Financial Accounting Ch. 1-4

which of the following would not be recorded as an accounting transaction

hiring a new employee

which of the following situations result in unearned revenue

received 100 cash from a customer for an order of goods to be shipped next month

public corporations are business

whose stock is bought and sold on a stock exchange

alpha sold $2000 of services to Beta on credit. Beta promised to pay for it next month. Alpha will report a $2000

accounts receivable

when existing assets are used up in the ordinary course business

an expense is recorded

accrual adjustments involve increasing

assets and revenues or increasing liabilities and expenses

if the prepaid rent account is not adjusted at the end of the period, what effect will this have on the financial statements

assets will be overstated and net income will be overstated

if a company receives $20,000 cash from its customers on account and uses the cash to pay $20,000 to its suppliers on accounts, the net result is that

assets would decrease by $20000 and liabilities would decrease by $20000

which of the following financial statements does not cover a period of time but rather reports amounts at a specific point in time

balance sheet

adjusting entries affect

both income statement and balance sheet accounts

an accounting system is referred to as a double-entry system because

both what is received and what is given in exchanged are recorded

which of the following would not represent a financing activity

buying supplies on account

financing that individuals or institutions have provided to a corporation is

classified as a liability when provided by creditors and as stockholders' equity when provided by owners

the book value of equipment is equal to which of the following

cost of equipment is less related accumulated depreciation

who has first claim to a business's assets should the company go out of the business

creditors

a difference between debt financing and equity financing is that

debt financing must be repaid, while repayment of equity financing is not required

what is the main difference between accrual and deferral adjustments

deferral adjustments are required to update previously recorded items whereas accrual adjustments are required to include items not previously recorded

managerial accounting reports prepared for internal use are used by the company's

employees

one of the major advantages of making adjustments in order to improve the quality of financial statements is that they

ensure that revenues and expenses are recognized during the period they are earned and incurred

a cost of doing business is referred to as a(n) ______________ and it is necessary to earn______________

expense; revenue

which of the following statements about accrual basis accounting is correct

if a company uses accrual basis accounting, the company should record expenses in the same period as the revenues they generate

expenses are reported on the

income statement in the time period in which they are incurred

salaries and wages expense appears on the _____________, while salaries and wages payable is a(n)

income statement; liability on the balance sheet

when a company earns net income, the company's retained earnings

increase

a credit would make which of the following accounts decrease

inventory

if a company borrows money from a bank and signs an agreement to repay the loan several years from now in which account would the company report the amount borrowed

notes payable long term

a characteristic shared by all liabilities is that they

obligate the company to do something in the future

which of the following will result in an increase in revenue

selling $10000 of groceries

which of the following expressions of the accounting equation is correct

stockholders equity = assets - liabilities

how will a company's current ratio be affected by the purchase of equipment for cash

the current ratio will decrease because the current assets decrease

which of the following items are reported on the income statement as a expense

the months utility bill

which of the following is a characteristic of a sole proprietorship

the owner is personally responsible for the debts of the business even if the debts are more than the owner has invested in the business

what is the effect on the balance sheet if a company purchases $100 of supplies using cash

total assets will remain the same