ACG 2001 test 1
What is a ledger?
Binder where accounts are kept.
What is financial accounting?
External users.
What is the revenue recognition concept?
Revenue is recorded when it's earned.
A businesses record of the increases and decreases in a specific asset, liability, equity, revenue or expense is known as a
account
Ralph Pine Consulting received its telephone bill in the amount of $300, and immediately paid it. Pine's general journal entry to record this transaction will include a
debit to telephone expense for $300
The record of all accounts and their balances used by a business is called
general ledger
What is a liability?
Amounts owned to outsiders (debts.)
All of the following are true regarding ethics except
Ethics do not affect the operations or outcome of a company
What is a revenue?
Price of goods sold and services rendered.
What is the purpose of the journal?
To record transactions.
An account used to record the owners investments in a business is called a
capital account
if equity is $300,000 and liabilities are $192,000 then what do assets =
$492,000
What are the 4 basic financial statements in order
1. income statement 2. Statement of owners equity 3. Balance sheet 4. Statement of cash flows
What is a permanent account?
All balance sheet accounts. We never close it out because it is a "snapshot."
What is a temporary account?
All income summary accounts. EX it's like a plug.
What is statement of owners equity?
Changes in owners equity during specific times (month or year.)
What is an expense?
Cost of goods and services used up in the process of obtaining revenues.
What are the columns of a general journal? (journal entry)
Date, description, post, debit, and credit.
What is managerial accounting?
Internal users.
The accounting concept that requires every business to be accounted for seperatley from other business entities including its owners or owners is known as the
business entity assumption
a debit
is on the left side of the t account
If a company is considering the purchase of a parcel of land that was acquired by the seller for $85,000, is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by the purchaser as easily being worth $140,000, and is purchased for $137,000, the land should be recorded in the purchaser's books at:
$137000
On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of owner's equity as of May 31 of the current year?
$31,100
What is a trial balance?
A list of all accounts and their balances.
identify the account below classified as a liability account
ACCOUNTS PAYABLE
Prepaid accounts (also prepaid expenses) are generally
ASSETS that represent pre payments of future expenses
What does a balance sheet account consist of?
Assets, liabilities, and capital.
What are the columns of a ledger account?
Date, item, post ref, debit, credit, debit balance, and credit balance.
What is the definition of FASB?
Financial accounting standards board.
What is the definition of GAAP?
General accepted accounting principles.
What are the 8 steps in the accounting cycle?
Journal entry, post to ledger, UNADJUSTED trial balance, adjusting entries, ADJUSTED trial balance, financial statements, closing entries, and post-closing trial balance.
What is the matching principle?
Matching expenses with revenues they relate to in the same accounting principle.
What are the 5 types of adjusting journal entries?
Prepaid expense, depreciation, unearned revenue, accrued expense, and accrued revenue.
What is an asset?
Property, economic resources that are owned by a business and are expected to benefit future observations.
What is income statement?
Revenue minus expenses equals net income/net loss.
What is a cash basis?
Revenues and expenses recognized when cash is received.
What is accrual basis?
Revenues and expenses recorded when earned or incurred REGARDLESS of when cash is received.
What does an income statement account consist of?
Revenues and expenses.
What is the balance sheet?
Statement of financial position on a specific date.
What is a journal?
The book of original entry and a chronological record of events.
What is owners equity?
The interest of the owner in the business.
What is the purpose of the ledger?
To post recorded journal entries.
What does posting mean?
To transfer.
What are the 4 adjustments to owners equity/capital?
W.I.R.E
What is depreciation?
Wear and tear and/or absoluteness (old big tv vs flatscreen.)
What is a slide?
When you move the decimal place the wrong way.
What is transposition?
When you switch around the digits.
A corporation is
a business legally separate from its owners
A business uses credit to record
a decrease in an asset account
an account in which a debit is NOT used to record an increase
accounts payable
a company's list of accounts and the identification #'s assigned to each account is called
chart of accounts
Golddigger Services Inc. provides services to clients. On May 1, a client prepaid Golddigger Services $60,000 for 6-months services in advance. Golddigger Services' general journal entry to record this transaction will include a:
credit unearned management fees for 60,000
Net income
is the excess of revenues over expenses
Creditors claims on the assets of a company are called
liabilities
The are of accounting aimed at serving decision making needs of internal users is
managerial accounting
The primary objective of financial accounting is to
provide accounting info that servces all external users
External users of accounting information include all of the following except
purchasing managers
which side of the t acct. is the credit
right
what is not included in the basic financial statements
statements of changed in asserts
An account balance is:
the different between the total debits and total credits for an account, including the beginning balance
a balance sheet lists
the types and amounts of assets, liabilities, and equity of a business as of a specific date
identify the account that is classified as a liability in a companys chart of accounts
unearned revenue
Revenue is properly reconized
upon consumption of the sale or when services have been performed and the business obtains the right to collect the sales price
one way a credit is NOT used to record an increase is
wages expense
distributions of cash or other resources by a business to its owners are called
withdrawls
