Exam 1 (Ch. 1,2,3)
Funds taken from the business by the owner for personal use are called_______
Withdrawals
The classification and normal balance of the accounts payable account is______
A liability with a credit balance
When equipment is purchased on credit
Assets and liabilities increase
When rent is prepaid, which of the following occurs?
Assets are unchanged
Which of the following equations is the fundamental accounting equation?
Assets=Liabilities+Owner's equity
The difference between the debit and credit side of a T account is called the account________
Balance
Owners are not personally responsible for the debts of the business organization is a
Corporation
The form of a business organization that is not affected by the withdrawal or death of an owner and can continue indefinitely is the....
Corporation
The three major legal forms of business entity are the sole proprietorship, the partnership, and the_______
Corporation
When equipment is purchased for cash, the cash account is credited and the _________ account is debited.
Equipment
Which of the following types of accounts normally have debit balances?
Expenses and assets
GAAP are developed by what body?
FASB
The_______(GAAP) must be followed by the publicly owned companies and are changed and refined in response to changes in the environment in which businesses operate.
Generally accepted accounting principles
Debits are used to record....
Increases in assets
Which of the following statements regarding the fundamental accounting equation is accurate?
It is in balance after every transaction
Owner's equity is alternatively referred to as which of the following?
Net Worth
The increase of an account represents the _________balance of the account
Normal
The securities and exchange commission (SEC) regulates the accounting methods and financial reporting of______corporations.
Publicly owned
Which of the following is NOT a goal of an accounting system?
To interpret the relative success of a business through the examination of data about its financial affairs
An entry on the right side of a T account is called a
credit
If during the year total assets increases by $82,000 and total liabilities decrease by $19,500, by how much did owner's equity increase/decrease?
$101,500 increase
If the following are the only accounts of Jones Supply Company , what is the missing Supplies balance? Cash: $10,130 Supplies: ??? Accounts Payable: $4,000 John Smith, Capital: $11,080
$4,950
The right side of a T account is referred to as the________ side of an account.
Credit
A decrease in a liability is recorded on the ______ side of the T account.
Debit
A business pays a creditor on account, The entry to record this transaction is:
Debit accounts payable; Credit cash
What is the correct order in which to prepare the three financial statements?
Income statement; statement of owner's equity; balance sheet
Credits are used to record
Increases in liabilities and revenues
The______ is the financial report that shows the assets, liabilities, and owner's equity of a business on a specific date.
Balance sheet
Rent Revenue is increased by _________________ the account.
Crediting
A business earns $4,00 from various charge account clients. To record this transaction, the business would:
Debit accounts receivable; Credit fees income
A business performed $10,600 of services. Their customer paid $4,000 of the amount right away but charged the remaining amount. To record this transaction, the business would:
Debit cash $4,000 and debit accounts receivable $6,600 and credit fees income $10,600
If a business issues a check for $100 to purchase office supplies, What is the effect on the accounting equation?
Total assets will remain the same
The total of the figures on the left side of a Cash T account is $27,300. The total of the figures on the right side is $14,000. The balance of this account....
Is $12,900 and would be recorded on the left side of the T account
The normal balance of an account is the
Side of the T account on which it increases
Accounting is often referred to as the language of _______
Business
A business purchases equipment costing $5,500. They pay $1,500 right away and charge the remaining amount. To record this transaction, the business would....
Debit equipment $5,500; Credit cash $1,500 and credit accounts payable $4,000.
A business receives a bill for utilities but decides to pay it next month. The business would record the receipt of the bill by:
Debiting utilities expense; Crediting accounts payable
In a business transaction, when expenses increase, owner's equity will________
Decrease
The financial accounting standards board is responsible for
Developing generally accepted accounting principles
The government agency that has final authority over the financial reporting of publicly owned corporations is the .....
Securities and exchange commission