ch. 3 – Flashcards
Unlock all answers in this set
Unlock answersquestion
True
>The costs that a firm incurs when operating it business cause retained earnings to decrease.
answer
Expenses decrease retained earnings. True or false?
question
Increased $40,000
>Since assets only decreased $50,000, and liabilities decreased by $90,000, stockholders' equity has to increase by $40,000 to keep the accounting equation balanced.
answer
During 2014, Gibson Company assets decreased $50,000 and its liabilities decreased $90,000. Its stockholders' equity...
-decreased $140,000
-increased $140,000
-decreased $40,000
-increased $40,000
question
Decreases cash; decreases retained earnings.
>Payment of dividends reduces both cash and retained earnings.
answer
Payment of a dividend...
-decreases cash; increases stockholders' equity.
-increases retained earnings; increases expenses.
-increases expenses; decreases cash.
-decreases cash; decreases retained earnings.
question
An account is a source document.
>An account has three basic parts - a title, a debit side, and a credit side, but it is not a source document.
answer
An account is a part of the financial information system and is described by all except which one of the following?
-an account has a debit and credit side
-an account is a source document
-an account consists of three parts
-an account has a title
question
Assets, dividends, and expenses
>Assets, dividends, and expenses have normal debit balances.
answer
Which accounts normally have debit balances?
-assets, liabilities, and dividends
-assets, expenses, and revenues
-assets, dividends, and expenses
-assets, expenses, and retained earnings
question
Analyze a transaction; record it in the journal; post it to the ledger
>The sequence is to analyze the event, record it, and then post it to the ledger.
answer
Which of the following is the correct sequence of events?
-record a transaction in the journal; analyze the transaction; post it to the ledger
-analyze a transaction; record it in the journal; post it to the ledger
-none of the answer choices provides the correct sequence
-analyze a transaction; post it to the ledger; record it in the journal
question
In the journal
>The first place entries are recorded is the journal. It is sometimes referred to as the book of original entry.
answer
Where is the first place every transaction is recorded?
-in the journal
-in the respective accounts
-in the basic accounting equation
-in the ledger
question
Liability
>The unearned revenue account is classified as a liability. Unearned revenues are payments for future services to be performed or goods to be delivered. Until a company performs the services or delivers the goods, the amount is owed to the party that made the payment.
answer
What type of account is unearned revenue?
-expense
-liability
-revenue
-asset
question
The order that they appear in the ledger
>Accounts will appear in the trial balance in the same order that they appear in the ledger.
answer
Accounts are listed on the trial balance in...
-the order in which they are posted
-alphabetical order
-chronological order
-the order that they appear in the ledger
question
Buying equipment
>Buying equipment is a part of the investing activities of a firm.
answer
Which of the following is not one of the primary types of the financing activities in the statement of cash flows?
-issuing shares of stock
-buying equipment
-borrowing money
-paying dividends
