Financial accounting review- chapters 1 & 2
Assets appear on the (BLANK) side of the accounting equation and are increased by amounts that appear on the (BLANK) side of asset T-accounts. (Enter one word per blank.)
LEFT, DEBIT
An amount posted on the right side of a T-account causes which accounts to increase? (Check all that apply.) Liabilities Cash Common Stock Notes Payable Assets
Liabilities Common Stock Notes Payable
The primary (BLANK) of financial reporting is to provide financial information about companies that is useful to capital providers for decision making. (Enter only one word per blank.)
OBJECTIVE
Select the financing activities from the list below. (Check all that apply.) Multiple select question. Issuing stock Purchasing land Issuing a note payable Purchasing equipment
Issuing stock Issuing a note payable
The asset (BLANK) (BLANK) represents the amount customers owe for goods or services.
accounts receivable
(BLANK) are economic resources owned by the company.
assets
Which groups have claims to a business's assets? (Check all that apply.) customers creditors management stockholders
creditors stockholders
Retained earnings is increased with Blank______. (Check all that apply.) Multiple select question. debits credits an excess of revenues over expenses dividends declared
credits an excess of revenues over expenses
True or false: The primary responsibility for the information in the financial statements lies with the outside independent auditors. True False
false
Expenses reported in one accounting period Blank______ accounting period. (Check all that apply.) Multiple select question. may be paid in the same may be paid in a later may be paid for in a prior equals the amount of cash paid for the expenses in that same
may be paid in the same may be paid in a later may be paid for in a prior
Net income is Blank______. (Check all that apply.) net earnings revenues minus expenses assets minus liabilities expenses minus revenues equal to the company's cash balance assets plus liabilities
net earnings revenues minus expenses
The statement of stockholders' equity is Blank______. necessary only if there have been recent owner contributions not required if the company has prepared an income statement one of the four financial statements usually prepared by profit-making organizations not required
one of the four financial statements usually prepared by profit-making organizations
The requirements in most states to become a Certified Public Accountant include Blank______. Multiple choice question. SEC registration five years of work experience passing the CPA exam certification by US General Accounting Office
passing the CPA exam
If a company has issued 10,000 shares of common stock and its Common Stock account has a balance of $100,000, then par value must equal Blank______. an undetermined amount $1.00 $10,000 $10
$10
During the current year, Revitup, Inc., an exercise video retailer, purchased $10,000 of videos for which it paid $7,000 and owes $3,000. Of the $10,000 of videos purchased, Revitup sold $8,000 worth of videos for $12,000 to its customers. How much should Revitup report as an expense on its income statement for the current year ended December 31? $8,000 $7,000 $10,000 $3000
$8,000
Par value of common stock is the Blank______. (Select all that apply.) excess amount received from selling stock legal amount per share market price of the stock amount established by the board of directors
legal amount per share amount established by the board of directors
Which of the following are advantages to forming as a corporation? (Check all that apply.) limited liability income is only taxed once continuity of life ability to raise large amounts of money by selling shares ease in transferring ownership
limited liability continuity of life ability to raise large amounts of money by selling shares ease in transferring ownership
Which of the following are not found in the heading of a balance sheet? (Select all that apply.) specific date name of the entity unit of measure name of the owner period covered
name of the owner period covered
List these liability accounts in the same order in which they would appear on a company's balance sheet from top to bottom. Instructions Mortgage payable (due in 25 years) Note payable (due in 5 years) Note payable (due in 5 months)
1. Note payable (due in 5 months) 2. Note payable (due in 5 years) 3. Mortgage payable (due in 25 years)
CPAs in public accounting perform the following services (select all that apply). 1. not-for-profit assurance services 2. assurance services 3. consulting services for audit clients 4. tax planning
1. not-for-profit assurance services 2. assurance services 4. tax planning
The statement of stockholders' equity is Blank______. 1. not required if the company has not paid a dividend this year 2. one of the four financial statements usually prepared by profit-making organizations 3. necessary only if there have been recent owner contributions 4. not required if the company has prepared an income statement
2. one of the four financial statements usually prepared by profit-making organizations
Which statement best describes a T account? A T account is used to record transactions in a chronological order and serves as a book of original entry. A T account represents an account and is a tool used to understand the effects of one or more transactions. A T account is a formal financial statement which reports whether debits = credits at any given time. A T account is used in a business to accurately report the financial status of its operations to the owners.
A T account represents an account and is a tool used to understand the effects of one or more transactions.
