Accounting ch.1 and ch.2

Service revenue would be credited for $700. Unearned revenue would be debited for $700.

$1,000 of cash was received in advance of performing services. By the end of the period, $300 had not yet been earned. (The Unearned revenue account was increased at the time of the initial cash receipt.) Demonstrate the required adjusting journal entry by selecting from the choices below. (Check all that apply.)

Supplies would be credited for $300. Supplies expense would be debited for $300.

$1,000 of supplies were purchased at the beginning of the month. $300 were used during the month. (The Supplies account was increased at the time of the initial purchase.) Demonstrate the required adjusting journal entry by selecting from the choices below. (Check all that apply.)

Supplies expense would be debited for $600.

$800 of supplies were purchased at the beginning of the month and the Supplies account was increased. As of the end of the period, $200 of supplies still remain. Which of the following is the correct adjusting entry?

Insurance expense would be debited for $300.

A 12-month insurance policy was purchased on Dec. 1 for $3,600 and the Prepaid insurance account was increased for the payment. Demonstrate the required adjusting journal entry on Dec. 31 by selecting from the choices below.

credit to Prepaid insurance for $400. debit to Insurance expense for $400.

A 12-month insurance policy was purchased on Dec. 1 for $4,800 and the Prepaid insurance account was initially increased for the payment. The required adjusting journal entry on December 31 includes a: (Check all that apply.)

debit to Insurance expense for $400. credit to Prepaid insurance for $400.

A 12-month insurance policy was purchased on Dec. 1 for $4,800 and the Prepaid insurance account was initially increased for the payment. The required adjusting journal entry on December 31 includes a: (Check all that apply.)

12 December

A calendar year-end reporting period is defined as a _______ month period which ends on _________ 31st.

data visualization

A graphical presentation of data to help in understanding their significance is called data

Its original cost (minus any salvage value) is expensed over its useful life. It is reported on the balance sheet. It has a life within the business greater than one year or the current operating cycle, whichever is longer. It is a tangible long-term asset.

A plant asset can be defined by which of the following statements? (Check all that apply.)

data analytics

A process of analyzing data to identify meaningful relations and trends is called data

optional entry. entry whose purpose is to simplify a company's record keeping. entry that is the exact opposite of an accrual adjusting entry. entry that is used for adjusting entries involving accrued revenues and accrued expenses.

A reversing entry can be described as a(n): (Check all that apply.)

external

A(n) _____ user of accounting information does not directly run the organization.

increase equity

After entering a transaction into the accounting equation, an increase in total assets can be accompanied by a(n) _____________ in total liabilities or _____________

Total assets Total liabilities

All of the following are on an unclassified balance sheet: (Check all that apply).

Recognition and measurement Objectives Elements Qualitative characteristics

All of the following are part of the FASB conceptual framework: (Select all that apply).

decreases

An account is a record of increases and____________ in a specific asset, liability, equity, revenue or expense.

pressure

An employee that is having trouble paying his personal bills might exhibit the following fraud factor:

Determine the missing amount from each of the separate situations given below.

Assets=Liabilities+ Equity Assets-Liabilities=Equity Assets-Equity=Liabilities

4.5%

Boaz Company had beginning of year assets of $100 million and end of year assets of $120 million. Boaz's net income is $5 million. Calculate Boaz Company's return on assets.

1.67

Brown Co. had current assets of $15,000, total assets of $30,000 and current liabilities of $9,000 at the end of the year. The current ratio for the period is:

Revenues Unearned Revenues Accounts Payable Common Stock

Choose the account(s) below, that would have a normal credit balance. (Check all that apply).

The final step is to create an adjusting journal entry to get from step 1 to step 2.

Describe the final step in the adjusting process.

Income Statement Statement of Retained Earnings Balance Sheet Statement of Cash Flows

Describe the order in which a company prepares financial statements.

Unearned revenues refer to cash received in advance of providing a service or product.

Explain what unearned revenues are by choosing the correct statement below.

They refer to cash received in advance of performing a service or product. They are also called deferred revenues. They are reported on a balance sheet. They are a liability.

Explain what unearned revenues are by selecting the statements below which are correct. (Check all that apply.)

Adjustments involve increasing both an expense and a liability account. They refer to costs that are incurred in a period, but are both unpaid and unrecorded. Examples of accrued expenses are wages expense and interest expense. They are reported on an income statement.

Explain your understanding of what an accrued expense is by selecting the statements below which are correct. (Check all that apply.)

relevance and faithful representation

Generally accepted accounting principles (GAAP) wants information to have: (Check all that apply).

