accounting test 1

financial statements can be prepared from the unadjusted trial balance. True or false?

False

generally accepted accounting principles ( GAAP) are currently formulated by the

Financial Accounting Standards Board (FASB)

Which of the following characteristics best describes a corporation?

Stockholders not personally liable for entity's debts

the income summary account is

a temporary account, summarizes net income ( or loss) for the period

the adjusted trial balance shows

account balances after adjustments

which of the following is true of accrual basis accounting and cash basis accounting?

accrual accounting records revenue only when it is earned

which of the following accounts is not closed?

accumulated depreciation

which of the following accounts would be included in the property, plant, and equipment category of the classified balance sheet?

accumulated depreciation

Financial statements are prepared from the ...

adjusted trial balance

The detailed record of the changes in a particular asset, liability, or stockholders' equity is called?

an account

accounting equation

assets= liabilities + equity

which financial statement represents a specific moment in time and not a period of time?

balance sheet

stockholders equity equation

beg. equity + common stock issued + net income or - net loss - dividends = End. equity

which of the following accounts may appear on a post-closing trial balance?

cash, salaries payable, and retained earnings

accounting is the information set that

communicates the results to decision makers. measures business activity. processes information into reports.

which of the following is not an external user of a business's financial information?

employee

the balance sheet reports the

financial position on a specific date

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

increase both assets and equity by 180

a worksheet

is an internal document that helps summarize data for the preparation of financial statements

which sequence correctly summarizes the accounting process?

journalize transactions, post to the accounts, prepare a trial balance

which of the following steps of the accounting cycle is not completed at the end of the period?

journalizing transactions as they occur

pixel copies recorded a cash collection on account by debiting cash and crediting accounts payable. what will the trial balance show for this error?

liabilities are over stated

assets and liabilities are listed on the balance sheet in order of their

liquidity

formula for ROA

net income/ average total assets

which of the following assets would be classified as a current asset?

office supplies, accounts receivable

which of the following is an example of a deferral ( or prepaid) adjusting entry?

recording the usage of office supplies during the period

the revenue recognition principle requires

revenue to be recorded only after the business has satisfied its performance obligation

What type of business organization is owned by only one owner?

sole proprietorship

which situation indicates a net loss within the income statement section of the worksheet?

total debits exceed total credits

which of the following accounts is a liability?

unearned revenue

adjusting the accounts is the process of

updating the accounts at the end of the period

what do closing entries accomplish?

-Bring the Retained Earnings account to its correct ending balance -Zero out the​ revenues, expenses, and dividends -Transfer​ revenues, expenses, and dividends to the Retained Earnings account

the matching principle

-is sometimes called the "expense recognition principle" -ensures expenses are matched against the revenues of the period - ensures all expenses are recorded when they are incurred during the period

At the end of a recent year, Quick service Cleaning service, a full service house and office cleaning service, had total assets of 6,180 and equity of 2,880. How much were quick service cleaning service's liabilities?

3,300

stub laundry reported assets of 1,200 and equity of 675. What is stubs debt ratio?

44%

This accounting equation is typically shown in which of the following forms?

Assets= Liabilities + equity

the left side of an account is used to record which of the following?

Debit

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

Faithful representation concept

Consider the overall effects on quick service cleaning service from selling and performing services on account 6,940 and paying expenses totaling 3,570. What is Quick Service cleaning services net income or net loss?

Net income of 3,370

in the accounting cycle..

Preparing the adjusted trial balance is the step before preparing the financial statements, the use of a worksheet is optional, preparing the post-closing trial balance is the final step.

which of the following lists the proper steps in order when recording an accounting transaction?

Transactions occur, source documents are prepared, transactions are analyzed, transactions are journalized and posted.

Financial accounting focuses on information for decision makers outside of the business, such as creditors and taxing authorities. True or false?

True

In a classified balance​ sheet, assets are reported in the order of liquidity and liabilities are listed in the order in which they must be paid. True or false?

True

The guidelines for accounting information are called Generally Accepted Accounting Principles (GAAP)?

True

The normal balance side is the side that the balance appears and is always on the increase side on an account. True or false?

True

To be useful, accounting must be relevant and have faithful representation.

True

all balance sheet accounts are permanent accounts. True or false?

True

in a double entry accounting system every transaction must be recorded into at least two accounts? True or false?

True

the accrual basis of accounting is allowed by generally accepted accounting principles because it gives a better picture of when businesses earn revenues and incur expenses. true or false?

True