cengage

Adjusting entries are made

"prior to the preparation of the financial statements" and "at the end of the accounting period for items that do not involve exchanges with an outside party

The adjusted balance of supplies would be transferred to the credit column of the adjusted trial balance.

False

Being a corporate stockholder means

can have influence on business decisions

The purpose of accounting is to provide financial information about the current operations and financial condition of a business to

individuals. organizations. agencies

Which user would most likely use accounting information to make operating decisions?

managers

The private standard-setting body that establishes GAAP is

the FASB

The recording, classifying, summarizing, and reporting steps of the accounting process can be performed either by computers or manually. If done manually,

the accounting concepts and techniques would be the same as if they had been performed by computers.

The difference between the T account footings is called

the balance of the account.

Business owners concerned with acquiring lines of credit from their suppliers are most interested in

the company's profitability and current financial condition.

After preparing the Trial Balance

the sum of debits must equal the sum of credits and the accounting equation must remain in balance

The only way to change the balance of a ledger account is

to journalize and post a journal entry. Journal entries must be posted for changing an account balance in the general ledger.

Expense accounts would most likely be listed last on the chart of accounts.

true

Since a trial balance is not a formal statement, dollar signs are not used

true

Rain & Shine Co. purchased a truck for its business on January 2, 20x1. The cost of the truck was $35,000 with a salvage value of $5,000 and a useful life of 5 years. Using the Double-Declining Balance method of depreciation, the depreciation expense recorded on December 31, 20x1, would be:

$14,000 $35,000 x .40 = $14,000 1/5 x 2 = 2/5 or .40

Total debits to the accounts payable account equaled $10,000 and total credits to the accounts payable account equaled $30,000. What is the balance of accounts payable?

$20,000 credit

Rain & Shine Co. purchased a truck for its business on January 2, 20x1. The cost of the truck was $30,000 with a salvage value of $5,000 and a useful life of 5 years. Using the Straight-Line method of depreciation, the depreciation expense recorded at the end of the second year, on December 31, 20x2, would be:

$30,000-$5,000)/5=$5,000

The following postings were made to accounts receivable that has a beginning balance of $50,000 in the general ledger:​ $10,000 debit, $5,000 credit, $15,000 debit and $35,000 credit. What is the balance of accounts receivable after all the postings?

$35,000 debit.

The following information is available for a depreciable asset: Cost: $20,000 Salvage Value: $5,000 Useful life: 5 years Using double-declining balance, what is the asset's book value at the end of year two?

$7,200 Year 1: $20,000 x 2/5 = $8,000; $20,000 - $8,000 = $12,000. Year 2: $12,000 x 2/5 = $4,800; $12,000 - $4,800 = $7,200.

Under MACRS, an asset with a useful life of 5 years for financial accounting purposes would have a useful ​life of

6 yrs

An increase to an asset is recorded

An increase to an asset is recorded

Assume that a $300 payment for Rent Expense was incorrectly debited to Repair Expense and correctly credited to Cash. The journal entry was posted. What would be the correcting entry?

Debit rent expense, credit repair expense

__________ is an accounting service that involves the application of standard review and testing proceduresto be certain that proper accounting policies and practices have been followed.

Auditing

Check stubs or copies of checks provide information related to

Cash Payments

Cost: $120,000 Salvage Value: $20,000 Useful Life: 10 years Accumulated depreciation: $100,000 What is the asset's depreciable cost?

Cost less salvage value equals depreciable cost; $120,000 - $20,000 = $100,000

The following information is available for a depreciable asset: Cost: $20,000 Salvage Value: $5,000 Useful life: 5 years Using sum-of-the-years' digits, what amount of depreciation will be recorded in the first year?

Fraction: 1+2+3+4+5=15; 5/15. ($20,000 - $5,000) (5/15) = $5,000.

The following information is available for a depreciable asset: Cost: $20,000 Salvage Value: $5,000 Useful life: 5 years Using sum-of-the-years' digits, what amount of depreciation will be recorded in the last year?

Fraction: 1+2+3+4+5=15; last year; 1/15. ($20,000 - $5,000) (1/15) = $1,000.

GAAP stands for

Generally Accepted Accounting Principles

Recording a $50 transaction as $250, is referred to as

Slide errors can be found on the trial balance if the trial balance debit and credit columns do not equal.

The Trial Balance is prepared by using information from

The General Ledger

When an accounting issue is identified, which of the following steps would be the first followed to ​address the accounting issue?

The issue is placed on FASB's agenda. This lets everyone know that the Board plans to develop a standard addressing this issue

The last step to describe the flow of data from source documents to the trial balance would be

This process includes the following steps: 1. Analyze what happened by using information from source documents and the firm's chart of accounts. 2. Enter business transactions in the general journal in the form of journal entries. 3. Post these journal entries to the accounts in the general ledger. 4. Prepare a trial balance

The purchase of equipment on account is recorded with

a debit to Equipment and a credit to Accounts Payable.

Businesses with large quantities of accounting tasks to perform daily often employ __________ to record, sort, and file accounting information.

accounting clerks

TNT Co. in the first month of operations, had the following accounts and respective balances appear in the adjustments section of the worksheet: rent expense; $500, depreciation expense; $300, accumulated depreciation; $300, and prepaid insurance; $500. Which amount(s) will eventually be extended to the balance sheet section of the worksheet?

accumulated depreciation. $300. Accumulated depreciation is a contra-asset account and appears on the balance sheet. This amount will reflect the balance of accumulated depreciation for the first year of operations.

For asset, expense, and drawing accounts in the general ledger, a running balance is maintained by

adding the debit or subtracting the credit from the previous balance

Depreciable ​cost is equal to

cost less salvage value.

The user of accounting information most likely interested in a company's profitability, debt outstanding, and assets that could be used to secure debt would be

creditors

Owner investments are recorded as

credits to the owner's capital account and debits to the owner's capital account

An advantage of a partnership is that

partners share risks and decision-making.

Under the accrual basis of accounting, when assets are consumed,

prepaid assets are decreased

When correcting errors in a trial balance, the ruling method should be used

when an incorrect journal entry has been made, but not yet posted and when a proper entry has been made but posted to the wrong account or for the wrong amount