Accounting Exam 1

Making insurance payments in advance is an example of:

A prepaid expense transaction.

A debit is used to decrease which account? Salaries Expense Supplies Accounts Payable Dividends

Accounts payable

which of the following appears on the balance sheet? Accounts Receivable Salaries Expense Common Stock Utilities payable Net Income

Accounts receivable Common Stock Utilities Payable

Balance Sheet

Assets = Liabilities - Stockholders Equity

The financial statement that displays a firm's financial position on a particular date is the

Balance Sheet

A list of all account names used to record transactions of a company is referred to as a: Chart of accounts Journal Financial statement Transaction

Chart of accounts

Stockholders Equity:

Common Stock + Retained Earnings

Is expense a debit or credit?

Debit (DEAD)

When a company pays 2,300 dividends to its stockholders, how would the transaction be recorded?

Debit dividends; credit cash

Purchase of equipment with cash

Debit equipment, credit cash

Which of these would be found on a company's balance sheet? Depreciation Expense Equipment Sales Revenue Accounts Receivable Notes Payable

Equipment Accounts Receivable Notes Payable

(blank) is the common abbreviation for the Board that currently establishes financial accounting and reporting standards in the U.S.

FASB

Fundamental qualitative characteristics of accounting information are:

Faithful representation and relevance

True or False: Jones Corporation provides services to a customer on June 17, but the customer does not pay for the services until August 12. Under accrual-basis accounting, Jones Corporation should record the revenue on August 12

False (Under accrual-basis accounting, revenue should be recorded at the time goods or services are provided to the customer [June 17])

True or False: The fundamental activities of a business are selling activities and marketing activities.

False (the fundamental activities are financing, investing, and operating activities).

True or False: An adjusted trial balance is prepared before adjusting entries

False.

True or False: the fundamental activities of a business are selling activities and marketing activities.

False.

True or False: Closing entries transfer the balances of all temporary accounts (revenues, expenses, and dividends) to the Common Stock account

False. (Balances of temporary accounts are transferred to Retained Earnings)

True or False: Deferred revenues occur when cash is received after the revenue is recorded

False. (Deferred revenues occur when cash is received in advance of the services to be provided)

True or False: On November 1, 2024, a company receives $1,800 for services to be provided evenly over the next six months. The December 31, 2024, adjusting entry for the company would include a credit to Deferred Revenue for $600.

False. (The adjusting entry would involve a debit to Deferred Revenue and a credit to Service Revenue for $600)

True or False: Under cash-basis accounting, if a company provides services to a customer in the current year, but does not collect cash until the following year, the company should report the revenue in the current year.

False. (Under cash-basis accounting, we record revenues when we receive cash)

True or False: Suppose Simeon Company begins the year with $1,000 in supplies, purchases an additional $5,500 of supplies during the year, and ends the year with $700 in supplies. The year-end adjusting entry includes Supplies Expense of $7,200

False. Reason: Supplies Expense = beginning ($1,000) + purchases ($5,500) − ending ($700)

True or False: Accrued expenses involve the payment of cash before recording an expense and a liability

False: (Accrued expenses involve the payment of cash after recording an expense and a liability.)

the private sector organization that is currently responsible for setting accounting standards in the US is the

Financial Accounting Standards Board

GAAP stands for

Generally Accepted Accounting Principles

The purpose of an (blank) (blank) is to report the profit-generating activities of a company over an interval of time.

Income Statement

Which of the following are financial statements? Statement of corporate responsibility Statement of assets Income Statmeent Balance Sheet Statement of Stockholder's equity

Income Statement Balance Sheet Statement of Stockholder's Equity

Which of the following are attributes of FASB? Independence Public Sector Organization Part-time Board Members Full-time Board Members Private Sector organization

Independence Full-time Board Members Private Sector Organization

In financial accounting which of the following are the three types of business activities of a company?

Investing, Financing, Operating.

Financial accounting info is essential to:

Making good business decisions

Which of the following knowledge and skills should an accounting professional possess? Presentation skills Technical accounting knowledge Leadership skills Fluency in several languages Ability to work in teams

Presentation skills Technical Accounting Knowledge Leadership Skills Ability to work in teams

Which of the following transactions increases total liabilities? Pay for rent in the current period Purchase equipment with cash Purchase office supplies on account Pay dividends to stockholders

Purchase office supplies on account

Examples of adjusting entries could include all of the following except: Recording interest earned in the current period, but not yet received, Recording unpaid taxes, Recording the expiration of prepaid insurance, Recording the purchase of office supplies

Recording the purchase of office supplies

Which of the following is a permanent account? Dividends Advertising Expense Service Revenue Retained Earnings

Retained Earnings

Net Income:

Revenue-expenses

A credit is used to increase which of the following accounts? Dividends Service Revenue Insurance Expense Cash

Service Revenue

The four primary financial statements published to provide information to external users include which of the following? Statement of Assets Statement of Stockholder's Equity Statement of Business Activities Statement of Cash Flows Balance Sheet Income Statement

Statement of Stockholder's Equity Statement of Cash Flows Balance Sheet Income Statement

Assets = Liabilities + ?

Stockholders Equity

Which of the following normally has a debit balance? Supplies Service Revenue Accounts Payable Common Stock

Supplies

Which of the following is true about a trial balance? Only income statement accounts are shown. Only balance sheet accounts are shown. The trial balance shows the change in all account balances over the accounting period. Total debit amounts should always equal total credit amounts.

Total debit amounts should always equal total credit amounts.

Posting is the process of

Transferring the debit and credit information from the journal to individual accounts in the general ledger.

True or False: Adjusting entries are not necessary when cash is paid at the same time expenses are incurred

True

True or False: In the balance sheet, we report equipment at current book value, which equals its original cost "net of" accumulated depreciation

True.

True or False: On December 31, 2024, employees who earn $500 per day have worked eight days and will be paid on January 6, 2025. The adjusting entry on December 31, 2024, includes a debit to Salaries Expense for $4,000

True.

which of the following aspects relate to the info provided in an income statement? assurance that the company will pay dividends to stockholders ability to earn a profit from its operations during the current period assurance that the company will pay its obligations when they become due

ability to earn a profit from its operations during the current period

The system that maintains records of a company's operations and then communicates that info to decision makers is referred to as

accounting

what is Prepaid Rent?

an Asset

ending retained earnings is calculated as

beginning retained earnings + net income - dividends

which of the following appears on the balance sheet? common stock Salaries expense account receivable net income utilities payable

common stock accounts receivable utilities payable

Is a liability a debit or a credit?

credit

What describes distributions to stockholders?

dividends

One disadvantage of the corporate form of business is:

double taxation

trial balance:

list of all accounts

Who's ultimately responsible for properly applying GAAP? The company's

management.

The primary functions of accounting are to: increase a company stock market valuation measure a company's activities provide information to taxing authorities increase a company's profitability communicate information to decision makers

measure a company's activities communicate info to decision makers

The primary functions of financial accounting are to

measure business activities of a company and communicate info ab business activities to outside users

If revenues are less than expenses, a company has

net loss

When a company provides services on account, which of the following would be recorded using cash-basis accounting?

no entry would be recorded.

the TWO sources of stockholders equity are amounts

paid in from shareholders earned by the corporation

Undistributed profits that have accumulated in the company over time are called (blank) earnings.

retained

the purpose of an income statement is to:

summarize the profit-generating activities that occurred during a particular reporting period.

Which of the following appears on the balance sheet? salaries expense utilities payable accounts receivable common stock net income

utilities payable accounts receivable common stock