question

Paying an account payable increases liabilities and decreases assets.

answer

false

question

Transactions affecting owner's equity include

answer

owner's investments and owner's withdrawals, revenues, and expenses

question

The financial statements of a proprietorship should include the owner's personal assets and liabilities.

answer

false

question

Revenue is earned only when money is received.

answer

false

question

The two most common specialized fields of accounting in practice are

answer

managerial accounting and financial accounting

question

Manufacturing and merchandising companies are similar because they purchase products from other companies to sell to their customers.

answer

false

question

Primary users of accounting information are accountants.

answer

false

question

Only large companies such as Wal-Mart, JCP, General Motors, and the Bank of America can be organized as corporations.

answer

false

question

How does receiving a bill to be paid next month for services rendered affect the accounting equation?

answer

liabilities increase; owner's equity decreases

question

A balance sheet is a list of the assets, liabilities, and owner's equity of a business for a period of time.

answer

false

question

Proprietorships are owned by one owner and provide only services to their customers.

answer

false

question

Most businesses in the United States are

answer

sole proprietorships

question

Rivers Computer Makeover Company purchased various computer supplies on account to be used for repairing their customers' computers. How will this business transaction affect the accounting equation?

answer

Increase Assets (Supplies) and Increase Liabilities (Accounts Payable)

question

Four financial statements are usually prepared for a business. The statement of cash flows is usually prepared last. The statement of owner's equity (OE), the balance sheet (B), and the income statement (I) are prepared in a certain order to obtain information needed for the next statement. In what order are these three statements prepared?

answer

I,OE, B

question

The process of transferring the journal entries to the accounts is known as

answer

posting

question

Journalizing transactions using the double-entry bookkeeping system will eliminate fraud.

answer

false

question

The recording of cash receipts to the cash account will be done by debiting the account.

answer

true

question

Which of the following entries records the acquisition of equipment on account?

answer

Equipment, debit; Accounts Payable, credit

question

A proof of the equality of debits and credits in the ledger at the end of an accounting period is called a balance sheet.

answer

false

question

The order of the flow of accounting data is (1) record in the ledger, (2) record in the journal, (3) prepare the financial statements.

answer

false

question

When a transposition error is made on the trial balance, the difference between the debit and credit totals on the trial balance will be

answer

divisible by 9

question

The classification and normal balance of the drawing account is

answer

owner's equity with a debit balance

question

Joe Able invested $6,000 in his company, Able Co. on June23. The journal entry will:

answer

Increase Cash and increase Capital

question

All except one of the following accounts will be increased with a debit:

answer

unearned revenues

question

A debit may signify a

answer

decrease in liability accounts

question

Drawings are an example of an expense.

answer

false

question

Prior to the adjusting process, accrued revenue has

answer

been earned and not recorded as revenue

question

Adjusting entries are made at the end of an accounting period to adjust accounts on the balance sheet.

answer

false

question

The matching concept requires expenses be recorded in the same period that the related revenue is recorded.

answer

true

question

The following adjusting journal entry was found on page 4 of the journal. Select the best explanation for the entry. Debit: Wages Expense 2,555 Credit Wages Payable 2,555

answer

Record wages expense incurred and to be paid next month

question

A contra asset account for Land will normally appear in the balance sheet.

answer

false

question

If the adjustment for depreciation for the year is inadvertently omitted, the assets on the balance sheet at the end of the period will be understated.

answer

false

question

All adjusting entries always involve

answer

at least one income statement account and one balance sheet account.

question

The revenue recognition concept

answer

determines when revenue is credited to a revenue account

question

Entries required to close the balances of the temporary accounts at the end of the period are called final entries.

answer

false

question

On which financial statement will Income Summary be shown?

answer

No financial statement

question

Accumulated Depreciation appears on the

answer

balance sheet in the property, plant and equipment section

question

Which of the accounts below would be closed by posting a debit to the account?

answer

fees earned

question

The phase of accounting system installation in which the information needs of people in the organization are taken into account is

answer

analysis

question

Purchase journals will have an Other Accounts Cr. column.

answer

false

question

The customers ledger is controlled by the general ledger account entitled Accounts Payable.

answer

false

question

Accounting systems evolve through a three-step process: analysis, design and feedback.

answer

false

question

A purchase of supplies on account is recorded in the

answer

purchases journal

question

A purchase of supplies for cash is recorded in the

answer

cash payments journal

question

Multiple-step income statements show

answer

both gross profit and income from operations

question

Office salaries, depreciation of office equipment, and office supplies are examples of what type of expense?

answer

administrative expense

question

The seller records the sales tax as part of the sales amount.

answer

false

question

Sales to customers who use bank credit cards, such as MasterCard and VISA, are generally treated as credit sales.

answer

false

question

Generally, the revenue account for a merchandising business is entitled

answer

sales

question

A retailer purchases merchandise with a catalog list price of $10,000. The retailer receives a 25% trade discount and credit terms of 2/10, n/30. How much cash will be needed to pay this invoice within the discount period?

answer

7,350

question

Apple Co sells merchandise on credit to Zea Co in the amount of $8,000. The invoice is dated on September 15 with terms of 1/15, net 45. If Zea Co. chooses not to take the discount, by when should the payment be made?

answer

october 30

question

When merchandise sold is assumed to be in the order in which the expenditures were made, the inventory method is called

answer

first-in, first-out

question

KoKo Company uses the retail method of inventory costing. They started the year with an inventory that had a retail cost of $35,000. During the year they purchased an inventory with a retail cost of $300,000. After performing a physical inventory, they calculated their inventory at $60,000. The mark up is 100% of cost. Determine the ending inventory at its estimated cost.

answer

$30,000

question

Inventory costing methods place primary emphasis on assumptions about

answer

flow of costs

question

Most large companies will use only one inventory costing methods for all of its different segments.

answer

false

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