ACCT – Free Accounting Flashcards
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the valuation of assets on the balance sheet is generally based on
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historical cost
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The accounting equation can be expressed as:
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Assets-Liabilities = owners equity
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The nature of an asset is best described as
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an economic resource that's expected to benefit future operations
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A financial statement that covers a period of time:
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Income statement and statement of cash flows
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How would net income be most likely to affect the accounting equation?
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increase assets and increase stockholder's equity
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What items are reported on the balance sheet?
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Inventory retained earnings accounts payable
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True statement about International Financial Reporting Standards?
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They are converging gradually with U.S. standards
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Ethics as applied to decision making in accounting
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ethics involves making difficult choices under pressure, and should be kept in mind in making every decision, including those involving accounting
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The primary objective of financial reporting is to provide information
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useful for making investment and credit decisions
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Which type of business organization provides the least amount of protection for bankers and other creditors of the company?
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Corporation
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assets are reported at their
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historical cost
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The amount a company expects to collect from customers appears on the:
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balance sheet in the current assets section
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All of the following are current assets except: Cash Accounts Receivable Inventory Sales revenue
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sales revenue
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Revenues are (increases in what?)
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increases in retained earnings resulting from selling products or performing services
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The financial statement that reports revenues and expenses is called:
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Income statement
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another name for the balance sheet
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Statement of financial position
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net income appears on which financial statement?
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statement of retained earnings and income statement
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Cash paid to purchase a building appears on the statement of cash flows among the
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investing activities
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a debit entry to an account
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increases assets
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which account types normally have a credit balance?
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revenues and liabilities
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An attorney performs services of 1,100 for a client and recieves 400 cash with the remainer on account. The journal entry for this transaction would:
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debit cash, debit accounts receibable, credit service revenue
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The list of all accounts with their balances is the
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trial balance
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The basic summary device of accounting is the
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account
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in a double-entry accounting system
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a debit entry is recorded on the left side of the T account
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The correct sequence for recording transactions and preparing financial statements
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Journal, ledger, trial balance, financial statements
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An error of posting 500 as 50 can be detected by
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dividing the out-of-balance amount by 9
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an investment of cash into the business will
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increase stockholders equity
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purchasing a laptop on account will
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have no effect on stockholders equity increase total assets increase total liabilities
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performing a service on account will
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increase total assets increase total liabilities increase stockholders equity
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receiving cash from a customer on account will
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have no affect on total assets
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purchasing computer equiptment for cash will
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have no affect on total assets, total liabilites or stockholders equity
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Where do we first record a transaction?
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Journal
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Which of the following are not an asset account: common stock salary expense service revenue
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none are assets
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The journal entry to record the receipt of land and a building and the issuance of common stock
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debits land and building and credits common stock
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the jouranal entry to record the purchase of supplies on account:
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debits supplies and credits accounts payable
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if the credit to record the purchase of supplies on account is not posted
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liabilites will be understated
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If the credit to record the payment of an account payable is not posted,
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cash will be overstated
