Accounting 2600 Review Question

The cost of operating assets is expensed over their individual useful life

According to accounting standards, Depreciation is a process in which

Increase expenses and assets

A debit will

Financing, Investing, Operating

Businesses engage in which three main categories?

Impacts the total book value of plant assets reported on the balance sheet and the amount of net income reported during a period

Capitalizing an expenditure rather than recording it as a revenue expenditure

The cost of plant and equipment is allocated to expense over the time periods which benefit from the use of the asset

Depreciation is a process by which

Payments to shareholders of a company

Dividends are best described as

A violation of proper segregation of duties

Having one employee prepare company checks and sign those checks relates to which internal control activity?

Consolidation of departments within the accounting function

Internal control systems provide assurance in each of the following areas except

Increases in assets resulting from the sale of products or services

Revenues are best described as?

The work is completed on the job, whether or not the cash is received

Revenues are recorded when

Retained earnings and contributed capital (common stock)

Stockholders equity consists of?

Not be amortized but instead reviewed annually for any impairment

The current U.S. GAAP standards indicate that the costs of intangible assets with an indefinitely life such as goodwill should

Both sides of the accounting equation must be affected

The rules for recording transactions do NOT include what?

Assets increase and stockholders equity increase

What effect does "recognizing accrued interest revenue at the end of the accounting period" have on the accounting equation?

Liabilities decrease and stockholders equity increases

What effect does "recognizing revenue at the end of the accounting period for rent previously received in advance" have on the accounting equation for the insurance company?

They only occur when a transaction occurs

What is false in regards to expenses?

They may deny responsibility for certain financial reporting matters if they are not knowledgeable about the proper accounting procedures for those transactions

What is not a requirement of a company's top managers under the Sarbanes-Oxley act?

All publicly traded corporations must provide internal controls over financial reporting that guarantees financial accuracy

What is not a requirement of the Sarbanes-Oxley Act?

The name of the auditor

What is not shown in the heading of a financial statement?

Overstated income and understated liabilities

What would be the result on your balance sheet of recording unearned revenue as revenue?

When the expense is incurred, despite the payment of cash

When are expenses recorded?

Balance Sheet

Which financial statement would you refer to in order to analyze your debt and ownership

Balance Sheet

Which financial statement would you refer to in order to determine how much resources the company owned?