Which of the following statements is (are) correct regarding a T-account? (Check all that apply.) A T-account reflects whether a transaction was posted correctly. A T-account will show the debits and credits of the transactions affecting the account. A T-account represents a ledger
A T-account will show the debits and credits of the transactions affecting the account. A T-account represents a ledger account.
A separate (BLANK) is maintained in order to accumulate the dollar effect of transactions on each financial statement item. (Enter only one word per blank.)
ACCOUNT
On July 19, WX Company ordered $100 of supplies, promising to pay for them in August. The supplies were delivered and invoiced to WX on July 21 and WX paid $100 for them on August 10. The journal entry that WX made on August 10 would include a debit to Blank______. Supplies Cash Accounts Payable
Accounts Payable
Which of these line items appears on a balance sheet? (Check all that apply.) Multiple select question. Accounts receivable Common stock Sales revenue Net income Cash Retained earnings
Accounts receivable Common stock Cash Retained earnings
A balance sheet shows which of the following elements? (Select all that apply.) Expenses Dividends Revenues Assets Liabilities Stockholders' equity
Assets Liabilities Stockholders' equity
What are long-term (noncurrent) assets? Assets that will be used up or converted to cash within 12 months Assets that must be paid for within 12 months Assets that will be used for more than one year Any assets that were purchased for cash
Assets that will be used for more than one year
Which of the following is a financing activity? Borrowing money from the bank. Paying suppliers for raw materials. Selling goods to customers. Buying equipment with cash.
Borrowing money from the bank.
Which of the following line items on a balance sheet results from an investing activity? (Check all that apply.) Buildings Accounts payable Equipment Notes payable Land Common stock
Buildings Equipment Land
A company typically receives (BLANK) , an asset, when it issues stock to its owners. (Enter only one word per blank.)
CASH
Which information is obtained from a statement of cash flows that is not found on the income statement? (Check all that apply.) Expenses incurred Revenues earned Cash flows from financing activities Cash from operating activities Cash flows from investing activities Wages expense
Cash flows from financing activities Cash from operating activities Cash flows from investing activities
Acme Enterprises issued shares of common stock for an amount in excess of par value. The journal entry to record this transactions includes a credit to Blank______. (Select all that apply.) Notes Payable Cash Retained Earnings Common Stock
Common Stock Additional Paid-in Capital
Which of the following accounting cycle steps describes the summarizing in ledger accounts? A list of accounts and ending balances is checked to be sure total debits equal total credits. Dollar amounts from journal entries are copied (posted) to the appropriate accounts in the ledger, so that account balances can be totaled. Transactions are recorded chronologically, showing the accounts debited along with the corresponding accounts credited.
Dollar amounts from journal entries are copied (posted) to the appropriate accounts in the ledger, so that account balances can be totaled.
Which of the following are internal events? (Select all that apply.) Borrowing cash that will be repaid in five years to the bank Earning revenues after cash is received in advance from customers Paying salaries to an employee Using supplies purchased and paid for last month
Earning revenues after cash is received in advance from customers Using supplies purchased and paid for last month
Smith Company purchased $8,000 of supplies on account. Show how to record this transaction in the T-accounts by selecting the correct answer below. Enter $8,000 on the left side of the Supplies account. Enter $8,000 on the right side of the Accounts receivable account. Enter $8,000 on the left side of the Supplies account; enter $8,000 on the right side of the Cash account. Enter $8,000 on left side of the Supplies account; enter $8,000 on the right side of the Accounts payable account. Enter $8,000 on the right side of the Supplies account. Enter $8,000 on the left side of the Accounts payable account.
Enter $8,000 on left side of the Supplies account; enter $8,000 on the right side of the Accounts payable account.
True or false: Stockholders and creditors are internal decision makers that use accounting information to manage the operating, investing and financing activities of the firm. True False
False
True or false: The primary responsibility for the information in the financial statements lies with the outside independent auditors. True False
False
Which financial statement is a company's primary measure of profit? Income statement Statement of cash flows Statement of stockholders' equity Balance sheet
Income statement
A financial statement heading states that it was prepared: "For the Year Ended December 31" What types of financial statements could this be? (Check all that apply.) Multiple select question. Income statement Balance sheet Statement of stockholders' equity Statement of cash flows
Income statement Statement of stockholders' equity Statement of cash flows
A(n) (BLANK) transaction is an event that affects the financial position of the company but does not include an exchange with a separate economic entity. (Enter only one word per blank.)
