Accounting Final WSU fall 2016 chaps 1-2

Which of the following are components of calculating net income?

Revenues Expenses

Income Statement has

Revenues and Expenses

What are the three components of retained earnings?

Revenues, expenses, and dividends

what is a Revenue

Services performed for customers on account.

what is the second step applied in ethical decision making

Specify the alternative courses of action

What are assets?

Supplies, Inventory

The heading of a balance sheet for the 2018 fiscal period would include which of the following

The title "Balance Sheet", At December 31, 2018, The name of the business

first step for measuring transactions in the correct order.

Use a source document to identify accounts affected

Which is an internal transaction?

Using supplies on hand

Accounting maintains records of

a company's operations and communicates information to decision makers.

Financial Statements represent

a company's primary means of communicating information to external users.

A dividend represents

a payment of cash to the stockholders or a company

Elements of the accounting equation are represented by

accounts, which are contained in the general ledger.

A balance sheet lists the

assets, liabilities, and stockholders' equity as of a specific date.

Investing activities involve

buying and selling of land, buildings, and equipment used in the business.

A General Ledger is a

collection of accounts used to keep track of increases and decreases in financial position elements.

Accountants' primary information-related roles are to:

communicate measurements of companies' activities to others measure companies' activities

The qualitative characteristic of using the same accounting method each period over time refers to the concept of

consistency

An expense is a

cost of doing business that is necessary to produce revenue

A revenue account increased with a

credit

The two external users of financial accounting information that contribute financial resources to a company are

creditors & investors

Accounts receivable are assets which represent the amount owed by

customers

A proper journal entry includes the

date, the account debited, the account and amount credited, and a brief explanation of the transaction.

what is Managerial accounting

deals with the concepts and methods used to provide information to an organization's internal users

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

debits and credits.

A t-account has space at the top for the account title and two sides for recording

debits; credits and increases; decreases to the account

After the accountant analyzes the impact of a transaction on the accounting equation, the next step in the measurement process is to

determine the accounts to debit and credit

A distribution of net income to owners is called a

dividend

Crane purchases equipment by signing a note payable with the equipment dealer for $10,000. The accounts affected for Crane are

equipment and notes payable

An internal transaction is an

event that affects the financial position of the company but does not include an exchange with a separate economic entity.

The monetary unit assumption states that

financial statement elements should be measured in terms of the U.S. dollar

The classification on the statement of cash flows are cash flows from

financing activities, investing activities, operating activities

Borrowing from a bank is an example of

financing activity

The financial statement that summarizes revenues and expenses for a period of time is the

income statement

When a company earns net income, its retained earnings:

increase

Transactions are classified as

internal or external transactions

Amounts owed to creditors are

liabilities

An advantage of the corporate form of organization is that a corporation has

limited liability

Accountants' key roles are to

measure the activities of the company and to communicate those measurements to others.

Revenues minus expenses equals

net income

The characteristic that a new accounting standard should not favor one group of companies over others or achieve a particular social outcome is an example of

neutrality

Two sources of stockholders' equity are amounts

paid in from shareholders, earned by corporation

The process of transferring information from a journal entry to the specific accounts affected in the general ledger is referred to as

posting

The term "accounting cycle" refers to the full set of

procedures utilized to measure and communicate business transactions to external decision makers

Operating activities involve

purchasing goods from suppliers, designing and manufacturing products, and selling products to customers

To be useful for decision making, information should posses the primary qualities of

relevance and faithful representation.

Prepaid rent is

rent paid in advance

A company reports a net loss if its

revenues were less than its expenses

Revenue is the

sale of goods or services to customers

The three most common forms of business organization are

sole proprietorship, partnership, and corporations.

The financial statement that provides information about cash receipts and cash disbursements for the period is the

statement of cash flows

For a corporation, the owners' claim to the resources of a company are called

stockholders' equity.

An external transaction involves an exchange between

the company and a separate economic entity.

In a double-entry accounting system

the debit represents the left side of the account.

The basic accounting equation is referred to as

the fundamental model of business valuation

The sum of accounts with debit balances must equal

the sum of the accounts with credit balances.