Dividends Revenues Expenses Common Stock

Given the accounts below, choose all of the ones that affect equity. (Check all answers that apply.)

Supplies Retained earnings, 12/31 Equipment Accounts Payable Cash

Given the list of accounts below, identify which of them would appear on a balance sheet. (Check all that apply.)

An asset is a resource that a business owns or controls

Identify the correct definition of an asset:

Accounting is a system that identifies, records and communicates financial information.

Identify what accounting is by selecting the correct statement.

Unearned revenue; Supplies; Prepaid rent

Identify which group of accounts may require adjustments at the end of the accounting period.

Office supplies Cash Prepaid rent Accounts receivable

Identify which of the accounts below would be classified as a current asset. (Check all that apply.)

Total liabilities/Total assets

Identify which of the following formulas correctly defines how to calculate the debt ratio.

Retained earnings and Dividends

Identify which of the following lists of accounts would belong on the statement of retained earnings.

A reporting period can be one month, one quarter or one year. A reporting period is determined by the business. A one-year reporting period is known as the fiscal year.

In defining a reporting period, which of the following statements is (are) correct? (Check all that apply.)

A journal

It is a book of original entry that includes a chronological record of all transactions that have occurred within a business during a period occurred

A general ledger

It is a collection of all accounts with their activity and balances that exist in a business.

A chart of accounts

It is a list of all ledger accounts which exist in a business and includes an identification number assigned to each account

A trial balance

It is a list of each account and its balance at any given time and is used to verify that debits = credits

Debit Cash; credit Common stock

J. Jackson invested $1,000 in his business in exchange for common stock. Show how to use T-accounts to record this transaction by selecting the correct answer below.

debited left credited right

L. Lyons started a business and invested $4,000 in exchange for common stock. Illustrate how to record the transaction in the T-accounts by completing the following sentence. The Cash account would be _________ on the _________ side of the T-account and the Common stock account would be __________ on the ____________ side of the T-account.

Debit Prepaid insurance $800.

Mouse Inc. uses the alternative method of accounting for prepayments and purchased a $1,200, 6-month insurance policy. The company immediately debited the Insurance expense account. By the end of the period, $400 of the policy had expired. Demonstrate the required adjustment needed at the end of the period.

Debit Salaries Payable $100; credit Salaries Expense $100.

On December 31, AB Consulting recorded two days' wages of $100 in an adjusting entry which included a debit to Salaries Expense and a credit to Salaries Payable. On January 1, the accountant prepared a reversing entry which included which of the following?

what it is what it should be record adjusting entry

Place the steps in the adjusting process in the correct order in which they would be performed.

Any unused prepaids existing at end of period are transferred to asset accounts. Record all prepaid expenses with debits to expense accounts.

Rather than debiting an asset account, which of the following statements explains an alternate recording procedure to journalize prepaid expenses, such as prepaid rent or supplies. (Check all that apply.)

A company that finances their assets by borrowing will need to make enough money to pay off the debt. If a company has a lot of debt, they may not be able to afford to take on new debt. A company's required debt payments may be greater than its ability to generate money to make those payments.

Review each of the following statements to determine which is correct regarding the importance of assessing a company's risk of paying debt. (Check all that apply.)

It is a listing of all permanent accounts and their balances after closing.

Select the statement below that describes a post-closing trial balance.

$5,750

Sheldon Company had beginning retained earnings of $1,000, net income of $5,000, and dividends of $250. The ending balance in the retained earnings account is

concepts

The FASB conceptual framework consists of all of the following except:

income statement

The _____ is the first financial statement to be prepared.

The statement reports the financial position of a company at a point in time. The statement reports assets, liabilities and equity at a point in time. The statement reports the equality of the accounting equation at any point in time.

The correct definition of a balance sheet includes which of the following statements? (Check all that apply.)

A record of increases and decreases in a specific asset, liability, equity, revenue, or expense item

The correct definition of an "account" includes which of the following?

dividends

The statement of retained earnings explains changes in equity from net income (or loss) and from any ______ over a period of time. (Select the accounts below which will correctly complete this question.)

opportunity, pressure, rationalization

The three factors that must exist for a person to commit fraud include __, __, and __. (Check all that apply).

posting

Transferring entries from the journal to the ledger is called _________

true

True or false: Dividends are resources paid to the stockholders.

false

True or false: Return on assets is computed as Net Income divided by Total Assets.