Internal
IFRS are Blank______. required for all financial statements prepared in the United States another form of US GAAP International Financial Reporting Standards
International Financial Reporting Standards
Which of these would be captured and reported by an accounting system? (Check all that apply.) Investing activities such as the purchasing of equipment Independent audit report Operating activities such as the payment of wages Financing activities such as the selling of stock
Investing activities such as the purchasing of equipment Operating activities such as the payment of wages Financing activities such as the selling of stock
Which of these line items appears on both the income statement and the statement of stockholders' equity? Cash Cash flows from operating activities Net income Assets
Net income
An amount posted on the right side of a T-account causes which accounts to increase? (Check all that apply.) Multiple select question. Cash Assets Notes Payable Common Stock Liabilities
Notes Payable Common Stock Liabilities
Revenues and expenses relate to the cash inflows and outflows found in the Cash flows from (BLANK) activities section of the statement of cash flows. (Enter only one word per blank.)
OPERATING
Which of the following is an investing activity? Paying cash dividends to stockholders Receiving cash from customers Borrowing from the bank Paying cash to buy equipment
Paying cash to buy equipment
Which of the following is an investing activity? Paying cash to buy equipment Borrowing from the bank Receiving cash from customers Paying cash
Paying cash to buy equipment
______ are earned by selling goods or services to customers. Multiple choice question. Revenues Expenses Cash Profit
Revenues
An income statement includes which of the following items. (Check all that apply.) Common stock Accounts payable Revenues Expenses Net income Cash
Revenues Expenses Net income
The abbreviation SEC stands for the Blank______. Securities and Exchange Commission Security Exchange Co-operation Sarbanes-Exley Commission
Securities and Exchange Commission
Which of the following are alternative titles for the income statement? (Select all that apply.) Statement of operations Statement of income Statement of assets Statement of financial position Statement of earnings
Statement of operations Statement of income Statement of earnings
Increases and decreases in individual accounts, as well as an ending balance, are shown in a(n) Blank______. (Check all that apply.) balance sheet journal T-account income statement ledger
T-account ledger
The heading of a balance sheet for a company that has been in business for years and has a June 30 year end might include which of the following? (Check all that apply.) The title "Balance Sheet" At June 30, 2019 The name of the business For the Year Ended June 30, 2019
The title "Balance Sheet" At June 30, 2019 The name of the business
MMM Pizza bought $1,500 of supplies on account. What is the effect of recording this transaction on the company's total assets? Nothing can be recorded until cash is paid. Total assets will decrease. Total assets will increase. There is no effect.
Total assets will increase.
Z Best, Inc. issued 1,000,000 shares of $1 par value common stock for $20,000,000 in cash. The effect on the accounting equation effect is Blank______. (Select all that apply.) Total stockholders' equity is increased by $20,000,000 Cash is increased by $20,000,000 Retained earnings is increased by $20,000,000 Additional Paid-in Capital is increased by $19,000,000 Common Stock is increased by $1,000,000 Common Stock is increased by $20,000,000
Total stockholders' equity is increased by $20,000,000 Cash is increased by $20,000,000 Additional Paid-in Capital is increased by $19,000,000 Common Stock is increased by $1,000,000
True or false: IFRS and US GAAP financial statements report similar items, but use different financial statement formatting. True False
True
Which of the following may be included in the heading of the statement of stockholders' equity for Xoff, Inc? (Check all that apply.) Xoff, Inc. Statement of Stockholders' Equity (in thousands of dollars) At December 31 For the year ended December 31
Xoff, Inc. Statement of Stockholders' Equity (in thousands of dollars) For the year ended December 31
When a company sells goods to customers on credit, Blank______. accounts receivable will be reported on the seller's balance sheet accounts payable will be reported on the seller's income statement accounts payable will be reported on the seller's balance sheet accounts receivable will be reported on the seller's income statement
accounts receivable will be reported on the seller's balance sheet
A(n) ***BLANK*** is performed by CPAs to determine whether the financial statements have been prepared in accordance with GAAP. (Enter one word per blank.)
