question

The classification and normal balance of the accounts payable account is

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a liability with a credit balance

question

Which of the following accounts is a stockholders' equity account?

answer

dividends

question

In which of the following types of accounts are increases recorded by credits?

answer

revenues, liabilities

question

Revenue should be recognized when

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the service is performed

question

Which group of accounts is comprised of only assets?

answer

Prepaid Expenses, Buildings, Patents

question

A chart of accounts is

answer

usually a listing of accounts in financial statement order

question

Which side of the account increases a cash account?

answer

debit

question

Expenses follow the same debit and credit rules a

answer

dividends

question

Which of the following types of accounts have a normal credit balance?

answer

revenues and liabilities

question

Which of the following entries records the acquisition of office supplies on account?

answer

Office Supplies, debit; Accounts Payable, credit

question

The business entity concept means that

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the entity is an individual economic unit for which data are recorded, analyzed, and reported

question

The asset created by a business when it makes a sale on account is termed

answer

accounts receivable

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Select the type of business that is most likely to obtain large amounts of resources by issuing stock.

answer

corporation

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Two common areas of accounting that respectively provide information to internal and external users are

answer

managerial accounting and financial accounting

question

Debts owed by a business are referred to as

answer

liabilities

question

If stockholders wanted to know how money flowed into and out of the company, what financial statement would they use?

answer

statement of cash flows

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Liabilities are reported on the

answer

balance sheet

question

Most businesses in the United States are

answer

proprietorships

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The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a month or year, is called a(n)

answer

income statement

question

The objectivity concept requires that

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amounts recorded in the financial statements must be based on independently verifiable evidence

question

Which of the following is not a characteristic of a corporation?

answer

A corporation's resources are limited to its individual owners' resources.

question

Which of the following is a manufacturing business?

answer

Ford Motors.

question

Which of the following best describes accounting?

answer

is an information system that provides reports to users regarding economic activities and condition of a business.

question

A financial statement user would determine if a company was profitable or not during a specific period of time by reviewing

answer

the income statement

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The debt created by a business when it makes a purchase on account is referred to as an

answer

account payable

question

Multiple-step income statements show

answer

both gross profit and income from operations

question

The arrangements between buyer and seller as to when payments for merchandise are to be made are called

answer

credit terms

question

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

answer

administrative expense

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Net income plus operating expenses is equal to

answer

gross profit

question

The inventory system employing accounting records that continuously disclose the amount of inventory is called

answer

perpetual

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The term "inventory" can indicate

answer

merchandise held for sale in the normal course of business

question

When comparing a retail business to a service business, the financial statement that changes the most is the

answer

income statement

question

Which of the following accounts usually has a debit balance?

answer

Freight In

question

If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as

answer

FOB shipping point

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Merchandise inventory is classified on the balance sheet as a

answer

current asset

question

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a

answer

credit memo

question

Generally, the revenue account for a merchandising business is entitled

answer

sales

question

Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as

answer

selling expenses

question

Which of the following accounts will only be found in the chart of accounts of a merchandising company?

answer

merchandise inventory

question

Which of the following accounts has a normal credit balance?

answer

sales

question

Control of inventory should begin as soon as the inventory is received. Which of the following internal control steps is not done to meet this goal?

answer

check the invoice with the person who specifically purchased the item

question

Under a perpetual inventory system, the amount of each type of merchandise on hand is available in the

answer

inventory ledger

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When merchandise sold is assumed to be in the order in which the purchases were made, the company is using

answer

first-in, first-out

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If a manufacturer ships merchandise to a retailer on consignment, the unsold merchandise should be included in the inventory of the

answer

manufacturer

question

Damaged merchandise that can be sold only at prices below cost should be valued at

answer

net realizable value

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The method of computing inventory that uses records of the selling prices of the merchandise is called

answer

retail method

question

Which of the following companies would be more likely to use the specific identification inventory costing method?

answer

Gordon's Jewelers

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Which of the following is not an example for safeguarding inventory?

answer

Returning inventory that is defective or broken.

question

Under the _________ inventory method, accounting records maintain a continuously updated inventory value.

answer

perpetual

question

Taking a physical count of inventory

answer

should be done near year-end

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Under a periodic inventory system

answer

a physical inventory is taken at the end of the period

question

The two most widely used methods for determining the cost of inventory are

answer

FIFO and LIFO

question

Ending inventory is made up of the oldest purchases when a company uses

answer

last-in, first-out

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