accounting exam 1

Accounts payable appear on which of the following statements?

Balance sheet

The owner's capital adjusted balance is entered in:

Balance sheet & Statement of Owner's Equity credit column

An unclassified balance sheet:

Broadly groups assets, liabilities and equity

Each business is accounted for separately from its owner or owners.

Business entity assumption

Which of the following is classified as a plant asset?

Equipment

A company records the expenses incurred to generate the revenues reported.

Expense recognition (matching) principle

A company records the expenses incurred to generate the revenue reported

Expense recognition principle

are exchanges of value between two entities, which yield changes in the accounting equation.

External transactions

Indicate how to increase each of the accounts listed below.

Cash : Debit Accounts payable: credit Supplies: debit Accounts receivable : debit Owners capital : credit Professional fees earned credit Owners withdrawals: debit Salaries expense: debit

identify which items belong on the balance sheet.:

Cash, accounts receivable, and owner capital

Identify the accounts that would appear on the post-closing trial balance.

Cash: included Withdrawls : Not included Depreciation expense: Not included Owner's capital: included Income summary: not included

list that contains only accounts that would be classified as asset accounts on the Chart of Accounts.

Cash; Prepaid Insurance; Equipment.

A credit entry:

Decreases asset and expense accounts, and increases liability, owner's capital, and revenue accounts.

Concepts, assumptions, and guidelines for preparing financial statements.

General accounting principle

Financial statements reflect the assumption that the business continues operating.

Going-concern assumption

The organization that is responsible for issuing International Financial Reporting Standards is the:

IASB

Net Income:

Is the excess of revenues over expenses.

The process of recording transaction in a journal is called:

Journalizing

Which of the following assets is not depreciated?

Land Explanation: Land is a fixed assets and non-depreciable assets.No depreciation is charged for land.

Select the balance sheet category where the items given would best typically appear.

Land held for future expansion : long term investments Notes payable due in five years : long term liabilities Accounts receivable: current assets Trademarks : intangible assets Accounts payable : current liabilities Store equipment: plant assets Wages payable: current liabilities Cash: current assets

Accounts Payable, and Note Payable are examples of ______ accounts.

Liability

The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:

Measurement (Cost) principle.

Information is based on actual costs incurred in transactions.

Measurement (cost) principle

he difference between the Debit and the Credit columns in the Income Statement section of the work sheet equals:

Net income (or net loss)

Which of the following accounts could not be classified as a current liability?

Notes payable (due in 5 years).

If a company uses $1,580 of its cash to purchase supplies, the effect on the accounting equation would be:

One asset increases $1,580 and another asset decreases $1,580, causing no effect.

Assets, liabilities, and equity accounts are not closed; these accounts are called:

Permanent accounts

The process of transferring general journal entry information to the ledger is called:

Posting

steps in the accounting process that focus on analyzing and recording transactions.

Record relevant transactions in a journal 2 Analyze each transaction from source documents. 1 prepare and analyze the trial balance. 4 Post journal information to ledger accounts 3

The accounting cycle consists of 10 steps. Identify the order in which the first five steps will be performed by selecting from the drop down items.

Step 1 analyze transactions Step 2 journalize 3 prepare unadjusted trial balance 4 adjust

From the following list, identify those that are likely to serve as source documents.:

Telephone bill, sales ticket, invoice from supplier, bank statement

With double-entry accounting, each transaction requires:

That at least two accounts are affected That the total debits will equal the total credits

Which of the following statements are true about the general ledger?

The general ledger contains all of the accounts that a company uses, along with detail of the balances in those accounts.

identify the statement below that is true.

The trial balance is a list of all accounts from the ledger with their balances at a point in time

Increases and decreases in a specific asset, liability, equity, revenue or expense are recorded in a(n)__

account

Which of the following accounts is a liability?

accounts payable

The work sheet:

aids in the preparation of financial statements

A__of accounts is a list of all accounts a company uses not including account balances :

chart

If a credit balance in Unearned Revenue (a liability account) is incorrectly listed as a credit balance in the Sales Revenue account (a revenue account), is the trial balance still in balance?

yes

Accounts Receivable, Prepaid Accounts, Supplies, and Land are examples of ______ accounts

.asset

Place the steps in the four-step closing process in the correct order:

1. Close the revenue accounts. 2. Close the expense accounts. 3.Close the income summary account. 4.Close the withdrawals account.

Which of the following is not true concerning account titles:

All companies use exactly the same account titles.

ncome Statement, Statement of owner's equity, Balance sheet, and Statement of cash flows.

