Fin Acct

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The first step in starting a new business is to obtain cash from owners and/or creditors. What kind of activity is this?

Financing

Events that would NOT be recored as transactions in an accounting system

Hiring an employee, ordering supplies to be delivered and paid for in the future.

What are considered investing activities?

Purchasing a company logo, purchasing land, purchasing equipment.

The Land account is increased with an entry on the _____ side of the Land T-account

left

Assets=

liabilities + stockholders equity

What is the effect on SHE when a company purchases a cash register for a cash payment of $1,200?

no effect

In April, Pizza Aroma hired a new employee at a rate of $1,000 per month to start work at the beginning of may. In April, Pizza Aroma should record

nothing because an exchange of promises is not a transaction

Identify key activities necessary to start a business

obtain financing, purchase assets

The Retained earnings account is increased with an entry on the _____ side of the account.

right

When a business issues stock, what does it give to its owners?

Stock Certificates

A company paid $5,000 cash to purchase equipment. The company recorded a debit to Equipment of $5,000 and a credit to Cash of $500. This company's accounting records are

incorrect because debits do not equal credits

Company X recieves $10,000 from issuing stock to its owners. The effect on the accounting equation is

increase in assets, increase in stockholders equity

Accounts _______ is a liability account and represents amounts owed to suppliers

payable

When a company pays its supplier for the amounts owed, its Cash and Accounts ______ accounts are decreased.

payable

debits must always equal ____ in journal entries

credits

Acme Enterprises issued $20,000 of stock in exchange for cash. The journal entry to record this transaction will include a

debit to cash of $20,000 and a credit to common stock of $20,000

The DOCUMENT that lists ALL of the daily journal entries but does not provide account balances, is the

journal

A company purchased land in exchange for a $25,000, 10-Year note payable. The increase in the Notes payable account would be recorded with a

Credit

On

...

The _______ principle requires that assets and liabilities be recorded at the amounts that were measurable at the time transactions occured

cost

A company paid $2,000 cash to an employee for this month's salary. The entry to record this transaction would include a ____ to cash

credit

Components of a classified balance sheet in the proper order in accordance with GAAP.

1. Current Assets 2. Non-Current Assets 3. Current Liabilities 4. Non-Current Liabilities 5. Stockholders Equity 6. Total Liabilities and Stockholders Equity

List the steps in the account cycle in order

1. Record a journal entry 2. Summarize in the ledger (t-accounts) 3. Prepare an unadjusted trial balance 4. adjust the accounts 5. prepare financial statements 6. close the books

The journal entry to record the purchase of land for $30,000 includes

a debit to Land and a credit to Cash

Acme Enterprises borrowed $20,000 from Last Bank on a 5-year note payable. Acme's journal entry to record this transaction will include a

a debit to cash for $20,000 and a credit to notes payable for $20,000

Lox, Stock and Bagel, Inc issued $100,000 of stock. It recorded the transaction by increasing cash and decreasing contributed capital. As a result of this entry

the accounting equation will balance, but the transaction was recorded in the wrong accounts.

A company purchased a new cash register for a payment of $1,200. As a result of recording the purchase,

total assets remain the same, one asset is exchanged for another

What is the effect on total assets when a company buys a building in exchange for a 20-year note payable?

total assets will increase


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