1.5

Vito Co. had current assets of $9,000 and current liabilities of $6,000 at the end of the year. Net income during the year was $21,000. The current ratio for the period is:

The concepts and rules that govern financial accounting practice.

What are Generally Accepted Accounting Principles?

A plant asset refers to a long-term tangible asset used to produce and sell products or services.

What is a plant asset?

It can help with adjusting and closing accounts and with preparing financial statements.

What is a work sheet?

The accounting equation must always remain in balance. After recording the transaction, total assets will always equal total liabilities plus equity.

When recording transactions into the accounting equation, which of the following statements are correct? (Check all that apply.)

Wages expense, Interest expense

Which of the accounts below are considered accrued expenses?

should be recorded when goods or services are provided to customers at an amount expected to be received

Which of the following accounts is considered a prepaid expense?

supplies

Which of the following accounts is considered a prepaid expense?

Supplies Prepaid insurance Prepaid rent

Which of the following accounts would be considered a prepaid expense or prepaid asset account? (Check all that apply.)

Income statement Statement of retained earnings Statement of cash flows

Which of the following financial statements report(s) the financial position of a business over a period of time? (Check all that apply.)

Posting means to transfer journal information to a ledger.

Which of the following is correct regarding posting a transaction?

A source document identifies and describes transactions and is the basis for entering an event into the accounting system.

Which of the following is the best definition of a source document in the accounting process?

The accounting equation must always remain in balance so that assets always equal the sum of liabilities and equity.

Which of the following statements below lists the rules of entering transactions into the accounting equation?

The total of everything owned by a business must always equal the total of what the business owes to creditors and owners.

Which of the following statements best represents the accounting equation?

Profit margin is the ratio of a business's net income to its net sales. Profit margin is also called return on sales.

Which of the following statements correctly define(s) a profit margin? (Check all that apply.)

List each account title and its amount from the ledger. If an account has a zero balance, it may be omitted entirely. Verify that the total debit balances equals the total credit balances. Compute the total of debit balances and the total of credit balances.

Which of the following statements correctly explains how to prepare a trial balance? (Check all that apply.)

Expenses should be matched in the same accounting period as the revenues that are recognized as a result of those expenses. Matching of expenses with revenues is a major part of the adjusting process.

Which of the following statements describes the expense recognition (matching) principle? (Check all that apply.)

Revenues are always recorded in the period in which they are earned. Comparability of financial statements is improved. Expenses are always recognized in the period in which they are incurred.

Which of the following statements describes why accrual accounting better reflects a business's performance? (Check all that apply.)

The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners. The equation applies to all monetary business transactions. The relation of assets, liabilities and equity is reflected in the equation. The equation states that Assets = Liabilities +Equity

Which of the following statements explain(s) how the accounting equation applies to businesses? (Check all that apply.)

The relation of assets, liabilities and equity is reflected in the equation. The equation applies to all transactions and events. The equation states that Assets = Liabilities + Equity. The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners.

Which of the following statements explain(s) how the accounting equation applies to businesses? (Check all that apply.)

A trial balance confirms that the sum of debit account balances equals the sum of credit account balances.

Which of the following statements explains what a trial balance is?

A T-account will show the debit and credit effects of transactions. A T-account may be used as a tool to visualize the effects of a transaction. A T-account represents a ledger account.

Which of the following statements is (are) correct regarding a T-account? (Check all that apply.)

It is a list of all ledger accounts which exist in a business and includes an identification number assigned to each account.

Which of the following statements is the best definition of the Chart of Accounts?

Purchase order Payroll records Checks Sales receipt

Which of the following would be considered a source document in an accounting system? (Check all that apply.)

An amount owned Resources controlled by the business Resources with expected future benefits

Which of the statement(s) below define(s) an asset? (Check all that apply.)

The accounting cycle is a series of steps repeated each reporting period. The cycle contains steps for adjusting and closing accounts. The accounting cycle contains 10 steps. The accounting cycle refers to steps followed by a company to prepare its financial statements.

Which of the statements below is (are) correct regarding the accounting cycle? (Check all that apply.)

Expenses; Dividends; Cash

Which set of accounts below would have a normal debit balance?

A T-account represents a ledger account and is a tool used to understand the effects of one or more transactions.

Which statement best describes a T-account?

After recording a transaction, the total of the right side of the accounting equation must equal the total of the left side of the accounting equation.

Which statement is correct regarding entering transactions into the accounting equation?

Accounting records business transactions and communicates financial information.

Why does a business need accounting information?