question

A formal report that shows what an individual owns, what an individual owes, and the difference between the two.

answer

Net Worth Statement

question

Planning, recording, analyzing, and interpreting financial information.

answer

Accounting

question

An equation showing the relationship among assets, liabilities, and owners equity.

answer

Accounting Equation

question

A business activity that changes the assets , liabilities, or owners equity

answer

Transaction

question

A planned process for providing financial information that will be useful to management

answer

Accounting System

question

The standards and rules that accountants follow while recording and reporting financial activities

answer

GAAP

question

The account used to summarize the owners equity in the business

answer

Capital Account

question

The amount remaining after the value of all the liabilities is subtracted from the value of all assets.

answer

Owners Equity

question

A record summarizing all the information pertaining to a single item in the accounting equation.

answer

Account

question

The difference between personal assets and personal liabilities

answer

Personal Net Worth

question

Anything of value that is owned

answer

Asset

question

A sale for which cash will be received at a later date

answer

Sale on Account

question

Assets taken out of a business for the owners personal use

answer

Withdrawals

question

A formal written document that describes the nature of a business and how it will operate

answer

Business Plan

question

A business owned by one person

answer

Proprietorship

question

The use of ethics in making business decisions

answer

Business Ethics

question

A business that performs an activity for a fee.

answer

Service Business

question

The difference between assets and liabilities

answer

Equity

question

Financial reports that summarize the financial conditions and operations of business

answer

Financial Statements

question

An amount owed by a business

answer

Liability

question

A person or business to whom a liability is owed

answer

Creditor

question

A decrease in owners equity resulting from the operation of a business

answer

Expense

question

An increase in owners equity resulting from the operation of a business.

answer

Revenue

question

The amount in an account

answer

Account Balance

question

The name given to an account

answer

Account Title

question

Financial rights to the assets of a business

answer

Equities

question

The principles of right and wrong that guide an individual in making decisions

answer

Ethics

question

The accounting equation is most often stated as Assets+Liabilities=Owners Equity T or F

answer

False, Correct is Assets=Liabilities+Owners Equity

question

After each transaction the accounting equation must remain in balance TorF

answer

True

question

A negative amount for net worth would reflect more debt than assets something a creditor would favor T or F

answer

False

question

When two Asset accounts are changed in a transaction there must be an increase and a decrease T or F

answer

True

question

Detailed information about changes in owners equity is needed by owners and managers to make sound business decisions T or F

answer

True

question

When items are bought and paid for at a future date another way to state this is to say these items are bought on account T or F

answer

True

question

A transaction for the sale of goods or services results in in a decrease in owners equity T or F

answer

False

question

keeping separate the financial records for a business and for its owners personal belongings is an application of the business entity accounting concept. T or F

answer

True

question

An expense is a decrease in owners equity resulting from the operation of a business. T or F

answer

True

question

Business ethics are the principles of right and wrong that guide an individual in making decisions T or F

answer

False

question

Payments for advertising, equipment, repairs, utilities and rent are all liabilities T or F

answer

False

question

Withdrawals are assets taken out of a business for the owners personal use T or F

answer

True

question

The most common type of withdrawal is cash T or F

answer

True

question

When an owner withdraws cash from the business the transaction affects both assets and owners equity T or F

answer

True

question

A withdrawal is an expense T or F

answer

False

question

An accounting device used to analyze transactions is a T account T or F

answer

True

question

An amount recorded on the right side of a T account is debit T or F

answer

False

question

Each asset account has a normal credit balance T or F

answer

False

question

Each Liability account has a normal debit balance T or F

answer

False

question

The balance of an account increases on the same side as the normal balance T or F

answer

true

question

Asset accounts decrease on the credit side T or F

answer

True

question

Each transaction changes the balance in at least two accounts T or F

answer

True

question

A list of accounts used by a business is a chart of accounts T or F

answer

True

question

When cash is paid for supplies the supplies account is credited T or F

answer

False

question

Common accounting practice is to record withdrawals as debits directly in the owners capital account T or F

answer

False

question

the left side of an asset is the credit side because asset accounts are on the left side of the accounting equation T or F

answer

False

question

A drawing account is increased by debits and decreased by credits T or F

answer

True

question

Increases in expense accounts are recorded as debits because they decrease the owners capital account T or F

