ACC 207 CH 1, 2, & 3
Chart of accounts
A list of all account names used to record transactions
X Corporation provides services to customers on account for $3K dollars, recording this transaction would include
A credit to revenue and a debit to accounts receivable
Chronological record of all economic events affecting a firm are recorded in
A journal
Which of the following accounts would normally have a debit balance on the trial balance
Accounts receivable, dividends, and equipment
When recording an adjustment for the cost of using equipment during the current accounting period, which two accounts are affected?
Accumulated Depreciation and Depreciation Expense
How do adjusting entries for accrued expenses affect liabilities and expenses?
Adjusting entries for accrued expenses can increase liabilities and increase expenses.
A journal entry should contain the following
Amount credited/debited, date, and description
Step three of measuring external transactions
Assess whether the transaction results in a debit or credit to account balances
Identify the entries needed for the closing process.
Debit each revenue, credit each expense, and record the difference in Retained Earnings. Credit Dividends Declared and debit Retained Earnings.
After the accountant analyzes the impact of a transaction on the accounting equation the next step is to
Determine accounts to debit and credit
DEA of DEALOR
Dividends, expenses, and assets
Internal transactions
Do not include other entity, reported at the end of the month
Which of the following accounts are located in the income statement
EXPENSES AND REVENUE
Last step for GENERALLY analyzing the effects of transactions
Ensuring that A=L+E
Is deferred revenue an asset, liability, or equity?
Liability
External transaction
Includes other entity, reported when they happen
Which of the following statements is true?
Income statement accounts are temporary accounts, while balance sheet accounts are permanent accounts.
What changes does net income have on retained earnings?
Increased retained earnings
When services are provided on account, what is the effect on stockholders' equity?
Increases it
LOR of DEALOR means
Liability, owners' equity, revenues
prepaid rent has what TOTAL change?
No changes to assets because cash was exchanged for prepaid rent
Which of the following pre-payments requires an adjusting entry at the end of the year?
On November 1, the company pays rent for the next six months.
This principle means that companies record revenue at the time goods are provided to customers
Revenue
Net income =
Revenue - Expense
A payment of cash dividends decreases which of the following
SE, Retained earnings, and assets
Revenue
Services performed for customers for cash on account
Equipment traded for cash, what will happen to assets?
Stay same
The purpose of an account is to
Summarize all transactions for that item
An account that is used informally for analysis instead of drawing a formal general ledger account is referred to as a
T-account
T/F A debit to expenses is a debit to retained earnings
TRUE
Domino's received inventory on the 15th and paid the 27th, when will they record the transaction?
The day received and paid
Which of the following statements is correct regarding a long-lived asset such as a building?
The original cost in the building account will not change when an adjusting entry is recorded for depreciation.
The purpose of a trial balance is?
To assist in preparing to adjust entries and to ensure that debits equal credits
What are the effects on the accounting equation from an adjusting entry for revenues earned, but not yet collected, during the accounting period?
Total assets will increase and total stockholders' equity will increase.
Step one of measuring external transactions
Use source documents to ID accounts affected by an external transaction
The adjusting entry for an accrued revenue always includes:
a debit to an asset account a credit to a revenue account
In an adjusting entry for expenses incurred but not yet paid ______.
a liability is increasing since cash will be paid in the future due to the expense incurred
occur when the cash flow occurs after either the expense is incurred or the revenue is earned.
accruals
A prepayment that is originally recorded as an asset will be ______.
allocated to future accounting periods based on the cost of the asset used during the period
After the adjusting entries have been completed, the balance in the Rent Expense account represents the:
cost of rent for the accounting period
Sabrina Company recorded an adjusting entry for salaries owed to employees at the end of the year. As a result of this entry, Sabrina Company's: (Select all that apply.)
equity decreases liabilities increase
A primary purpose of adjusting entries is to record events that
have occurred but that have not yet been recorded.
Consistent with accrual-basis accounting, expenses should be recognized
in the period when the related revenue is generated
Does net income include dividends?
nO
The journal entry to close dividends _____ retained earnings.
reduces
Wald Corporation's adjusted trial balance shows the following temporary accounts: service revenue: $20,000; salaries expense $8,000; insurance expense: $2,000; utilities expense: $3,000; interest expense $200; and depreciation expense: $1,400. As part of the the closing process, Wald should debit
service revenue.
Retained earnings is debited for
sum of expenses
Retained earnings is credited for
sum of revenue
After the adjusting entries have been completed, the adjusted balance in the Interest Expense account represents:
total interest that has been paid or accrued during the period
After the adjusting entries have been completed, the balance in the "Salaries Expense" account represents:
total salaries, paid and unpaid, that have been incurred during the accounting period
There is a cause-and-effect relationship between revenues and expenses that dictates:
when costs are recognized as expenses in the income statement
A company records the effects of transactions for a particular item in an
Account
Used to record the summary of effects on one item
An account
Step two of measuring external transactions
Analyze the impact on the accounting equation
Accounts receivable are an
Asset
Deferred Revenue
Cash received from customers for services to be performed in the future
Which of the following would be referred to as "accruals?"
Expenses incurred, not yet paid Goods and services provided, not yet collected
This contains alistt of transactions affecting each account and the account's balance
General ledger
Does net income affect retained earnings?
Increases retained earnings
Which of the following transactions requires an adjusting entry for accrued revenue?
Interest earned, but not yet collected, on a note receivable
Which of the following represents a common advantage of a computerized accounting system
Journal entries are instantly posted to the ledger
Which of the following accounts would normally have a credit balance on the trial balance
Notes payable, deferred revenue, and common stock, and retained earnings
Step five of measuring external transactions
Post the transaction to the general ledger
Step six of measuring external transactions
Prepare a trial balance
Purpose of a general ledger is to
Provide in a single location the list of transactions affecting each account and the account balance
Chart of accounts
Record of a company's daily transactions
Step four of measuring external transactions
Record the transactions in a journal using debits and credits
Which situations does a corporation record revenue in the current period?
Services on account OR services for cash
T/F Revenue is recorded when services are performed, whereas deferred revenue is recorded when cash is received from customers in advance before services are performed
TRUE
T/F a debit to dividends is a debit to retained earnings?
TRUE
Taggert Company paid $1,800 for a 6-month insurance premium on December 1. Which of the following statements are correct regarding the accounting for this insurance over the six-month period? (Select all that apply.)
Taggert will debit Insurance Expense for $300 on Dec. 31. Taggert will debit Prepaid Insurance for $1,800 on Dec. 1. Taggert will credit Prepaid Insurance for $300 on Dec. 31.
The type of information included in an account includes
The account title and the columns for debits and credits
Accounts receivable are assets which represent
The amounts owed by customers
Under accrual-basis accounting, which of the following result in an expense being recorded in May?
The company pays cash in April for supplies used in May. The company pays cash in June for salaries earned in May.
Which of the following statements most accurately describes the purposes of the closing entries?
To establish zero balances in the income statement and dividend accounts and to transfer net income and dividends into retained earnings