audit
The four financial statements include the: (BLANK) sheet (BLANK) statement (BLANK) statement of equity and (BLANK) statement of flows (BLANK) (enter only one word per blank)
balance income stockholders' cash
A Blank______ to a stockholders' equity account causes total stockholders' equity to decrease. debit plus credit minus
debit
The main goal of US GAAP is to Blank______. ensure that companies become more profitable prevent all fraud from occurring reduce the number of required financial statements ensure that companies produce useful information for users of financial statements
ensure that companies produce useful information for users of financial statements
Intangibles such as trademarks and patents are Blank______. Multiple choice question. current liabilities current assets non-current assets non-current liabilities
noncurrent assets
Mauricio, the owner of Pizza Aroma, spent $2,500 of his own money to take his family to Disney World. Pizza Aroma's financial statements will report Blank______. a business travel expense of $2,500 a cash payment of $2,500 a cash receipt of $2,500 nothing about this trip sales of $2,500
nothing about this trip
Which of these are long-term intangible assets? (Check all that apply.) buildings patents trademarks inventory land
patents trademarks
Which action is done to update account balances? recording entries journalizing entries analyzing entries posting entries
posting entries
Which of the following classifications is not used to categorize cash inflows and cash outflows on the statement of cash flows? financing operating spending investing
spending
Faithful representation exists when the information is Blank______. (Select all that apply.) unbiased complete elemental free from error
unbiased complete free from error
Company X receives $10,000 from issuing 10,000 shares of $1 par value common stock to its owners. The effect on the accounting equation is Blank______. (Check all that apply.) stockholders' equity increases assets decrease assets increase retained earnings increase liabilities increase liabilities decrease stockholders' equity decreases
stockholders' equity increases assets increase
Acme Enterprises issued 10,000 shares of $0.10 par value common stock for $20,000 in cash. The journal entry to record this transaction will include a Blank______. (Select all that apply.) credit to Additional Paid-in Capital of $19,000 debit to Cash of $20,000 credit to Common Stock of $1,000 credit to Notes Payable of $20,000 credit to Cash of $20,000 credit to Common Stock of $20,000
credit to Additional Paid-in Capital of $19,000 debit to Cash of $20,000 credit to Common Stock of $1,000
The journal entry to record the cash investment by a partner named B. Rich includes a Blank______. (Check all that apply.) debit to Common Stock credit to B. Rich, Capital debit to Cash debit to B. Rich, Capital
credit to B. Rich, Capital debit to Cash
On January 1, Year 1, X-it Company bought a new delivery truck for $30,000. X-it plans to use the truck for 4 years, after which it will be sold for $6,000. Depreciation Expense for Year 1 using double-declining-balance equals Blank______. $15,000 $6,000 $7,500 $12,000
$15,000 (30,000-0) x 2, then divide by 4
At December 31, Equate, Inc.'s assets equal $50,000 and liabilities equal $30,000. Stockholders' equity must equal $((((BLANK)))))
$20,000
During the current year, Revitup, Inc., an exercise video retailer, sold $24,000 of videos to its customers. Revitup collected $22,000 and expects to receive the remaining $2,000 in January of the following year. Revitup's income statement for the year ended December 31, of the current year, will report revenue of $????
$24,000
The beginning balance in Acme's Accounts Payable was $4,000. Acme then bought $100 of supplies on account and paid $700 of the amount that it owed for supplies purchased on account last month. The ending balance in Acme's Accounts Payable was a credit of Blank______. Multiple choice question. $3,400 $2,500 $4,700 $4,000 $4,600
$3,400
Daffy Duct, Inc. issued 10,000 shares of $1 par value common stock at $5 per share. The effect of this transaction on the accounting equation includes a Blank______. (Check all that apply.) $50,000 increase in total assets. $10,000 increase in total assets. $50,000 increase in total stockholders' equity. $10,000 increase in total stockholders' equity. $50,000 decrease in total stockholders' equity. $50,000 increase in total liabilities.
$50,000 increase in total assets. $50,000 increase in total stockholders' equity.
X-it Company, signed a $500,000, 5-year note payable to buy a new industrial machine. The company paid $2,000 cash for transportation of the machine and $1,000 cash for installation costs. The journal entry to record this transaction will include a Blank______. (Check all that apply.) $500,000 debit to Machinery $1,000 debit to Installation Expense $500,000 credit to Note Payable $503,000 debit to Machinery $3,000 credit to Cash $2,000 debit to Freight-in
$500,000 credit to Note Payable $503,000 debit to Machinery $3,000 credit to Cash
Rank the following steps applied in ethical decision making in the proper order, beginning with the first step. Evaluate the courses of action in terms of what you would like your family or friends to see. Identify the benefits of a decision and who will be harmed. Identify the alternative courses of action.
