Midterm for accounting
Cash flows from (used in) investing activities include amounts:
received from the sale of the company's office building
Which of the following is an accounting transaction?
A manger signs a promissory note and receives cash.
Which of the following statements about cash basis accounting and accrual basis accounting is correct?
Accrual basis accounting provides a better measure of operating performance than cash basis accounting.
Permanent accounts
Also referred to as real accounts. Accounts that do not close at the end of the accounting year. The permanent accounts are all of the balance sheet accounts (asset accounts, liability accounts, owner's equity accounts) except for the owner's drawing account.
Asset
An economic resource that is owned by a company and will provide future benefits
Interest Receivable
An example of an account that could be included in an accrual adjustment for expense
Which account would be decreased with a credit?
Cash
Which of the following items is reported on the income statement as an expense?
Cost of goods sold
Chart of accounts
Each account is assigned a number; this listing of all accounts
Adjustments help to ensure that all ________ are recorded in the period in which they are earned
Expenses
Which of the following statements about financial accounting is correct?
Financial accounting reports are primarily prepared to provide information for external decision makers
Liabilities
The obligations and debts of a business
Which of the following statements about cash basis accounting and 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.
In part, a transaction affects the accounting equation by decreasing a liability. There is no effect on assets. Which of the following statements is correct with regards to this transaction?
If other assets are unchanged, stockholders equity must be decreasing
Sole Proprietorship
The owner(s) of a business are not taxed on the profits of the business
Which activity is not part of the operating cycle?
Payment of employees salaries
Which of the following statements about the post-closing trial balance is correct?
The post-closing trial balance is an internal report prepared as the last step in the accounting cycle.
Depreciation
The process of allocating the cost of buildings, vehicles, and equipment to the accounting periods in which they are used
Cost principle
The requirement that transactions be recorded at their exchange price at the transaction date
After net income has been determined, it is then transferred to
The statement of retained earnings.
Which of the following steps is performed first at the end of each accounting period?
Prepare adjusting entries
Which of the following accounts does not have a normal credit balance?
Rent Expense.
Your company places an order for inventory with suppliers for delivery in two weeks
This is an activity that does not affect the balance sheet
Accumulated Depreciation appears on
balance sheet
Net income loss
Revenues - Expenses
separate entity assumption
The financial reports of a business include only the results of that business's activities
Where are dividends reported?
balance sheet if they aren't paid, under liabilities and stockholders equity if they are paid.
The book value of equipment is equal to which of the following?
asset's cost less accumulated depreciation.
Blake, Inc. pays its employees once a month and records the expense at the time of payment. On September 30, X paid its employees $X for work performed in September. The entry to record the payment includes a
credit to Cash for $12,210.
At the end of the year, accrual adjustments could include a
credit to a revenue and a debit to an expense.
what is an accounting transaction?
event that occurs that has an impact on your business' financial statements
Amortization is the concept that applies to the
long-term assets that lack physical substance and have a limited period of usefulness (ex: software)
Operating activities include
manufacturing, sales, advertising, and marketing
Financial statements are most commonly prepared
monthly, quarterly, annually
the companys management staff
use Managerial accounting reports prepared for internal use
journal
where transactions are entered each day they occur