Financial accounting

Which of the following is the best definition of a source document in the accounting process?

A source document identifies and describes transactions and is the basis for entering an event into the accounting system.

Users who do not directly run the organization and have limited access to accounting information are known as (internal/external) users.

external

The revenue recognition principle states that revenue is recognized when:

goods or services are provided to customers

Which of the statements below is true regarding the statement of retained earnings?

Both the beginning and ending retained earnings balances are reported on the statement.

Recall that the Balance Sheet reports the equality of the accounting equation and would include which of the following amounts?

Total Assets Total Liabilities Retained earnings balance at end of period

Which of the following would be included on an income statement? (Check all that apply.)

Total expenses Total revenues Net income

Which of the following statements is accurate about the Land account? (Check all that apply.)

The Land account is used to record the costs of land purchased by the business. The Land account is an asset. The Land account is increased on the left side of its T-account.

An income statement reports:

the revenues less the expenses incurred by a business

Which of the following statements is (are) correct regarding a T-account? (Check all that apply.)

A T-account may be used as a tool to visualize the effects of a transaction. A T-account represents a ledger account. A T-account will show the debit and credit effects of transactions.

Which of the following statements is the correct definition of a creditor?

A creditor is an individual or organization that has a right to receive payments from a business.

Choose the statement below that correctly explains a general journal..

A journal is a complete record of each transaction in one place and includes the debit and credit of each transaction.

The correct definition of an "account" includes which of the following?

A record of increases and decreases in a specific asset, liability, equity, revenue, or expense item

Which of the following statements is (are) true about accounts receivables? (Check all that apply.)

Accounts receivable increased when credit sales are made. Accounts receivable reflects the amount still owed by customers.

Which of the statement(s) below define(s) an asset? (Check all that apply.)

An amount owned, Resources with expected future benefits, Resources controlled by the business

Given the list of accounts below, identify which of them would appear on a balance sheet. (Check all that apply.)

Equipment Accounts Payable Retained earnings, 12/31 Cash Supplies

Identify the broad opportunity areas of accounting. (Check all that apply.)

Managerial Taxation Financial

Given the statements below, choose the most accurate definition of dividends.

Outflow of resources to stockholders.

Which of the following statements are accurate regarding supplies? (Check all that apply.)

Unused supplies can be recorded as Store Supplies, Office Supplies or Supplies. Supplies are assets until they are used. Unused supplies are treated as assets. When supplies are purchased, they are added to the Supplies account.

The balance sheet reports:

assets, liabilities and the ending retained earnings balance

Recording transactions and events is known as

bookkeeping

All of the following are part of the FASB conceptual framework: (Select all that apply).

elements, recognition and measurement, qualitative characteristics, objectives

The Accounts Payable account is a(n) ______ account.

liability

Which of the following statements explains what a trial balance is?

A trial balance confirms that the sum of debit account balances equals the sum of credit account balances.

Why does a business need accounting information?

Accounting records business transactions and communicates financial information.

Identify the main sections on a statement of cash flows. (Check all that apply.)

Cash flows from investing activities Cash flows from financing activities Cash flows from operating activities

Which of the following would be considered a source document in an accounting system? (Check all that apply.)

Checks, Purchase order, Payroll records, Sales receipt

Which list of accounts below, identifies only accounts that would appear on a balance sheet.

Common Stock, Equipment, Accounts Payable

Which of the selections below includes all of the required information to be entered in a journal?

Date of transaction, explanation of transaction, debited and credited accounts, dollar amounts of debits and credits

From the following statements, select the one that describes the effect of dividends on equity.

Dividends cause equity to decrease.

Which of the following statements about the Dividends account is (are) correct? (Check all that apply.)

Dividends decrease equity. Dividends is used to record distributions of assets to the owners of a business. Dividends are increased on the left side of the T-account.

Which of the following statements is (are) accurate regarding equipment purchased within a business? (Check all that apply.)

Equipment is reported on the left side of the accounting equation. Equipment cost is initially recorded as an asset and as it is used and gets worn down, the cost is gradually expensed. Equipment is an asset. Equipment purchases are reported on the balance sheet.

Which of the following statements is the correct definition of equity?

Equity is the owner's claim on a company's assets.

True or false: Assets are claims (by creditors) against the company.

False

From the lists of accounts below, which one contains only revenue accounts?

Interest revenue, Professional fees earned, Sales

Which statement below defines why accounting information is useful?

It identifies, records, and communicates business transactions.