1. Identify the benefits of a decision and who will be harmed. 2. Identify the alternative courses of action. 3. Evaluate the courses of action in terms of what you would like your family or friends to see.
When an employee takes vacation time off, what is the impact on the accounting equation? An increase in an asset and a decrease in stockholders' equity A decrease in an asset and a decrease in a liability An increase in a liability and a decrease in stockholders' equity A decrease in one asset with an increase in another asset A decrease in an asset and an increase in a liability
A decrease in an asset and a decrease in a liability
What is earnings per share (EPS)? A financial measure required for public companies that reports how much of a company's reported earnings was generated for each common shareholder A financial measure required for public companies that reports how much of a company's reported earnings was generated for each common and preferred shareholder A financial measure required for all companies that reports how much of a company's reported earnings was generated for each common shareholder A financial measure required for all companies that reports how much of a company's reported earnings was generated for each common and preferred share
A financial measure required for public companies that reports how much of a company's reported earnings was generated for each common shareholder
What are current assets? Multiple choice question. Assets that must be paid for within 12 months Assets that will be used up or converted to cash within 12 months Assets that will be used for many years Any assets that were purchased for cash
Assets that will be used up or converted to cash within 12 months
Which of these headings and accounts would be found on a company's balance sheet? (Check all that apply.) Cash Retained earnings Assets Liabilities Revenues Stockholders' equity Expenses
Cash Retained earnings Assets Liabilities Stockholders' equity
Assets that will be used up or converted to cash within 12 months are (BLANK) assets. (Enter only one word per blank.)
Current
What information appears on the statement of stockholders' equity? (Select all that apply.) Multiple select question. Dividends Cash paid during the accounting period Cash received during the accounting period Ending balance of retained earnings Beginning balance of retained earnings Net income
Dividends Ending balance of retained earnings Beginning balance of retained earnings Net income
Describe where dollar signs are appropriate in financial statements. Dollar signs are not used in financial statements. Dollar signs are used beside the first and last numbers in a column. Dollar signs are used beside every number in a column.
Dollar signs are used beside the first and last numbers in a column.
Which of the following statements best describe earnings per share (EPS)? Multiple select question. EPS is an indicator of an entity's profitability. EPS measures the amount of earnings available to common shareholders on a per-share basis. EPS must be disclosed in the notes to the financial statements. Entities that report under IFRS must disclose EPS.
EPS is an indicator of an entity's profitability. EPS measures the amount of earnings available to common shareholders on a per-share basis.
The trial balance is an internal report used to determine whether total debits (BLANK) total credits. (Enter only one word per blank.)
EQUAL
A(n) (BLANK) event involves an exchange between the company and a separate economic entity. (Enter one word per blank)
EXTERNAL
(BLANK) activities involve the borrowing and repaying of money to lenders. (Enter one word per blank)
FINANCING
Which of the following are not required payroll deductions from an employees' gross earnings? (Check all that apply.) FICA tax Federal unemployment tax (FUTA) Charitable contributions Federal income tax Medicare State unemployment tax (SUTA)
Federal unemployment tax (FUTA) Charitable contributions State unemployment tax (SUTA)
When using a calculator or Excel to compute the present value of $500 monthly payments over 3 years at 12%, the rate (I/YR), the number of periods (N) and payment amount (PMT) to input are Blank______. I/YR=0.12; N=3; PMT=-500 I/YR=0.01; N=3; PMT=+500 I/YR=0.01; N=36; PMT=--500 I/YR=0.12; N=36; PMT=-+500
I/YR=0.01; N=36; PMT=--500 Since payments are made monthly, the rate is 0.01 (=12%/12 months per year) and the number of periods are 36 (=12 payments per year times 3 years).
Identify the steps in the process to follow when faced with an ethical dilemma. (Select all that apply.) Multiple select question. Choose the course of action that is most profitable. Identify alternative courses of action. Identify the benefits of a decision and who will be harmed. Choose the course of action that is most ethical. Identify which alternative is most efficient.
Identify alternative courses of action. Identify the benefits of a decision and who will be harmed. Choose the course of action that is most ethical.
Which of these line items appear on a balance sheet? (Check all that apply.) Multiple select question. Inventories Accounts payable Interest expense Sales revenue Property, plant, and equipment
Inventories Accounts payable Property, plant and equipment
Which of the following is not an accurate statement about internal control? It guarantees the management will behave ethically. It helps protect against the theft of assets. It enhances the reliability of accounting information. It promotes efficient and effective operations.