answer

True

question

The normal balance side of an Accounts Receivable account is a debit T or F

answer

True

question

accounts payable accounts are increased with debit T or F

answer

False (Increased with credit)

question

Utilities Expense is increased with a debit T or F

answer

True

question

Cash is increased with a debit T or F

answer

True

question

Pre paid insurance is decreased with credit T or F

answer

True

question

To summarize withdrawal information separately from the records owner withdrawal transactions are recorded in the owners capital account T or F

answer

False

question

Decreases to Liability accounts are recorded on the credit side T or F

answer

False (Debit)

question

The left side of a T account is the

answer

Debit side

question

If an amount is recorded on the side of a T account opposite the normal balance side the account balance is

answer

Decreased

question

The normal balance side of a liability account is the

answer

Credit Side

question

When an owner invests cash in a business the owners capital account is

answer

Increased by credit

question

when a business pays cash on account a liability account is

answer

decreased by debit

question

When cash is received from sales the change in the owners equity is usually recorded in what?

answer

in a separate revenue account

question

Increases in a revenue account are shown on which side of T accounts

answer

Credit Side

question

When $1,500 cash is received on account what is debited and what is credited?

answer

Accounts receivable is decreased with a credit and cash is increased with a debit

question

The normal balance side of any revenue account is the

answer

Right Side

question

Information for each transaction recorded in a journal

answer

Entry

question

Recording transactions in a journal

answer

Journalizing

question

A form on which a brief message is written to describe a transaction

answer

Memorandum

question

A business form ordering a bank to pay cash from a bank account

answer

Check

question

A form for recording transactions in chronological order

answer

Journal

question

An invoice used as a source document for recording a sale on a document

answer

sales invoice

question

a business form giving written acknowledgements for cash received

answer

Receipt

question

The recording of debit and credit parts of a transition

answer

Double-Entry Accounting

question

Determining that the amount of cash agrees with the accounting records

answer

Proving Cash

question

A form describing the goods or services sold, the quantity, the price, and the terms of sale

answer

Invoice

question

The source document for all each payments is a Check T or F

answer

True

question

A recipt is the source document for cash and received from the transactions other than sales T or F

answer

True

question

The accounting concept Unit of Measurement is being applied when a source document is prepared for each transaction? TorF

answer

False

question

The source document used when supplies are bought on account is a memorandum T or F

answer

True

question

The Journal Columns used to record receiving cash from the owner as an investment are Cash Debit, and Sales Credit T or F

answer

False

question

To correct an error in a journal one can simply erase the incorrect item and write the correct item T or F

answer

False

question

A transaction recorded in a journal is not considered a permanent record T or F

answer

False

question

Transactions are recorded in a journal in Chronological order T or F

answer

True

question

A complet Journal entry consists of the date, the debit amount, the credit amount, and a source document. T or F

answer

True

question

When an entry in an amount column is an even dollar amount either "00" or "-" can be entered in the cents column T or F

answer

False

question

Double lines are ruled across a journal's amount columns to indicate that the totals have been verified as correct T or F

answer

True

question

Cash is always proved at the end of a month T or F

answer

True

question

Every business uses the same journal to record transactions T or F

answer

False

question

In double entry accounting each transaction affects at least two accounts T or F

answer

True

question

On each Journal page the date is written...

answer

For each entry

question

The entry to record payment of cash to the owner as a withdrawal of equity is..

answer

debit Drawing, credit Cash

question

When cashe is paid for supplies...

answer

Supplies is increased

question

A single line ruled across the journals amount columns indicates...

answer

That columns are to be totaled

question

If an error is recorded in a journal entry

answer

All of the options listed (All the above)

question

When cash is received on account the amount is recorded in the

answer

Accounts Receivable credit column, and cash debit column

question

When cash is received from sales, the amount is recorded in the

answer

Sales Credit column, and cash debit column

question

When services are sold on account the amount is recorded in the

answer

Accounts receivable debit column, and sales credit column

question

When cash is paid for rent the amount is recorded in the

answer

Cash credit column, and General debit column

question

When cash is paid on account the amount is recorded in the

answer

General Debit column, and cash credit column

Accounting and Business CGHS – Flashcards

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