question

What is the time period assumption?

answer

The economic life of a business can be divided into artificial time periods.

question

Which principle dictates that efforts (expenses) be recorded with accomplishments (revenues)?

answer

matching principle

question

What is a false statement about the accrual basis of accounting?

answer

companies record revenue only when they receive cash, and record expense only when they pay out in cash.

question

Adjusting entries are made to ensure that:

answer

expenses are recognized in the period in which they are incurred revenues are recorded in which they are earned balance sheet and income statement accounts have correct balances at the end of an accounting period

question

what are the three major type (or category) of adjusting entry?

answer

prepaid expenses, accrued revenues, accrued expenses

question

adjustments for unearned revenues:

answer

decrease liabilities and increase revenues

question

adjustments for prepaid expenses:

answer

decrease assets and increase expenses

question

Queenan Company computes depreciation on delivery equipment at $1,000 for the month of June. The adjusting entry to record this depreciation is as follows:

answer

Depreciation Expense 1,000 Accumulated Depreciation- Delivery Equipment 1,000

question

Adjustments for accrued revenues:

answer

increase assets and increase revenues

question

Colleen Mooney earned a salary of $400 for the last week of September. She will be paid on October 1. The adjusting entry for Colleen's employer at September 30 is:

answer

Salaries 400 Expense Salaries Payable 400

question

What is a false statement about adjusted trial balance?

answer

The adjusted trial balance lists the account balances segregated by assets and liabilities.

question

Which account will have a zero balance after a company has journalized and posted closing entries?

answer

Service Revenue

question

Which types of accounts will appear in the post-closing trial balance?

answer

Permanent accounts

question

What are the required steps in the accounting cycle?

answer

journalizing and posting closing entries preparing an adjusted trial balance preparing a post-closing trial balance

question

The effects on the basic accounting equation of performing services for cash are to:

answer

increase assets and increase stockholders equity

question

Genesis Company buys a $900 machine on credit. This transaction will affect the:

answer

balance sheet only

question

Which is not recorded in the accounting records?

answer

an employee is terminated

question

During 2010, Gibson Company assets decreased $50,000 and its liabilities decreased $90,000. its stockholders' equity therefore:

answer

increased $40,000

question

What is an account?

answer

An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders equity items

question

Debits:

answer

increase assets and decrease liabilities

question

a revenue account:

answer

is increased by credits

question

which accounts normally have debit balances?

answer

assets, dividends, and expenses

question

Paying an account payable with cash affects the components of the accounting equation ?

answer

decreases assets and decreases liabilities

question

what are the three parts of the recording process?

answer

analyzing transactions entering transaction in a journal posting transactions

question

what statement about a journal is false?

answer

it contains only revenue and expense accounts

question

A ledger:

answer

is a collection of the entire group of accounts maintained by a company

question

posting:

answer

transfers journal entries to ledger accounts

question

a trial balance:

answer

is a list of accounts with their balances at a given time

question

a trial balance will not balance if

answer

a $100 cash dividend is debited to Dividends for $1,000 and credited to cash for $100

question

In a classified balance sheet, assets are usually classified as:

answer

current assets; long-term investments; property, plant, and equipment; and intangible assets

question

current assets are listed:

answer

by liquidity

question

the correct order of presentation is a classified balance sheet for the following current assets is:

answer

cash, accounts receivable, inventories, prepaid insurance

question

a company has purchased a tract of land. it expects to build a production plant on the land in approximately 5 years. During the 5 years before construction the land will be idle. The land should be reported as:

answer

a long-term investment

question

which is an indicator of profitability?

answer

earnings per share

question

for 2010, Stoneland Corporation reported net income, $24,000; net sales, $400,000; and average shares outstanding, $6,000. There were no preferred stock dividends. What was the 2010 earning per share?

answer

$4.00

question

the balance in retained earning is not affected by:

answer

issuance of common stock

question

Which of the measures is an evaluation of a company's ability to pay current liabilities?

answer

current ratio

question

Companies can use free cash flow to:

answer

Pay additional dividends acquire property, plant, and equipment pay off debts

question

generally accepted accounting principles are:

answer

a set of standards and rules that are recognized as a general guide for financial reporting.

question

What organization issues U.S. accounting standards?

answer

Financial Accounting Standards Board

question

What is the primary criterion by which accounting information can be judged?

answer

usefulness for decision making

question

verifiability is an ingredient of: Reliability __________; Relevance ___________

answer

yes; no

question

what accounting constraint refers to the tendency of accounts to resolve uncertainty in a way least likely to overstate assets and net income

answer

conservatism

question

What is an advantage of corporations relative to partnerships and sole proprietorships?

answer

reduced legal liability for investors

question

which statement about users of accounting information is incorrect?

answer

regulatory authories are considered internal users

question

which did not result from the sarbanes-oxley act?

answer

tax rates on corporations increased

question

What are the three primary business activities?

answer

Financing, Operating, Investing

question

Net income will result during a time period when:

answer

revenues exceed expenses

question

what section of a cash flow statement indicates the cash spent on new equipment during the past accounting period?

answer

The investing section

question

which statements presents information as of a specific point in time?

answer

balance sheet

question

Which financial statement reports assets, liabilities, and stockholders' equity?

answer

balance sheet

question

stockholders equity represents:

answer

claims of owners

question

As of December 31, 2007, Stoneland Corporation has assets of $3,500 and stockholders' equity of $2,000. What are the liabilities for Stoneland Corporation as of December 31, 2007?

answer

$1,500

question

The segment of a corporation's annual report that describes the corporation's accounting methods is the:

answer

notes to the financial statements

question

The segment of the annual report that presents an opinion regarding the fairness of the presentation of the financial position and results of operations is/are the:

answer

auditors opinion

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