It guarantees the management will behave ethically.
The document that shows the effects of transactions chronologically, but does not provide account balances, is the general (BLANK)
JOURNAL
Which of the following is correct regarding posting a transaction? Posting takes place once during an accounting period. Posting means to enter transactions into a journal. Posting means to transfer journal information to a ledger.
Posting means to transfer journal information to a ledger.
Which of the following are external transactions? Purchasing inventory from suppliers Using supplies purchased last month Paying salaries to employees Borrowing money from the bank
Purchasing inventory from suppliers Paying salaries to employees Borrowing money from the bank
The ability to confirm past events and to predict future activities are components of which primary qualitative characteristic? Faithful representation Neutrality Relevant information Comple
Relevant information
Which of these line items appear on a balance sheet? (Check all that apply.) Multiple select question. Revenues Expenses Stockholders' Equity Assets Liabilities
Stockholders' Equity Assets Liabilities
The entry to record the issuance of $1 par value common stock to investors for $10 per share in cash results in an increase in Blank______. (Select all that apply.) Multiple select question. Stockholders' Equity Cash Liabilities Assets Retained Earnings Common Stock Additional Paid-in Capital
Stockholders' Equity Cash Assets Common Stock Additional Paid-in Capital
True or false: IFRS and US GAAP financial statements report similar items, but use different financial statement formatting. True false question. True OR False
TRUE
Which of the following is a characteristic of a sole proprietorship? Multiple choice question. Its income is taxed twice: once on the company's income tax return and again on the owner's individual income tax returns. The owner is personally responsible for the debts of the business, even if the debts are more than the owner has invested in the business. The owner has limited liability to their investment in the business.
The owner is personally responsible for the debts of the business, even if the debts are more than the owner has invested in the business.
Which of the following qualitative characteristics does the FASB use when deciding what financial information should be reported? (Check all that apply.) Multiple select question. Timeliness Understandability Political correctness Efficiency Verifiability Comparability
Timeliness Understandability Verifiability Comparability
Which of the following accounting cycle steps describes the process of recording journal entries? Multiple choice question. Transactions are recorded chronologically showing the accounts debited along with the corresponding accounts credited. Dollar amounts from entries are copied (posted) to the appropriate account in the ledger, so that account balances can be totaled. A list of accounts and ending balances are summarized, and the list is checked to be sure total debits equal total credits.
Transactions are recorded chronologically showing the accounts debited along with the corresponding accounts credited.
Creditors want to see that a company that owes them money has Blank______. assets that are greater than its liabilities liabilities that are greater than its assets borrowed money from many other people assets that are greater than its stockholders' equity
assets that are greater than its liabilities
Lox, Stock and Bagel, Inc., issued $100,000 of stock. It recorded the transaction by increasing Cash and decreasing Common Stock. As a result of this entry, the accounting equation will Blank______. be out of balance balance balance, but the transaction was recorded in the wrong accounts
be out of balance
If a company debits Cash and credits Notes Payable, it Blank______. repaid a loan issued stock made a mistake borrowed money
borrowed money
Which of the following are financing activities? (Select all that apply.) purchasing of equipment selling of equipment borrowing from creditors paying dividends selling stock to investors
borrowing from creditors paying dividends selling stock to investors
An owner gives $5,000 cash to his company in exchange for stock. This will increase the company's Blank______. (Check all that apply.) Multiple select question. cash total liabilities common stock total stockholders' equity net income retained earnings
cash common stock total stockholders' equity
Which of the following services may be provided by public accounting firms? (Check all that apply.) ethics consulting audit tax
consulting audit tax
Financing provided by owners is referred to as Blank______. treasury stock contributed capital noncurrent liabilities current liabilities
contributed capital
On September 1, ABC Company borrowed $50,000 with a 6% annual rate by issuing a 9-month note payable to XYZ National Bank. Given no previous adjusting entries have been recorded, the adjusting entry at December 31 would include a Blank______. debit to Interest expense of $750 debit to Interest expense of $3,000 debit to Interest expense of $1,000 debit to Interest expense of $2,250
debit to Interest expense of $1,000 50,000 *.06 *4/12= 1,000
The account(s) that is/are Blank______ is/are always listed first in a journal entry. credited increased decreased debited
debited
The closing entry of a sole proprietorship requires the revenues to be (BLANK) (debited/credited) and the Capital account to be (BLANK) (debited/credited).