Which of the following statements is the best definition of the Chart of Accounts?

It is a list of all ledger accounts which exist in a business and includes an identification number assigned to each account.

Which of the following is correct regarding posting a transaction?

Posting means to transfer journal information to a ledger.

Which of the following statements is correct about prepaid accounts

Prepaid accounts are also called prepaid expenses and are considered assets.

Which of the following are examples of prepaid (expense) accounts? (Check all that apply.)

Prepaid insurance Prepaid rent

Which of the following lists of items contain only examples of prepaid (expense) accounts?

Prepaid rent, prepaid insurance

From the following lists of accounts, choose the list(s) which contains only expense accounts.

Rent expense, wages expense, insurance expense

Identify which of the following lists of accounts would belong on the statement of retained earnings.

Retained earnings and Dividends

Which of the following statements about revenues is correct?

Revenues cause equity to increase, and they are increased on the right side of the T-account.

Which of the following accounts are examples of revenues? (Check all that apply.)

Service revenue Sales Fees earned

Which of the following statements explain(s) how the accounting equation applies to businesses? Check all that apply.

The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners. The equation states that Assets = Liabilities + Equity. The equation applies to all transactions. The relation of assets, liabilities and equity is reflected in the equation.

Analyzing the accounting equation at the end of the month will reveal the following. Select all that apply.

revenues and expenses will change the equity account assets = liabilities + equity

Identify the correct definition of an asset:

An asset is something of value that a business owns or controls

You are entering a transaction in the journal. Place the following steps in the order that they would be entered in the journal.

Enter date if transaction in date column Enter name of accounts debited and their amounts Enter name of accounts credited and their amount Enter explanation

Which of the following items would be considered "cash" and reflected in a company's Cash account? (Check all that apply.)

Money orders Coin Checks

Given the descriptions below, which is (are) true regarding notes receivable? (Check all that apply.)

Notes receivable is classified as an asset. Another name for a note receivable is a promissory note. It is the promise of another entity to pay a specific sum of money on a specified future date.

Which of the following statements below lists the rules of entering transactions into the accounting equation?

The accounting equation must always remain in balance so that assets always equal the sum of liabilities and equity.

When recording transactions into the accounting equation, which of the following statements are correct? (Check all that apply.)

The accounting equation must always remain in balance. After recording the transaction, total assets will always equal total liabilities plus equity.

What are Generally Accepted Accounting Principles?

The concepts and rules that govern financial accounting practice.

Which of the following describes a general ledger?

The general ledger is a record containing all accounts used by a company.

Which of the following statements explain(s) how the accounting equation applies to businesses? Check all that apply.

The relation of assets, liabilities and equity is reflected in the equation. The equation applies to all transactions. The equation states that Assets = Liabilities + Equity. The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners.

Which of the following statements is (are) true regarding the balance sheet? (Check all that apply.)

The report date includes a single calendar day. It depicts the equality of the accounting equation. It reports the financial position at a point in time.

The correct definition of an income statement includes which of the following?

The statement describes a business's revenues and expenses over a period of time.

The correct definition of a balance sheet includes which of the following statements? (Check all that apply.)

The statement reports the financial position of a company at a point in time. The statement reports assets, liabilities and equity at a point in time. The statement reports the equality of the accounting equation at any point in time.

Which of the following statements best represents the reason for the accounting equation?

The total of everything owned by a business must always equal the total of what the business owes to creditors and owners.

True or false: Dividends are resources paid to the stockholders.

True

When supplies are purchased on credit it means that: (Check all that apply.)

a liability has been incurred. the Accounts Payable account will be increased. the business will pay for the supplies at a later time.

The general ledger can be used to determine which of the following (select all answers which apply):

common and unique accounts used by a business. which accounts are being used by a company and their balances at any given time. increases and decreases in all accounts in a business.

Users of accounting information can be divided into two main groups. These groups include:

internal and external

The FASB conceptual framework consists of all of the following except:

measurement

The principle which states that accounting information is based on actual cost is called the

measurement principle

Recall the required information in a financial statement heading. Rearrange the following line items as they would appear in a heading.

name of business, name of financial statement, period of time the financial statement covers

The three factors that must exist for a person to commit fraud include

opportunity, pressure, and rationalization

The recording of transactions and events is called

recordkeeping

Each of the following are areas of accounting opportunities except

regulators

Generally accepted accounting principles (GAAP) wants information to have:

relevance faithful representation