The qualitative characteristic wherein information is available early enough allowing it to be useful for a decision describes the concept of

timeliness

The term debit means

to place the entry on the left side of the account

For every journal entry, total debits must be equal to

total credits

A list of all accounts and their balances at a particular date showing that debits equals credit is referred to as a

trial balance

The accounting characteristic that requires a user to comprehend the information within the context of the decision being made is referred to as

understandability

When the cost of an item can be traced to objective evidence of a transaction, such as a sales receipt, canceled check, and bank statement, the information has the quality of

verifiability

What is the correct order of the items found on the balance sheet?

1. Assets 2. Liabilities 3. Stockholders' Equity

Place the three steps for analyzing the effect of transactions in the correct order.

1. Determine one account in the accounting equation that will increase or decrease 2. Determine a second account in the accounting equation that will increase or decrease 3. Confirm that assets are equal to liabilities plus stockholders' equity

Rank the following steps applied in ethical decision making in the proper order beginning with the first step

1. Identify the ethical issue and stakeholders 2. Specify the alternative courses of action 3. Evaluate the courses of action in terms of their impact on stakeholders 4. Make a decision

Arrange the steps for measuring transactions in the correct order.

1. Use a source document to identify accounts affected 2. Analyze the impact of the transaction on the accounting equation 3. Assess whether the transaction results in a debit or credit to account balances 4. Record the transaction in a journal 5. Post the transaction to the general ledger

Which of the following are internal transactions?

1.Using supplies purchased and paid for last month 2.Earning revenues after cash is received in advance from customers

The two roles of financial accounting are to

1.communicate information to external parties for decision making purposes 2.measure business activities of the company

Financial accounting should provide information that:

1.tells about economic resources, claims to resources, and changes in resources and claims 2. is useful to investors and creditors in making decisions 3. helps to predict cash flow

If a transaction decreases cash by $100, the balance sheet will balance if which of the following occurs?

A liability is decreased Another asset is increased.

second step for measuring transactions in the correct order

Analyze the impact of the transaction on the accounting equation

third step for measuring transactions in the correct order

Assess whether the transaction results in a debit or credit to account balances

Using the accounting equation, stockholders' claims on the resources of the corporation can be expressed as

Assets - Liabilities

Balance Sheet has

Assets, liabilities, and stockholders' equity

Which of the following are external transactions

Borrowing money from the bank Purchasing inventory from suppliers Paying salaries to employees

Shriver Corp. borrows $25,000 from a bank and signs a two-year promissory note. What accounts will be affected by this transaction and what is the effect?

Cash increases, Notes payable increases

what is Deferred Revenue

Cash received from customers for services to be performed in the future

A list of all account names used to record transactions of a company is referred to as the

Chart of Accounts

Which of the following are stockholder equity accounts?

Common stock Retained Earnings

third step in analyzing the effect of transactions in the correct order

Confirm that assets are equal to liabilities plus stockholders' equity

what is an Expense

Cost of conducting business during the period

Daryl Inc. pays $2,000 for advertising for the month. Recording this transaction will include which of the following?

Credit Cash Debit Advertising Expense

second step in analyzing the effect of transactions in the correct order

Determine a second account in the accounting equation that will increase or decrease

first step in analyzing the effect of transactions in the correct order

Determine one account in the accounting equation that will increase or decrease

what is a Dividend

Distribution of cash to stockholders

Which of the following appears on the statement of stockholders' equity?

Dividends, Beginning balance of retained earnings, Net Income

what is the third step applied in ethical decision making

Evaluate the courses of action in terms of their impact on stakeholders

Faithful representation requires information to have which of the following three characteristics?

Free from material error, Neutrality, Completeness

Generally accepted accounting principles are abbreviated as

GAAP

what is the first step applied in ethical decision making

Identify the ethical issue and stakeholders

Which of the following are financial statements

Income statement, Balance sheet, Statement of stockholders' equity

What effect does revenue have on retained earnings?

Increases

In financial accounting which of the following are the three types of business activities of a company?

Investing activities, Financing activities, Operating activities

what is a Computerized System

Journal entries are instantly posted to the general ledger

what is a Manual System

Journal entries are posted periodically to the general ledger

what is the fourth step applied in ethical decision making

Make a decision

Statements of Cash Flows has

Operating, investing, and financing activities

fifth step for measuring transactions in the correct order

Post the transaction to the general ledger

Which of the following is an external transaction?

Purchasing supplies from a vendor

fourth step for measuring transactions in the correct order

Record the transaction in a journal