debited, credited
L. Lyons started a business, called Lyons Share, by investing $4,000 for stock. Illustrate how to record the transaction in Lyons Share's T-accounts by completing the following sentence. The Cash account would be ***BLANK*** (debited/credited) on the ***BLANK***(left/right) side of the T-account and the Common Stock account would be ***BLANK***(debited/credited) on the ***BLANK*** (left/right) side of the T-account. (Enter one word per blank.)
debited; left credited; right
Shareholders' equity arises primarily from amounts invested by shareholders and amounts Blank______. borrowed from banks earned and retained by the corporation borrowed from investors received by customers
earned and retained by the corporation
(BLANK) is a term that refers to a code or moral system that provides criteria for evaluating right or wrong. (Enter one word per blank)
ethics
A(n) (BLANK) is a cost of doing business that is necessary to earn Blank______. Multiple choice question. expense; revenue liability; expenses dividend; revenue revenue; assets
expense; revenue
To help ensure the company's records are accurate, the board of directors should Blank______. 1.. also be in managerial positions within the company to ensure the company is operated efficiently and effectively 2. form a committee to oversee the integrity of the controls over the accounting records and assets of the company 3. personally perform the audit of the company rather than hire outside auditors since they are more familiar with the company
form a committee to oversee the integrity of the controls over the accounting records and assets of the company
The benefits of internal control procedures are that they Blank______. (Check all that apply.) improve the efficiency and effectiveness of operations protect against theft of assets decrease a firm's taxes, which increases its available cash enhance the reliability of accounting information
improve the efficiency and effectiveness of operations protect against theft of assets enhance the reliability of accounting information
When a company earns net income, its retained earnings Blank______. decrease are paid to stockholders are converted to cash increase
increase
After entering a transaction into the accounting equation, an increase in total assets can be accompanied by a(n) (increase/decrease) ***BLANK** *in total liabilities and/or (equity/assets) ***BLANK***. (Enter one word per blank.)
increase equity
Company X borrows $10,000 from a bank in exchange for a promissory note. The effect of this transaction on the accounting equation is to Blank______ by $10,000. (Check all that apply.) Multiple select question. decrease stockholders' equity decrease assets increase assets decrease liabilities increase liabilities increase stockholders' equity
increase assets increase liabilities
Pasta Disasta, Inc. issued 1,000 shares of the company's $1 par value stock to its owner for $2,000. The effect of this transaction on the accounting equation is to cause Common Stock to Blank______. decrease by $2,000 increase by $2,000 decrease by $1,000 increase by $1,000
increase by $1,000
Creditors expect to receive Blank______ from the money they lend. contributed capital dividends stock interest
interest
An event that affects the financial position of a company but does not include an exchange with a separate economic entity is a(n) Blank______ event. Multiple choice question. internal operating nonoperating external
internal
Corporations have Blank______. (Check all that apply.) limited liability for its stockholders unlimited liability continuity of life limited life
limited liability for its stockholders continuity of life
The notes to financial statements Blank______. (Check all that apply.) can be used instead of the financial statements for those who are not accountants provide supplemental information about the financial condition of a company are an integral part because the financial statements do not contain all the necessary details along with the financial statements provide a more complete picture of a company's financial health
provide supplemental information about the financial condition of a company are an integral part because the financial statements do not contain all the necessary details along with the financial statements provide a more complete picture of a company's financial health
An accountant who is employed by an accounting firm such as PricewaterhouseCoopers or Ernst & Young has a career in Blank______. public accounting private accounting certified management accounting
public accounting
Journals are used to Blank______. report the results of operations to stockholders let management know how much cash remains show the balances in individual accounts record transactions chronologically
record transactions chronologically
Qualitative characteristics of financial information require that, in order to be useful for decision making, information should possess the primary characteristics of Blank______. relevance and faithful representation cost and benefit neutrality and materiality materiality and consistency
relevance and faithful representation
Thermal, Inc. bought a new computer system for $50,000 cash. What is the effect of this purchase on the company's total assets? Total assets Blank______. increase remain the same decrease
remain the same
Expenses report the Blank______ during the accounting period. resources used to earn revenue net earnings amount sold cash paid to operate
resources used to earn revenue
Net income is equal to Blank______. Multiple choice question. assets minus liabilities revenues minus expenses the amount of cash that a company has on hand the amount of cash that owners have contributed to the business
revenues minus expenses
Net income equals total (BLANK) minus total (BLANK) . (Enter only one word per blank.)