The four basic financial statements are: i

A company reports the details behind financial statements that would impact user's decisions :

full disclosure principle

Presumes that the business will continue operating in the future :

going concern assumption

are exchanges within an entity, which may or may not affect the accounting equation.

internal transactions

a(n) __ has complete record of every transaction recorded

journal

Accounting information is based on actual cost:

measurement principle

Transactions and events are expressed in unity of money:

monetary unit assumption

a(n) __ describes transactions entering an accounting system such as purchase

order source document

Which of the following accounts is equity?

owner's capital

Place the steps in completing a work sheet in the correct order:

1.List the titles of all accounts , account number and their balance 2. Enter the adjustments 3. Prepare the adjusted trial balance

A company reports details behind financial statements that would impact users' decisions:

:Full disclosure principl

Which of the following is a true statement about debits and credits?

A credit is on the right side of an account

Unearned revenue is reported in the financial statements as:

A liability on the balance sheet.

Which of the following statements is true?

A post-closing trial balance should include only permanent accounts.

A(n) ______ is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item.

Account

the description of the relation between a company's assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity, is known as the:

Accounting equation.

All of the following are classified as liabilities except:

Accounts Receivable.

List the steps of the accounting cycle in their proper order.

Analyzing transactions and events. Journalizing transactions and events Posting the journal entries Preparing the unadjusted trial balance Journalizing and posting adjusting entries Preparing the adjusted trial balance Preparing the financial statements Journalizing and posting closing entries Preparing the post-closing trial balance

All of the following accounts are temporary except:

Assets

The income statement reports all of the following except:

Assets owned by a business.

Classify each of the following accounts as an asset (A), liability (L), or equity (EQ) account.

Cash: asset Prepaid rent: asset Office supplies: asset Prepaid insurance: asset Office equipment : asset Owner capital: equity account Accounts payable: liability Unearned rent revenue : liability Owner, withdrawals: equity account

Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and withdrawals accounts for the upcoming period and to update the owner's capital account for the events of the period just finished are referred to as:

Closing entries

Willow Rentals purchased office supplies on credit. The general journal entry made by Willow Rentals will include a:

Credit to account payable

Which of the following statements are true about the chart of accounts?

Different companies use different chart of accounts based on individual company need The charts of accounts should be ordered in a logical sequence based on type of account

are happenings that affect the accounting equation and are reliably measured. They include business events such as changes in the market value of certain assets and liabilities and natural events such as fires that destroy assets and create losses.

Events

The organization that is primarily responsible for developing GAAP for use by all U.S. companies is the:

FASB

Which of the following accounts is an asset?

Prepaid advertising

The purpose of the closing process is to

Reset revenues , expense and withdrawal accounts Help summarize a periods revenue and expenses

Revenue is recognized when goods are provided to the customer at the amount expected to be received:

Revenue recognition principle

Revenue is recorded when products and services are delivered.

Revenue recognition principle

Identify which items belong on the income statement.:

Revenue, expenses and net income

Which of the following accounts is not included in the asset section of the balance sheet?

Services revenue.

Why are posting references entered in the journal when entries are posted to the ledger accounts?

So we will know that the entry has been posted.

Detailed rules used in reporting events and transactions.

Specific accounting principle

Alex invested $30,000 in cash in his business. How will this entry be posted in the ledger accounts?

The 30,000 will be posted to the debit side of the cash account The 30,000 will be posted to the credit side of the owners capital account

A general journal provides a place for recording all of the following except:

The balance in each account.

Which of the following statements is true?

The trial balance is completed to ensure that debits and credits are equal in the General Ledger.

A balance sheet lists:

The types and amounts of assets, liabilities, and equity of a business as of a specific date.

The life of the company can be divided into specific time periods:

Time period assumption

Select the account below that normally has a credit balance.

Wages payable

Revenue is properly recognized:

When goods or services are provided to customers and at the amount expected to be received from the customer.

Identify which items belong on the statement of owner's equity.:

Withdrawals, beginning owner capital and ending owner capital

An optional aid used to prepare a company's unadjusted trial balance, adjusting entries, adjusted trial balance, and financial statements is a(n):

Work sheet

A record of the increases and decreases in a specific asset, liability, equity, revenue or expense is a(n)::

account

A business is accounted for separately from other business entities and its owner:

business entity assumption

Owner, Capital and Owner, Withdrawals are examples of ______ accounts.:

equity

the __ is the record containing all accounts used by a company, including account balances:

general ledger

Which of the following is NOT an asset account:

service revenue

Correctly identify steps 3 and 4 of the accounting process:

step 3: record transactions into the journal; Step 4: post entries into the ledger.

Balance sheet accounts are arranged into ______ general categories. :

three

Which of the following accounts is not included in the asset section of the balance sheet?

wages expense