptions Debit 11,500
Subscriptions Earned Credit 11,500
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decrease liabilities, increase revenues
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What is the purpose of the adjusted trial balance?
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to verify that the debits and credits balance
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The cash basis of accounting records revenues and expenses when the cash is exchanged while the accrual basis of accounting
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records revenues and expenses when they are incurred
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The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a month or year, is called a(n)
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income statement
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Deferred expenses is
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a cost not yet recorded as an expense but has been paid
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Liabilities are reported on the
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balance sheet