revenues, expenses
Z Best, Inc. issued $1,000,000 of stock for cash. Z Best recorded the transaction by increasing cash and decreasing common stock and additional paid-in capital. As a result of this entry, Blank______. (Check all that apply.) assets are understated the accounting equation is out of balance liabilities are understated stockholders' equity is understated contributed capital is understated
the accounting equation is out of balance stockholders' equity is understated contributed capital is understated
Identify on which side of the Accounts Payable T-account the following amounts appear? Select all that are correct. decreases would be on the right side the ending balance would be on the right side the beginning balance would be on the left side increases would be on the right side the ending balance would be on the left side increases would be on the left side decreases would be on the left side the beginning balance would be on the right side
the ending balance would be on the right side increases would be on the right side decreases would be on the left side the beginning balance would be on the right side
An asset is initially recorded at Blank______. the total cost incurred to acquire it rate of return the historical cost plus anticipated profit
the total cost incurred to acquire it
Liberty, Inc., a US company, sold merchandise to Belle, a French company, for 10,000 euros. In Liberty's US financial statements, this sale should be reported in Blank______. euros either US dollars or euros old French francs US dollars
US dollars
Z Best, Inc. issued $1,000,000 of stock for cash. Z Best recorded the transaction by increasing cash and decreasing common stock and additional paid-in capital. As a result of this entry, Blank______. (Check all that apply.) assets are understated contributed capital is understated stockholders' equity is understated the accounting equation is out of balance liabilities are understated
contributed capital is understated stockholders' equity is understated the accounting equation is out of balance
Common forms of business organization include Blank______. (Check all that apply.) unlimited liability company taxable company corporation partnership sole proprietorship
corporation partnership sole proprietorship
A company purchased land in exchange for a $25,000, 10-year note payable. The increase in the Notes Payable account would be recorded with a Blank______. debitor credit debit creditar
credit
Brown Company purchased $900 of supplies on credit. Illustrate how to record the transaction to T-accounts by completing the following sentence. Accounts Payable would be ***BLANK***(debited,/credited) on the ***BLANK***(left/right) side of the T-account, and Supplies would be ***BLANK***(debited/credited) on the ***BLANK***(left/right) side of the T-account.
credited; right debited; left
A company received $5,000 cash when it issued stock certificates to shareholders. The increase in cash would be recorded with a Blank______ to the Cash account. debitor credit creditare debit
debit
CPA firms offer management consulting services to clients which include Blank______. (Check all that apply.) design and installation of accounting systems preparing income tax returns and the subsequent audit of the returns preparing financial statements and the subsequent audit financial advice
design and installation of accounting systems financial advice
The SEC Blank______. (Check all that apply.) determines the financial statements that public companies must provide to stockholders writes IFRS has created a code of ethics for all companies to follow oversees financial reporting by US public companies writes accounting rules for companies around the world
determines the financial statements that public companies must provide to stockholders oversees financial reporting by US public companies
Most investors hope to get Blank______ from their investments in a company's stock in addition to a higher price for the stock. dividends free product samples repayment interest
dividends
A number on the left side of a T-account means the account balance Blank______. either increased or decreased depending on the account increased decreased
either increased or decreased depending on the account
The benefits of internal control procedures are that they Blank______. (Check all that apply.) decrease a firm's taxes, which increases its available cash enhance the reliability of accounting information protect against theft of assets improve the efficiency and effectiveness of operations
enhance the reliability of accounting information protect against theft of assets improve the efficiency and effectiveness of operations
Borrowing from a bank is a Blank______ activity and causes Blank______ to increase. financing; liabilities investing; stockholders' equity financing; stockholders' equity investing; liabilities
financing; liabilities
Primary responsibility for the information in a company's financial statements lies with Blank______. the Public Company Accounting Oversight Board (PCAOB) independent auditors (CPAs) stockholders management the Securities and Exchange Commission (SEC)
management
Which of the many services is an independent CPA firm providing when it installs data processing and control systems? tax services assurance services management consulting audit
management consulting
Z Best, Inc. issued $1,000,000 of stock for cash. Z Best recorded the transaction by increasing cash and decreasing common stock and additional paid-in capital. As a result of this entry, Blank______. (Check all that apply.) the accounting equation is out of balance contributed capital is understated liabilities are understated assets are understated stockholders' equity is understated
the accounting equation is out of balance contributed capital is understated stockholders' equity is understated
