acct 1-2 – Flashcards
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Net Income is reported when
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revenues exceed expenses
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Public accountants are normally
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Certified Public Accountants
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The initials GAAP stand for
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Generally Accepted Accounting Principles
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Presently the dominant body in the development of accounting principles is the
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Financial Accounting Standards Board (FASB)
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The cost principle relates to
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the value exchanged at the time something is asquired
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A corporation is a(n)
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separate legal entity
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The objectivity principle requires that
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amounts recorded in the financial statements must be based on independently verifiable (objective) evidence
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The Reynolds Company estimated that the value of its land had increased from $10,000 to $16,000 and therefore wrote up the land account to $16,000. Which accounting concept was violated?
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cost concept
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Which Financial Statement reports cash coming in and going out?
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Statement of Cash Flows
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Which of the items below is not a business organization form?
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entrepreneurship
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Which of the following would NOT be interested in financial information?
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a value chain
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An accounting frim would be classified as which type of business
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service
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A chronological diary of economic business events is a call a(n)
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General Journal
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Behavior that considers the impact one's action have on society and others is considered
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proper ethical conduct
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Which of the following best describes accounting?
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is an information system that provides reports to decision makers
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Revenues and expenses are reported on the
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income statement
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Total Stockholder's Equity is
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Retained Earnings + Common Stock
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Debts owed by a business are referred to as
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liabilities
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The accounting equation may be expressed as
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Assets - Liabilities = Owner's Equity
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Which of the following is not a business transaction
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make a sales offer
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The costs associated with generating revenues are
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expenses
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Which financial statement reports information as a specific date?
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Balance Sheet
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Which of the following is an asset account
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Accounts Receivable
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Changing (increasing or decreasing) account balances is done by applying the rules of
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Debits and Credits
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When journalizing (making a journal entry), if the account title is NOT indented and the $$$ amounts are entered on the left side it would represent a
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debit
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An account is said to have a debit balance if
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the amount of the debits exceeds the amount of the credits
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Which of the following types of accounts have a normal credit balance?
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revenues and liabilities
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Which of the following groups of accounts have a normal debit balance?
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assets, expenses
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A credit indicates a decrease in
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expenses
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A debit indicates a decrease in
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liabilities
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Which of the following describes the classification and normal balance of the Service Revenue account?
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revenue; credit
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The classification and normal balance of the supplies expense account is a(n)
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expense with a debit balance
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In which of the following types of accounts are increases recorded by credits?
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revenues; liabilities
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A credit balance in which of the following accounts would indicate a likely error
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salary expense
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A debit balance in which of the following accounts would indicate a likely error
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notes payable
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If a transaction is described as a purchase on account, which of the following accounts will be increased
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accounts payable
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A journal entry that includes more than one debit or more than one credit is called a
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compound entry
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Which statement concerning cash is true
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cash is increased with a debit
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The process of transferring the debits and credits from the journal to the ledger accounts is called
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posting
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If the two totals of an Unadjusted Trial Balance are NOT equal it is an indication of a(n
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error
