Accounting

If assets equal $10,000, and owners equity equals $2,000, then liabilities equal:

$8,000

*A debit to the purchases account would have a corresponding credit in which of the following accounts:

Accounts payable

In the accounting equation, owners equity equals:

Assets - Liabilities

Basic Accounting Equation

Assets=liabilities+capital

The financial statement that shows the financial position of a company on a particular date:

Balance sheet

The formula for determining the cost of goods sold is:

Beginning inventory + net purchases - ending inventory

Purchases on account would be recorded by:

CR accounts payable, DR purchases

A sales for cash is recorded by:

DR accounts payable, CR sales CR sales, DR account receivable DR sales, CR cash CR sales, DR cash???

A sale made on account is recorded by:

DR accounts receivable, CR sales

The entry for receiving $1400.00 in cash for services would be:

DR cash, CR revenue

To record the depreciation of an asset:

DR depreciation expense, CR accumulated depreciation

The entry for buying office supplies on account would be:

DR office supplies, CR accounts payable

The procedure for closing revenue accounts with normal balances is:

DR revenue & expense summary, CR capita

The procedure for closing expense accounts with normal balances is:

DR revenue & expense summary, CR expense

The accounts that are debited to decrease are:

Equity, Liabilities & Revenue

The difference between net sales and cost of goods sold is:

Gross margin

Which of the following list the proper order of accounting procedures:

Journal/ledger/trial balance/financial statements

Return on owners equity is computed:

Net income/Owners equity

Cost of merchandise less cost of goods returned and any allowances is referred to as:

Net purchases cost of goods sold inventory purchases

Expenses incurred in the operation of the business causes:

Owners equity to decrease

A trial balance of the general ledger accounts taken after the temporary owners equity accounts have been closed is referred to as:

Post-closing trial balance

Recognizing net income under the accrual basis of accounting is accomplished by matching:

Revenue earned against expenses incurred to produce that revenue

The sales account is a(n):

Temporary owners equity account

The difference between the two sides of an account is called the:

account balance

The art of analyzing and recording financial transactions and certain business related economic events in a manner that classifies and summarizes the information and reports and interprets results defines:

accounting

The steps involved in handling all of the transactions and events completed during an account period, beginning with placing the data in a book of original entry and ending with a post-closing trial balance, are referred to collectively as the:

accounting cycle

Anything of value owned is considered:

an asset

The accounts that are credited to DECREASE are:

assets and expenses

The accounts that are debited to INCREASE are:

assets and expenses

The difference between the total debits and the total credits in an account is the:

balance

A list of all accounts showing the title and balance of each account is a(n):

balance sheet

The method of accounting where no record of revenue is made in the accounts until cash is received:

cash basis

Cash and cash items paid by a business are known as:

cash disbursements

A special discount on list prices to encourage prompt payment is:

cash discount

Special discounts on list prices granted to customers to encourage their patronage are:

cash discounts

Any account having a balance which is intended to be deducted from another related account balance for financial statement purposes is a(n):

contra account

The right-hand amount column of a standard two-column ledger account form is called the:

credit column

When a net profit is closed to capital, the capital account is:

credited

Cash or any other assets that will be converted into cash within one year of the normal operating cycle is a:

current asset

The left side of a standard account is called the:

debit side

An entry made to the DR side of a revenue account indicates that the account has been:

deceased

The part of the original cost of a fixed asset that is assigned to each period expected to benefit from its use is:

depreciation

The process of allocating the cost of plant and equipment to the periods expected to benefit from the use of these assets:

depreciation accounting

The accounts that are credited to INCREASE are:

equity, liabilities and revenue

An accounting year ending at some other date than December 31st is called a:

fiscal year

The totaling of a column in a journal or ledger account is called:

footing

Beginning inventory plus purchases for the period yields:

goods available for sale

The gross amount of revenue from sales less the price of goods returned in any reductions in price describes:

gross profit

An entry made on the DR side of an asset account indicates that the account has been:

increased

The record or book in which the first formal double entry record of a transaction is made is a(n):

journal

Which of these does NOT qualify as a current asset:

land

Which of the following accounts normally has a credit balance:

liability

Accounts payable is a(n):

liability account

The form of the balance sheet where liabilities and equity are shown below assets is the:

long form

If the total expenses is smaller than the total of revenue, the difference is termed:

net profit

Gross sales minus sales returns and allowances minus discounts on sales yields:

net sales

When cash is spent in the acquisition of an asset, the net worth of a business is:

not affected

The amount by which the business assets exceed the business liabilities is:

owners equity

The revenue and expense summary is closed to:

owners equity

An enterprise in which the principal source of revenue is compensation for services rendered is a:

personal service enterprise

An office fund established for paying small items without the necessity of writing checks for small amounts is:

petty cash

The amount of revenue from the sale of funeral services would show on the:

profit and loss statements

Which of these does NOT appear on the balance sheet:

proprietorship

The process of determining whether the amount of cash, both on hand and in the bank, is the same as the amount entered in the accounting records is called:

proving the cash

The account that is credited for the cost of any merchandise returned to supplies, and for any allowances is:

purchase returns and allowances

In computing cost of goods sold, freight-in should be treated as an addition to:

purchases

A liquidity ratio that measures the ability of a firm to meet its current debt on short notice is called what type of ratio:

quick asset

FICA refers to what taxes:

social security tax

Separate ledgers containing individual accounts with customers and suppliers are known as:

summary ledgers subsidiary ledgers general ledgers accounts receivable control account