accounting
In accounting, depreciation refers to the
allocation of asset cost.
When are adjusting entries done?
always done at the end of the month
The cost of doing business is also known as
an expense.
When are expenses recognized?
are recognized when incurred/period they are incurred.
In accrual accounting when are revenues recognized?
are recognized when services are performed.
cash
asset
An adjusting entry would not include which of the following accounts?
Cash
Which of the following accounts is a contra account?
Accumulated Depreciation-Machinery
Which type of account is cost of goods sold?
An expense account
What is the formula for calculating retained earnings? What type of account is it?
Beginning R.E + Net Income - Dividends = End R.E Equity Account
To which account is the cost of inventory transferred when a product is sold?
Cost of goods sold
Which of the following is not a subtotal?
Cost of goods sold
Liabilities have which of the following two major categories?
Current and long term
The normal operating cycle helps define which of the following balance sheet sections?
Current assets
retained earnings (beginning)
Equity
In which category would office salaries expense be included?
General and administrative expenses
Which of the following should be classified as an intangible asset?
Goodwill
Why is it necessary to adjust the accounts?
If not our financial statements will be over or under
Which of the following is not a permanent account?
Insurance Expense
Patents would appear in which section of the balance sheet?
Intangible assets
Which of the following accounts is not classified as a selling expense on the income statement?
Interest expense
Which of the following is not considered an operating expense?
Interest expense
Who is responsible for preparing financial statements?
Management of the company
Which of the following appears on the balance sheet?
Merchandise inventory
Which of the following does not represent a sale?
Merchandise placed aside for a customer who plans to come in next week and pay with cash
Is the cash account involved in the adjusting process? Why or why not?
Never involve cash. Because either you have already received or it will be in the future
Which of the following transactions results in an increase in expenses?
Receive a bill for the usage of utilities
Which of the following transactions will not result in an increase in revenues?
Sale of stock to investors for cash
Which of the following accounts would be found on the credit side of the adjusted trial balance?
Service Revenue
What is the adjustment entry for that portion of revenue received in advance which has now been earned?
Unearned Revenue - Debit; Revenue from Services - Credit.
Which of the following is a measure of liquidity?
Working capital
When expenses exceed revenues
a net loss occurs.
A physical inventory is usually taken
at the end of the fiscal year.
Revenues are increases in stockholders' equity and result from
both selling goods and rendering services.
Each of the following companies is a merchandising business except a
car wash.
Accumulated depreciation--buildings
contra long term asset
Accumulated depreciation--furniture/fixtures
contra long term asset
Accumulated depreciation is classified as a(n)
contra-asset account.
Gross margin equals the difference between net sales and
cost of goods sold.
accounts receivable
current asset
merchandise inventories
current asset
office supplies
current asset
prepaid rent
current asset
What is the difference between a current asset and property, plant and equipment?
current asset expected to convert to cash, sell or consume with in a year. long term assets are used to produce sell and deliver goods, thy last for longer than a year.
accounts payable
current liability
income tax payable
current liability
interest payable
current liability
Current assets divided by current liabilities is known as the
current ratio.
The principal difference between depreciation expense and most other types of expenses is that depreciation
does not require an immediate cash outlay.
additional paid in capital
equity
capital stock
equity
dividends
equity
buildings
fixed/long term asset
land
fixed/long term asset
furniture and fixtures
fixed/long term assets
Income from operations is arrived after considering all except
interest income.
Machinery might be depreciated over 10 years because
it will help to generate revenue for the company over 10 years.
Merchandise inventory becomes part of cost of goods sold when a company
sells the inventory.
long term notes payable
long term liability
advertising expense
operating expense
commissions expense
operating expense
depreciation expense--buildings
operating expense
depreciation expense--furniture/fixtures
operating expense
insurance expense
operating expense
rent expense
operating expense
salary expense
operating expense
The carrying value of a depreciable asset equals
original cost minus accumulated depreciation.
cost of goods sold
other expense
income tax expense
other expense
interest expense
other expense
interest revenue
other revenue
Interest expense on a mortgage would be classified on a multistep income statement under the heading
other revenues and expenses.
Interest paid on debt would be entered on the multistep income statement in the category called
other revenues and expenses.
Define the matching principle
record expenses and revenue in the correct period
The other revenues and expenses section of a multistep income statement could include all the following except
rent expense.
sales revenue
revenue
Working capital measures
the excess of current assets over current liabilities—what is on hand to continue business operations.
The matching rule is applied
to help produce an accurate measurement of a company's performance