Chapters 1 and 2 for accounting

A business makes a cash payment of $12,000 to a supplier for supplies purchased two weeks earlier.Which of the following accounts is debited?

Accounts payable

which of the following is the correct accounting equation

Assets= Liabilities +Equity

Stewart Candle Company received cash of $40,000 and issued common stock. Which of the following accounts will be debited?

Cash

A business purchases equipment for $8,000 cash. Which of the following accounts is debited?

Equipment

which of the following is a major reason why corporate ownership is popular in the United States

Stockholders have limited liability for the debts of the corporation

a shortened form of the ledger is called a ________

T-account

_________ is a summary device that is shaped like a capital T with debits posted on the left side of the vertical line and credits posted on the right side of the vertical line.

The T-account

Which of the following is a characteristic of a corporation

a corporation is owned by stockholders

a debt that a business owes is called

a liability

Ave, Inc. had the following transactions during June: Performed services for $5,000 on account; recieved cash on account, $7,000; paid $600 for repair expense; paid $2,000 to a supplier that it owed from the previous month. What is the combined effect on cash of the june transactions

$4,400 increase

Glendale Corporation had the following transactions in August: Earned $5,000 of revenues on account; collected $5,000 from a customer for services provided last month; incurred $500 of repair expense and paid cash; paid $600 for rent that it owed from the previous month.

$4,500

which of the following is the record holding all the accounts, the changes in those accounts, and their balances?

Ledger

A compound journal entry has more than two accounts, but the total dollar value of the debits still must equal total dollar value of the credits. True or False.

True

Accounting is the information system that measures business activities, processes the information info reports, and communicates the results to decision makers

True

Business owners use accounting information to set goals,evaluate progress toward those goals, and make adjustment when needed

True

Source documents provide the evidence and data for accounting transactions. True or False.

True

Harris landscaping services incurred $500 as a labor expense and promised to pay the labor agency within 30 days. Which of the following accounts will increase as a result of this transaction?

accounts payable

A business renders services to a customer for $26,000 on account. Which of the following accounts is debited?

accounts recievable

Accounts receivable is a _______ account and has a normal_______

asset;debit

which one of the following account groups normally has a debit balance

assets and expenses

Bliss corporation settles a liability by making a payment in cash. How does paying this liability affect the accounting equation of the business?

assets and liabilities decrease

The public company accounting oversight board was created

by the Sarbanes-Oxley Act

Fitch supply services received $1,000 cash from a customer; the amount was owed to the business from the previous month. What is the effect of this transaction on the accounting equation?

cash increases and accounts receivable decreases.

a listing of all accounts in numerical order is called a

chart of accounts

which of the following statements,regarding International Financial Reporting Standards, is correct?

companies who are incorporated in or do significant business in another country might be required to publish financial statements using international financial reporting standards

according to what principle should acquired assets should be recorded at the amount actually paid rather than at the estimated market value.

cost principle

which of the following is an external user of business's financial information

customers

hamilton lawn services incurred $800 as a repair expense and paid it for in cash. This transaction will

decrease the stockholders' equity

which of the following is the final step in the journalizing and posting process?

determining whether the accounting equation is in balance

corporations pay their own income tax on corporate income.Stockholders pay personal income tax on dividends received from corporations. This is an example of

double taxation

The system of accounting in which every transaction affects at least two accounts is called the

double-entry system

For retained earnings, the category of account and its normal balance is

equity and credit balance

which of the following statements is true of expenses

expenses decrease equity, so an expense account's normal balance is a debit balance

the field of accounting that focuses on providing information for eternal decision makers is

financial accounting

which of the following organizations is responsible for the creation and governance of accounting standards in the United States

financial accounting standards board

GAAP refer to guidelines for accounting information in the United States. The acronym GAAP refers to

generally accepted accounting principles

as per the _______ the entity will remain in operation for the foreseeable future.

going concern assumption

the first step in the journalizing and posting process is to

identify the accounts involved and the account type

Managerial accounting provides information to

internal decision makers

Transactions are first record in a ______

journal

accounts payable is a ______ account and has a normal_______ balance.

liability;credit

Genity corporation records business transactions in dollars and disregards changes in the value of a dollar over time. Which of the following accounting assumptions does this represent?

monetary unit assumption

which of the following appears on both the income statement and statement of retained earnings?

net income

Which of the following is an asset account

prepaid expense

The Sarbanes-Oxley Act

requires companies to take responsibility for the accuracy and completeness of their financial reports

________ is the equity earned by profitable operations that is not distributed to stockholders

retained earnings

amounts earned from delivering goods or services to customers are called

revenues

Which of the following organizations requires publicly owned companies to be audited by independent accountants

securities and exchange commission

Which of the following sequences is the normal sequence of flow of accounting data

source document ->Journal-> Ledger

the ultimate control of the corporation rests with the

stockholders

aventis company distributes cash dividends. How does this transaction affect the accounting equation?

the assets decrease and equity decreases

which of the following statements is true of the corporate form of business

the board of directors sets policy for the corporation and appoints the officers

which of the following actions determines when a corporation comes into existence

the first share of stock is issued

which of the following statements is true of a sole proprietorship

the sole proprietor is personally liable for the liabilities of the business.

posting a transaction means________

transferring data from the journal to the ledger

The three types of events that affect retained earnings are dividends, revenues, and expenses

true

True or false the balance in the liability and revenue accounts are increased with a credit

true

a liability created when a business collects cash from customers in advance of providing services or delivering goods is called an

unearned revenue