Accounting Review

Yes

Cash

Financial Accounting Standards Board (FASB)

Generally Accepted Accounting Principles (GAAP) are currently formulated by the.....

Disadvantage

Government regulation is expensive

Matching principle

Guides accounting for expenses, ensures that all expenses are recorded when they are incurred during the period, and matches those expenses against the revenues of the period

False

Rate of return on total assets measure the success a company has in using its assets to generate sales, while the asset turnover ratio measures a company's success in using its assets to earn income

Revenue recognition principle

Requires companies to record revenue when it satisfies each performance obligation

The sarbanes-oxley act

Requires that an outside auditor must evaluate a public company's internal controls

Yes

Retained earnings

No

Service revenue

Advantage

Stockholder's liability is limited

Outstanding check

Subtracted from the bank balance

NSF check

Subtracted from the book balance

Service charge

Subtracted from the book balance

Assets=liabilities + equity

The accounting equation

Income statement, statement of retained earnings, balance sheet

The adjusted trial balance is used to prepare the financial statements in which of these orders?

Maturity date

The date when the note receivable is due

Debit to bad debts expense

The entry to record a write-off of an uncollectible account when using the direct write-off method involves a_______.

Management's Discussion and Analysis (MD&A)

What part of the liberty's annual report is written by the company and could present a biased view of financial conditions and results?

First-in, first-out

Which inventory costing method assigns to ending merchandise inventory the newest-the most recent-costs during the period?

collections from customers

Which item does not appear on a statement of cash flows prepared by the indirect method

Accounts payable, revenues, and common stock

Which of the following lists below include accounts that all have a normal balance on the credit side?

Faithful Representation concept

Which of the following requires accounting information to be complete, neutral, and free from material error?

operating activities

current assets and liabilities

The main categories of cash flow activities are

operating, investing, and financing

Which of the following are true regarding the allowance method for recording uncollectibles?

1. Bad debt expense for the period is estimated by recording an adjusting entry at the end of the period 2. A contra asset account related to accounts receivable is used to hold the estimated amount of uncollectible accounts

What do closing entries accomplish?

1. Bring the retained earnings account to its correct ending balance 2. Zero out the revenues, expenses, and dividends 3. Transfer revenues, expenses, and dividends to the retained earnings account

Purposes of the statement of cash flows

1. Evaluate map

Which of the following are common required withholding deductions from an employees paycheck

1. Federal income tax 2. Social security tax

Accounting is an information system that

1. Measures business activities 2. Communicates the results to decision makers 3. Processed the information into reports

Which of the following are provisions included within the Satbanes-Oxley Act

1. Public companies must issue an internal control report describing management's responsibility for internal controls and the adequacy of internal controls 2. Penalties of 25 years in prison for securities fraud and 20 years for an executive making false sworn statements

Generally Accepted Accounting Principles (GAAP)

1. Rests on the conceptual framework that identifies the objectives, characteristics, elements, and implementation of financial statements 2. Creates the acceptable accounting practices

Other receivables

A miscellaneous category that includes any other type of receivable where there is a right to receive cash in the future

Notes recievable

A written promise to pay a specified amount of money at a particular future date

Deposit in transit

Added to the bank balance

Interest revenue earned

Added to the book balance

No

Advertising expense

Intangible

An asset with no physical form that is valuable Bc of the special rights it carried is called a (n)------- asset?

Furniture

Asset

Notes receivable

Assets

Prepaid insurance

Assets

Increase both assets and equity by $180

Assume that Global Cleaning Service performed cleaning services for a department store on account for $180. How would this transaction affect Global Cleaning Service's accounting equation?

Time period concept

Assumes that a business's activities can be sliced into small time segments and that financial statements can be prepared for specific periods.

Increase to Cash

Debit

Debit

Decrease to Accounts Payable

Credit

Decrease to Accounts Receivable

Credit

Decrease to office supplies

No

Dividends

Advantage

Entity can raise more money than a partnership or sole proprietorship

Advantage

Entity has continuous life

Common Stock

Equity

Dividends

Equity

Insurance Expense

Equity

Rent expense

Equity

Service Revenue

Equity

Disadvantage

Exposure to double taxation is evident

Credit

Increase to Common Stock

Credit

Increase to interest Revenue

Credit

Increase to notes Payable

Debit

Increase to prepaid rent

Debit

Increase to rent expense

Credit

Increase to unearned Revenue

Accounts Payable

Liability

Unearned Revenue

Liability

Non-cash investing and financing activities

Mountain water corp. issued common stock of $28,000 to pay off long term notes Payable of $28,000. In what section (s) would these transactions be recorded?

Disadvantage

Ownership and management are separated

The objective to financial reporting is to

Provide information useful for making investment and lending decisions

True

The normal balance side is the side that the balance appears and is always on the increase side of an account

Accounts receivable

The party to a credit transaction who takes on an obligation/payable

Debtor

The party to a credit transaction who takes on an obligation/payable

Perpetual and periodic

The two main inventory accounting systems are the_______, ________.

Advantage

Transfer of ownership is easy