question

What is the accounting equation?

answer

A = L + OE

question

What is the equation for net income?

answer

Revenue - Expenses = Net Income

question

What financial statement is net income found on?

answer

Income statement

question

You purchase $150 of inventory. What changes?

answer

Debit inventory 150 credit cash 150

question

Financial Accounting objective

answer

external

question

managerial accounting objective

answer

internal

question

___ are professional accountants who serve the general public, not one particular company

answer

CPA

question

Which of the following organizations is responsible for the creation and governance of accounting standards in the United States?

answer

FASB

question

The Sarbanes-Oxley Act (SOX) ________

answer

Requires companies to take responsibility for the accuracy and completeness of their financial reports

question

Gatto Production Services started the year with total assets of $90,000 and total liabilities of $40,000. The revenues and the expenses for the year amounted to $130,000 and $80,000, respectively. During the year, the owner did not make any additional contributions, but had withdrawals of $55,000. Calculate Gatto's net income for the year.

answer

50,000

question

Correct order of preparation of financial statements?

answer

Income Statement Statement of Owner's Equity Balance Sheet Statement of Cash Flows

question

Which financial statements lists the entity's assets, liabilities, and stockholders' equity as of a specific date?

answer

Balance sheet

question

Managerial accounting provides information to_________.

answer

Internal decision makers

question

The field of accounting that focuses on providing information for internal decision makers is _________.

answer

Managerial Accounting

question

Which of the following users would rely on management accounting information for decision — making purposes?

answer

company managers

question

GAAP are the rules that govern accounting in the United States. The acronym GAAP in this statement refers to ________.

answer

Generally Accepted Accounting Principles

question

Characteristic of a corporation

answer

corporation is owned by stockholders

question

A debt that a business owes to an outside party is called a

answer

liability

question

The owners' claim to the assets of the business is called ________

answer

equity

question

_______ is the capital earned by profitable operations that is not distributed to stockholders

answer

retained earnings

question

Which of the following transactions will affect the balance of retained earnings?

answer

rent expense

question

Which of the following is true of retained earnings

answer

Retained earnings decrease with payments of dividends

question

Equity of a corporation is broken out into two components. Which of the following are the two components of the equity of a corporation?

answer

contributed capital and retained earnings

question

Marsh Supply Services received $1,000 cash from a customer which was owed to the business from the previous month. Which of the following accounts would decrease as a result of this transaction?

answer

Accounts receivable

question

The assets of Moon Company are $130,000 and liabilities are $70,000. The equity will be _____________

answer

60,000

question

Ace Inc. had the following transactions in June: Sold goods for $6,000 on account; received cash on account, $8,000; paid $900 for repair expense; paid $1,700 to a supplier that it owed from the previous month. What is the combined effect on Cash of the June transactions?

answer

$5,400 increase (8000 - 900 - 1700 = 5400)

question

________represent the right to receive cash in the future from customers for goods sold or for services performed.

answer

accounts receivable

question

Which of the following financial statements reports expenses in decreasing order of their amounts, by stating the largest expense first?

answer

income statements

question

The balance sheet is a snapshot of the entity. Which of the following items are included on the balance sheet?

answer

assets

question

Which of the following financial statements reports cash receipts and cash payments during a period of time?

answer

statement of cash flow

question

Which is always listed first when recording a JE?

answer

debit

question

You should include a brief description of the JE at the end of the entry.

answer

yes

question

The company purchased office supplies on account for $300. What is the correct JE?

answer

debit office supplies expense, credit accounts payable

question

Land is depreciated

answer

false

question

What type of an account is Accumulated Depreciation?

answer

contra account

question

What natural balance does Revenues have?

answer

credit

question

What is the natural balance of an expense account?

answer

debit

question

Depreciation Methods

answer

Straight line, double declining balance, declining balance, MACRS

question

What is the formula for Straight Line Depreciation?

answer

SL Depr. = cost - salvage( or residual) value / useful life

question

CASH basis is acceptable for GAAP

answer

false (use accrual basis)

question

Two categories of AJE are Accruals and Prepaids

answer

true (could include estimates, but accruals and prepaids are main 2)

question

Prepaid Rent is what type of account?

