ACC 320

Galaxy Corporation issues 500 shares of $1 par value common stock for $5,000. What is the total effect on owners' equity?

Increases $5,000

True or false: The objective of an Enterprise Resource Planning (ERP) system is to create a customized software program that integrates the information of departments and functions of a company into a single computer system.

True

True or false: The purpose of the statement of cash flows is to summarize the transactions that caused cash to change during the period.

True

The accounting equation is

Assets = Liabilities + Owner's Equity

Adjusting journal entries are necessary for three situations: deferrals, _______, & estimates

accruals

Adjusting entries are recorded for

accruals prepayments estimates

Entries made at the end of the accounting period before the financial statements are prepared are called ________ entries

adjusting

Accruals occur when cash flow comes:

after revenue recognition after expense recognition

When rent is paid in advance for 2 years, it is appropriately recorded as a(n) _________, whereas when rent is paid and used during one month, it is appropriately recorded as a(n) ____________ .

asset, expense

Prepaid expenses are the cost of ___ acquired in one accounting period and ___ in a future period

assets, expensed

Accrued receivables involve situations when the revenue is earned in a period ______ the cash receipt.

before

Prepaid expenses are costs of assets acquired in an accounting period

before they will be expensed

Which of the following is an external event? borrowing from the bank using supplies depreciating equipment

borrowing from the bank

A deferred revenue liability appears on the balance sheet for:

cash received before revenue is earned

The adjusting journal entry required when deferred revenue is recognized includes a ________ entry to revenue.

credit

The normal balance in a contra asset account is

credit

On May 1, Year 1, Garcia Company paid $1,200 for 12 months of rent and recorded the transaction in an income statement account. The adjusting journal entry required on December 31, Year 1, will require a

credit rent expense $400 debit to prepaid rent $400 Garcia recorded the full amount as rent expense in the income statement account on May 1. At the end of the year, the rent expense must be reduced by the remaining four months.

The balance sheet impact of accruing salaries expense is to:

increase liabilities (for the salaries payable)

An account should have an account title, account number, a place for the date of the transaction, and two columns for

increases and decreases.

A ______ liability is a liability that will be satisfied in more than 1 year or operating cycle, whichever is longer, in the future.

non-current

The purpose of the statement of comprehensive income is to report current period changes in equity that arose from

non-owner transactions

The categories on a statement of cash flows are

operating, investing, and financing activities.

On June 1, Year 1 Oxian Corp. receives $24,000 from a customer for work to be performed evenly over the next 2 years. What is the amount of revenue that Oxian should recognize on the income statement for Year 1?

$7,000

Lassiter Corp. uses the periodic inventory method. During the year, Lassiter purchases $10,000 of inventory. Ending inventory is $6,000. Cost of goods sold is $12,000. Beginning inventory was:

$8,000 beg.inv. +purchases - ending inventory= cogs beg.inv+ 10,000-6,000=12,000

Adjusting entries help a company accurately measure

-revenues and expenses for the period. -the company's financial performance.

Mann Corporation signed a note with principal and interest due in 6 months. The stated rate of interest on the note was 8%. If Mann accrues three months of interest at year-end, the formula Mann will use will be: Principal x ______% x 3/12.

8

Which of the following steps occurs only at the end of the year? -Record adjusting entries and post to the general ledger accounts -Close the temporary accounts to retained earnings -Obtain information about external transactions from source documents -Prepare the financial statements

Close the temporary accounts to retained earnings

On September 1, Newman Company received $1,200 of revenue in advance from customers for work to be performed evenly over the next 12 months. The transaction was recorded in an income statement account. What is the adjusting journal entry required on December 31?

Debit revenue $800.

On October 1, Year 1, Swift Corporation received $1,200 from customers for services to be performed evenly over the next 12 months. Swift recorded the original transaction in a balance sheet account. The adjusting journal entry on December 31, Year 1, will include which of the following entries?

Debit to deferred revenue $300.

Which of following is true regarding a trial balance?

Debits must equal credits.

Revenue of $1,000 was collected in advance from customers for goods and was recorded as sales revenue. At year end, $600 of the revenue collected in advance is earned. The adjusting entry includes a:

credit to deferred revenue of $400 debit to revenue of $400 The company used the alternative approach and initially recorded the unearned revenue as revenue. At year end, the adjustment is made to reflect the correct amount of revenue. The $400 debit to revenue removes the unearned portion.

On November 1, Year 1, Thomasson paid rent on its building for 2 years in the amount of $12,000. When the transaction was initially recorded, the full $12,000 was recorded as an expense using an alternative approach to record the prepayment. The adjusting journal entry on December 31, Year 1 requires a

credit to rent expense $11,000.

The adjusting entry to record deferred revenue originally recorded as sales revenue includes a:

debit to sales revenue credit to deferred revenue

Logan Corp. purchases supplies on account and appropriately records the transaction in an asset account. The adjusting journal entry at year-end when accounting for supplies used will require a

debit to supplies expense credit to supplies

The accounting system that refers to the effect that each transaction has on the accounting system is called a(n)

double-entry system

Economic events cause changes in the:

financial position of a company

One of the purposes of adjusting entries is to? -make assets equal liabilities plus owners' equity. -ensure debits equal credits. -record all external transactions at the end of the year. -recognize all revenues earned during the period.

recognize all revenues earned during the period.

A prepayment may be recorded in prepaid rent, a balance sheet account. The alternative method to record the prepayment is to debit the ________ _________.

rent expense

To adjust for rent used up during the year that was recorded to the prepaid rent account when paid for,

rent expense is debited, prepaid rent is credited

Which of the following make up shareholders' equity of a corporation?

retained earnings paid-in capital

An event that has a dual effect on the accounting equation is referred to as a(n)

transaction.

Which of the following is an internal event? -repayment of a note payable -use of supplies -payment of rent expense -payment of salaries

use of supplies