question

False

answer

Unearned revenue is classified as an expense account

question

True

answer

the debit side of a transaction is the left side and the credit side is the right side of the transaction

question

True

answer

assets have a normal balance of debit

question

false

answer

liabilities and equity have a normal balance of debit

question

true

answer

expenses and dividends are increased when they are debited

question

false

answer

after posting a transaction to the general ledger one should then record the transaction in the general journal

question

false

answer

dez's diner purchased supplies on account. in order to record a journal entry for this event would-- Debit Supplies and Debit Cash

question

true

answer

romos construction co purchased a piece of equipment for cash. in order to record a journal entry for this event one would-- Debit Equipment and Credit Cash

question

True

answer

the trial balance lists all accounts balances in the general ledger

question

true

answer

the debt ratio = total liabilities/ total assets

question

false

answer

companies that use accrual accounting recognize revenues and expenses at the time that cash is paid or received

question

false

answer

cash basis accounting is compliant with GAAP while accrual basis accounting is not compliant with GAAP

question

true

answer

the adjusting entry for expired prepaid insurance is a -- Debit to an Expense and a Credit to the Prepaid Insurance

question

false

answer

depreciation represents a plant asset's decline in a market value

question

true

answer

accumulated depreciation is shown on the balance sheet as a subtraction from the cost of an asset

question

false

answer

another name for unearned revenue is accrued revenue

question

true

answer

an accrued expense is a transaction where a company pays cash after an expense is recognized

question

true

answer

adjustments are necessary to bring an asset or liability account to its proper amount and also update a related expense or revenue account

question

true

answer

a deferral describes a transaction in which cash is paid prior to the recognition of an expense or in which cash is received prior to the recognition of a revenue

question

false

answer

a prepaid expense is NOT an example of a deferral

question

false

answer

goods sold on consignment are included in the consignees merchandise inventory

question

true

answer

under the fifo costing method, the oldest cost is of goods available for sale is used

question

true

answer

when the purchase price of inventory is rising, the fifo method produces a lower of cost of goods sold than lifo

question

false

answer

inventory cost= invoice cost+ cost necessary to receive inventory + selling expenses

question

false

answer

an understatement of the ending inventory balance will understate cost of goods sold and overstate net income

question

false

answer

the its requires that companies use the same costing method for tax purposes as it does for its financial statements, regardless of the method used

question

false

answer

errors in the period-end inventory balances only have an impact on the current periods records and financial statements

question

false

answer

whether prices are rising or falling, fifo always will yield the highest gross profit and net income

question

true

answer

accounting principles require that inventory be reported at the market value of replacing inventory when market value is lower than cost

question

true

answer

goods that are damaged or obsolete are not counted in inventory if they are unsellable

question

false

answer

plant assets refer to nonphysical assets that are used in the operations of a business

question

true

answer

salvage value is an estimate of an asset's value at the end of its benefit period

question

true

answer

depreciation does not measure the decline in the market value of an asset each period

question

false

answer

depreciation is higher in earlier years and is lower in the later years when using the straight-line method

question

true

answer

an assets cost includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use

question

true

answer

the purchase of a property that included land, building, and related improvements is called a lump sum or basket purchase

question

false

answer

total asset cost plus depreciation expense equals book value

question

true

answer

the units of production method of depreciation charges a varying amount of expense for each period of an assets useful life depending on its usage

question

true

answer

a plant assets useful life is the length of time it is productively used in a company's operation.

question

cost-salvage/ total units of capacity

answer

depletion per unit

question

depletion per unit x units extracted and sold

answer

depletion expense

question

2 methods of accounting bad debts

answer

1) direct write off 2) allowance method

question

method of bad debts that shows -what customers can pay off -does not match best w/ sales and expenses -materiality -can use this method if its not a big amount

answer

direct write off

question

method of bad debts that shows -estimated bad debts -reports AR on balance sheets and estimated amount of cash to be collected

answer

allowance method

question

cash flow that deals with current assets and liabilities

answer

operating

question

cash flow that deals with long term assets

answer

investing

question

cash flow that deals with long term liabilities and equity

answer

financing

question

total liabilities / total assets

answer

debt ratio

question

opportunity, rationalization, financial pressure

answer

fraud triangle

question

net income/average total assets

answer

return on assets

Intro To Financial Accounting – Flashcards

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