answer

asset

question

Unearned Revenue is what type of account?

answer

liability

question

Goods a company acquires to use in making products are called:

answer

Raw Materials inventory

question

The assets section of a classified balance sheet usually includes the subgroups:

answer

Current Assets, long term investments, plant assets, intangible assets

question

Financial statements are typically prepared in the following order:

answer

income statement, statement of retained earnings, balance sheet

question

The statement of cash flows is:

answer

a financial statement that reports the cash inflows and outflows for an accounting period, and that classifies those cash flows as operating activities, investing activities, or financing activities

question

The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is:

answer

investing activities

question

If a company is using the indirect method to prepare the statement of cash flows, identify where an increase in the accounts receivable account should be reported:

answer

a decrease in cash flows from operating activities

question

A financial report that summarizes the amounts and types of costs that were incurred in the manufacturing process during the period is a:

answer

schedule of cost of goods manufactured

question

A cost that includes both fixed and variable cost components is called a:

answer

mixed cost

question

A term describing a firm's normal range of operating activities is:

answer

relevant range of operations

question

The sales level at which a company neither earns a profit nor incurs a loss is the:

answer

break-even point

question

Income __________ when there is zero beginning inventory and all inventory units produced are sold.

answer

will be the same under both variable and absorption costs

question

If a company receives $11,600 from its sole stockholder to establish a corporation, the effect on the accounting equation would be:

answer

assets increase 11,600, equity increase 11,600

question

External users of accounting information include all of the following except:

answer

purchasing managers

question

A company acquires equipment for $75,000 cash. This represents a(n):

answer

investing activity

question

Given the following errors, identify the one by itself that will cause the trial balance to be out of balance.

answer

A $140 cash receipt from a customer in payment of her account posted as a $140 debit to cash and a $14 credit to accounts receivable

question

Which of the following is not a step in the accounting process?

answer

Verify that revenues and expenses are equal

question

Identify the account below that impacts the Equity of a business

answer

utilities expense

question

Identify the account used by businesses to record the transfer of assets from a business to its stockholders:

answer

the dividends account

question

All of the following are asset accounts except:

answer

supplies expense

question

A simple tool that is widely used in accounting to represent a ledger account and to understand how debits and credits affect an account balance is called a:

answer

t-account

question

a debit:

answer

is the left hand side of a t-account

question

A business uses a credit to record:

answer

a decrease in an asset account

question

Merchandise inventory:

answer

is a current asset

question

Which of the following items does not represent a difference between financial and managerial accounting? - users of the information - flexibility of reporting - timeliness of information -focus of the information - managerial accounting does not use the financial information from the financial accounting system

answer

managerial accounting does not use the financial information from the financial accounting system

question

A fixed cost:

answer

does not change with changes in the volume of activity within the relevant range

question

Costs that flow directly to the income statement as expenses are called:

answer

period costs

question

Manufacturing costs other than direct materials and direct labor, and are not readily traceable to specific units or batches of production are called:

answer

factory overhead

question

Labor costs that are clearly associated with specific units of product because the labor is used to convert raw materials into finished products are called:

answer

direct labor

question

Products that have been completed and are ready to be sold by the manufacturer are called:

answer

finished goods inventory

question

Two common subgroups for liabilities on a classified balance sheet are:

answer

current liabilities and long-term liabilities

question

A balance sheet that places the liabilities and equity to the right of the assets is a(n):

answer

account form balance sheet

question

Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as:

answer

operating activities

question

The accounting principle that requires important noncash financing and investing activities be reported on the statement of cash flows or in a footnote is the:

answer

Full disclosure principle

question

A statement of cash flows explains the differences between the beginning and ending balances of:

answer

cash and cash equivalents

question

A financial report that summarizes the amounts and types of costs that were incurred in the manufacturing process during the period is a:

answer

schedule of cost of goods manufactured

question

A cost with a flat cost line within a relevant range that shifts to another level when volume significantly changes is a(n):

answer

step-wise cost

question

A cost that changes in proportion to changes in volume of activity is a(n):

answer

variable cost

question

The sales level at which a company neither earns a profit nor incurs a loss is the:

answer

break-even point

ACCTG 211 – Summer – Flashcards

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