question

accounting

answer

is a system of gathering financial information about a business and reporting this information to users.

question

analyzing

answer

is looking at events that have taken place and thinking about how they affect the business.

question

recording

answer

is entering financial information about events into the accounting system.

question

classifying

answer

is sorting and grouping similar items together rather than merely keeping a simple, diary-like record of numerous events.

question

false

answer

Reviewing the events that have taken place and determining how this affects the business is called interpreting.

question

true

answer

Stockholders have very little influence on business decisions.

question

CIA

answer

An internal auditor can achieve professional recognition in internal auditing by receiving which of the following certificates?

question

true

answer

Generally accepted accounting principles are procedures and guidelines to be followed in the accounting and reporting process.

question

false

answer

The principal accounting officer of a company is called a public accountant.

question

corporation

answer

Stockholders own which type of business?

question

false

answer

A CMA is a Certified Marketing Auditor.

question

false

answer

Writing or using one of the latest technological advances to enter a transaction in the accounting records is called summarizing.

question

merchandising business

answer

A business that purchases a product from another business to sell to customers is called a

question

false

answer

Cost accounting is used to develop a financial plan for a company.

question

marketing analysis

answer

Public accountants do NOT offer which of the following services?

question

analyzing

answer

Examining a transaction or event to determine its fundamental significance to the business so that the relevant information may be properly processed is called

question

proprietorships

answer

Which of the following does NOT use nonprofit accounting guidelines and procedures?

question

the language of business

answer

Since financial information is communicated in accounting terms, accounting is said to be

question

true

answer

Since financial information is communicated in accounting terms, accounting is said to be the "language of business."

question

decrease assets and decrease liabilities

answer

Tyler paid $3,700 on account to the company from which equipment was purchased on credit. This transaction would

question

true

answer

If owner's equity and liabilities increased during the period, then assets must also have increased.

question

false

answer

Liabilities represent an "inside" interest in a business.

question

decrease assets and decrease owner's equity.

answer

Sue Lee paid $1,200 for office rent. This transaction would

question

Other terms used for owner's equity include net worth and capital.

answer

true

question

Withdrawing cash from a business entity will result in an increase in owner's equity.

answer

false

question

The terms "profit and loss statement" or "operating statement" are sometimes used as synonyms for the balance sheet.

answer

false

question

According to the business entity concept, a proprietor may include nonbusiness assets and liabilities in the business entity's accounting records.

answer

false

question

Since insurance lasts for several months, it is recorded as owner's equity.

answer

false

question

The income statement and statement of owner's equity provide information covering a period of time.

answer

true

question

Since supplies last for several months, they are recorded as assets.

answer

true

question

An example of an expense is

answer

supplies consumed

question

Financial statements commonly prepared by businesses include an income statement, a statement of owner's equity, and a balance sheet.

answer

true

question

Recognizing the effects of transactions on assets, liabilities, owner's equity, revenue, and expenses of a business is the processing function.

answer

true

question

Meghan started her business by investing $30,000 in cash. This transaction would

answer

increase assets and increase owner's equity

question

To debit an account is to enter an amount on the left side of the account.

answer

true

question

An increase or decrease in any asset, liability, owner's equity, revenue, or expense is always accompanied by an offsetting change within the basic accounting elements.

answer

true

question

When services are performed for which payment will be received later, accounts receivable increases.

answer

true

question

Liability accounts normally have debit balances.

answer

false

question

The trial balance

answer

shows the current date.

question

The fact that each transaction has a dual effect on the accounting elements provides the basis for what is called

answer

double-entry accounting.

question

A credit represents a decrease in

answer

an asset

question

The balance of a T account is on the side with the larger footing.

answer

true

question

Revenues decrease owner's equity.

answer

false

question

Footings in T accounts

answer

are unnecessary when there is only one entry.

question

Prepaid insurance and supplies are assets because they will provide benefits for more than one month.

answer

true

question

Payment of a telephone bill represents an increase in a(n)

answer

expense

question

A trial balance is a formal business report.

answer

false

question

At least two accounts are affected by every transaction.

answer

true

question

A trial balance is taken periodically to check the equality of the debits and credits.

answer

true

question

The fact that each transaction has a dual effect on the accounting elements provides the basis for what is called complex-entry accounting.

answer

false

question

The standard T account includes all of the following EXCEPT

answer

the current date

question

A trial balance is a list of all accounts showing the title and balance of each account.

answer

true

question

The owner's capital account normally has a credit balance.

answer

true

question

A cash payment on a loan affects which of the following accounts?

answer

Cash and Notes Payable

question

The purchase of a supply of markers for three months should be recorded as an increase in revenue and a decrease in cash.

answer

false

question

A credit increases liabilities and owner's equity.

answer

true

question

An increase in an asset account may be offset by a(n)

answer

increase in owner's equity

question

Payment of rent decreases the Cash account.

answer

true

question

If services for the month total $7,000 in cash and $1,500 on account, the revenue account increases $8,500

answer

true

question

The accounting equation must remain in balance.

answer

true

question

Revenues received during an accounting period increase owner's equity.

answer

true

question

If owner's equity and liabilities increased during the period, then assets must also have increased.

answer

true

question

Expenses represent a decrease in liabilities.

answer

false

question

The accounting equation shows the relationship among the three basic accounting elements?assets, revenues, and owner's equity.

answer

false

question

The financial statement that should be completed first is the

answer

income statement

question

Expenses that are incurred in operating the enterprise increase owner's equity.

answer

false

question

The statement of owner's equity shows the state of the business on a specific date.

answer

false

question

An accounts payable is an unwritten promise to pay a supplier for assets purchased or services rendered.

answer

true

question

If the revenue of a period exceeds the expenses, the excess represents a net loss.

answer

false

question

The income statement provides information about events over a period of a month, year, or other period of time.

answer

true

question

Which phase of the accounting process involves recognizing the effect of transactions on assets, liabilities, owner's equity, revenue, and expenses of a business?

answer

processing

question

Writing or using one of the latest technological advances to enter a transaction in the accounting records is called summarizing.

answer

false

question

Certified Public Accountant is a professional designation that a public accountant can earn by passing a written exam and completing a specific amount of work experience.

answer

true

question

The Financial Accounting Standards Board develops generally accepted accounting principles to provide some assurance that companies are reporting business activities in a similar manner.

answer

true

question

Examining a transaction or event to determine its fundamental significance to the business so that the relevant information may be properly processed is called

answer

analyzing

question

The six major steps of the accounting process are analyzing, recording, classifying, summarizing, reporting, and interpreting.

answer

true

question

The person who reviews the operating and accounting control procedures adopted by management to make sure the controls are adequate may be referred to as a(n)

answer

internal auditor

question

Accountants design accounting information systems and analyze and interpret information.

answer

true

question

The principal accounting officer of a company is called a public accountant.

answer

false

question

Reviewing the events that have taken place and determining how this affects the business is called interpreting.

answer

false

question

A business that makes a product to sell is called a manufacturing business.

answer

true

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