Accounting test 1

the agency of the united states government that oversees the U.S financial markets is the

Security exchange commison

equipment costing $23200 is purchased by paying $5800 cash and signing a note payable for the remainder, the journal entry should include a

credit to notes payable

debts and obligations of a business are referred to as

liabilities

Corporation advantages

1.) easy to transfer ownership 2.) greater capital raising potential 3.) lower legal liability

corporation disadvantages

1.) unfavorable tax treatment

which of the following is not classified properly as a current assets

a receivable from the sale of an asset to be collected in two years

Which of the following represents the expanded basic accounting equation?

assets+dividends+expenses=liabilities + common stock+revenues

the management discussion and analysis (MD&A) section of the annual report covers all of the following aspects except the

certification criteria of the companys auditors

different companies using the same accounting principles is an application of

comparability

accounting information is relevant to business decisions because it

contains prior expectations

an accountant has debited an asset account for $780 and credited a liability account for $390. what can be done to complete the recording of the transaction.

credit a different asset account for $390

in a classified balance sheet, assets are usually classified as

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

liabilities are generally classified on a balance sheet as

current liabilities and long-term liabilities

current assets divided by current liabilities is known as the

current ratio

when a company has performed a service but has not yet received payment, it

debits account receivable and credit service revenue

a company that receives money in advance of preforming a service

debits cash and credits unearned service revenue

when a company receives a utility bill but will not pay it right away, it should

debt utilities expense and credit acounts payable

what are dividends

dividends represent a portion of corporate profits that are paid to the shareholders. they belong on the retained earning statement

the measure of profitability is the

earnings per share

which of the following activities involves collecting the necessary funds to support the business?

financing

stockholders equity

includes retained earnings and common stock

which of the following groups uses accounting information to determine whether the company's net income will result in a price stock increase?

investors in common stock

the dividends account

is increased with debits and decreased with credits

why are financial statement users interested in the statement of cash flow?

it provides information about an important company resource

after transaction information has been recorded in the journal, it is transferred to the

ledger

earnings per share

net income-preferred dividends/ average common shares

which of the following clarifies information presented in the financial statement, as well as expanding upon it where additional detail is needed?

notes to the financial statements

Buying and selling products are examples of

operating activities

partnership disadvantages

partners personally transfer of ownership may be difficult

garrison company prepares quarterly reports, which it distributes to all stockholders and other entities that rely on its accounting information. which of the following is the best term for the key assumption in financial reporting that Garrison is following?

periodicity assumption

an income statement

presents the revenues and expenses for a specific period of time

sole proprietorship disadvantages

proprietor personally liable transfer ownership may be difficult

Which of the following groups uses accounting information primarily to insure the entity is operating within prescribed rules?

regulatory agencies

net income will result during a time period when

revenues exceed expenses

which of the following accounts with a credit

sales revenue

Partnership advantages

simple to establish shared control tax advantages board resources

Sole Proprietorship advantages

simples to establish owner controlled tax advantages

when a service has been preformed, but no cash has been received, which of the following statements is true?

the entry includes a debit to accounts receivable

if accounting information has relevance, it is useful in making predictions about

the future events of the company

information presented in a clear and concise fashion so that users can comprehend its meaning is an application of

understandability