Practice 1

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When working with T​ accounts, an important rule to remember​ is: the debit side of a T account is on the right−hand side of the T account for assets and expenses. when an account is​ debited, an amount is entered on the right−hand side on the T account. to credit an account means to enter an amount on the right−hand side of the T account. an increase to accounts payable will be recorded as a debit.

to credit an account means to enter an amount on the right−hand side of the T account

As a practical matter most companies prepare financial​ statements: after every transaction. only when both the balance sheet and income statement are affected. at the end of the accounting period. at the close of every business day.

at the end of the accounting period

Liabilities​ are: debts payable to outsiders called creditors a form of paid−in capital future economic benefits to which a company is entitled the outflow of resources that decrease common stock

debts payable to outsiders called creditors

The trial balance is used to prepare​ the: statement of retained earnings only. income statement only. balance sheet only. all of the above

All of the above

Examples of liabilities​ include: investments and note payable. accounts payable and dividends. accounts payable and common stock. accounts payable and note payable.

accounts payable and note payable.

Interest​ payable, income tax payable and salary payable are all examples​ of: accrued liabilities expenses of future periods. prepaid expenses. retained earnings.

accrued liabilities

When an adjustment is made for prepaid​ rent: an asset decreases and an expense increases. one asset increases and another decreases. an asset increases and an expense decreases. a liability decreases and an expense decreases

an asset decreases and an expense increases

A company started the year with​ $300 of supplies. During the year the company purchased additional supplies costing​ $1800. There were​ $1000 of supplies on hand at the end of the year. An adjusted trial​ balance, prepared at the end of the accounting​ period, will show the following balance in Supplies​ Expense: (300 + 1800 - 1000) ​$1800. ​$1000. ​$700. ​$1100

$1100

On December 1 of the current​ year, Prepaid Rent was debited​ $10,800 for three months of​ rent, to cover the period December 1 to February 28. The amount of the adjusting entry on December 31​ is: ($10,800 / 3) ​$0. ​$7200. ​$3600. ​$10,800

$3600

Which of the following is CORRECT regarding​ liquidity? A balance sheet lists assets and liabilities in the order of relative liquidity. Liquidity measures how quickly revenue can be earned. Accounts receivable is the most liquid asset. Equipment is a highly liquid asset

A balance sheet lists assets and liabilities in the order of relative liquidity

The entry to record the purchase of supplies on account includes a credit​ to: Cash. Accounts Payable. Supplies Expense. Supplies.

Accounts Payable

Which accounts are increased by​ debits? Salaries Expense and Common Stock. Accounts Payable and Service Revenue. Accounts Receivable and Utilities Expense. Cash and Accounts Payable

Accounts Receivable and Utilities Expense

Accounting: is often called the language of business. processes data into reports and communicates the data to decision makers. measures business activities. is all of the above.

All of the above

Decision makers who use accounting information​ include: the Securities and Exchange Commission. creditors. the Internal Revenue Service. all of the above.

All of the above

The accounting equation can be stated​ as: Assets​ + Stockholders' Equity​ = Liabilities. Assets minus−Liabilities ​= Stockholders' Equity. Assets minus− ​Stockholders' Equity​ + Liabilities​ = Zero. Assets​ = Liabilities minus− ​Stockholders' Equity.

Assets - Liabilities = Stockholder's Equity

All of the following accounts are closed EXCEPT​ for: Utilities Expense. Dividends. Cash. Service Revenue.

Cash

Which of the following accounts are considered permanent​ accounts? Accounts Payable and Service Revenue Land and Accounts Receivable Common Stock and Salary Expense Inventory and Cost of Goods Sold

Land and Accounts Receivable

On a classified balance​ sheet: Dividends is a current asset Accounts Receivable is a current liability Notes Payable due in one year is a current liability Salaries Payable is a longminus−term liability

Notes Payable due in one year is a current liability

All of the following accounts would be considered assets EXCEPT​ for: Retained Earnings. Notes Receivable. Cash. Prepaid Expenses.

Retained Earnings

Which of the following​ statements, regarding the rules of debits and​ credits, is​ CORRECT? An asset is increased by a credit. A liability is increased by a debit. Revenue is increased by a credit. Dividends are decreased by debits

Revenue is increased by a credit

Which accounts are used in the adjusting entry to record salaries owed to​ employees, but not paid until the next accounting​ period? Salaries Payable and Deferred Salaries Expense Deferred Salaries Payable and Salaries Receivable Salaries Expense and Salaries Payable Unearned Salaries and Salaries Payable

Salaries Expense and Salaries Payable

The left side of a T− account is always​ the: increase side. debit side. credit side. decrease side.

debt side

The net income or loss is calculated on which financial​ statement? balance sheet income statement dividends statement statement of retained earnings

income statement

Every journal​ entry: must increase at least one account and decrease at least one account. affects both an income statement account and a balance sheet account. must debit at least one account and credit at least one account. is recorded in either the journal or the ledger.

must debit at least one account and credit at least one account

Closing​ entries: bring all account balances to zero. prepare the accounts for the next​ period's transactions. are made at the beginning of each accounting period. are the same as adjusting entries

prepare the accounts for the next​ period's transactions

Accounts that relate to a limited period of time are​ called: permanent accounts. asset and liability accounts. temporary accounts. real accounts

temporary accounts

The normal balance of an expense account is a​ ________ because expenses decrease​ ________. ​debit; retained earnings ​debit; expenses ​debit; assets ​credit; retained earnings

​debit; retained earnings

The major types of transactions that affect retained earnings​ are: revenues and liabilities. assets and liabilities. paidminus−in capital and common stock. ​revenues, expenses, and dividends

​revenues, expenses, and dividends

At the end of the current accounting​ period, account balances were as​ follows: Cash,​ $29,000; Accounts​ Receivable, $44,000; Common​ Stock, $18,000; Retained​ Earnings, $12,000. Liabilities for the period​ were: ​$43,000 ​$73,000 ​$55,000 ​$61,000

$43,000

The trial balance is used to determine​ if: total debits of the income statement accounts equal the total credits of the income statement accounts. total assets equal total liabilities. total debits of all the accounts equal total credits of all the accounts. total debits of the balance sheet accounts equal the total credits of the balance sheet accounts

total debits of all the accounts equal total credits of all the accounts

Which of the following lists the accounts in order of​ liquidity? ​Cash, Accounts​ Receivable, Inventory, Furniture ​Furniture, Cash, Accounts​ Receivable, Inventory ​Furniture, Cash,​ Inventory, Accounts Receivable ​Cash, Inventory, Accounts​ Receivable, Furniture

​Cash, Accounts​ Receivable, Inventory, Furniture

Kincaid​ Company's Retained Earnings balance on January 1 was​ $7000. During the current​ year, Kincaid earned​ $3500 in revenues and incurred​ $3900 in expenses. Kincaid declared and paid​ $2500 in​ dividends, all in cash. After the closing entries are​ made, Kincaid's Retained Earnings balance on December 31 will​ be: ($7000 + $3500 - $3900 - $2500) ​$8000 ​$6600 ​$4100 ​$7000

$4100

On May​ 10, a business collected​ $3300 on account. What journal entry is needed on that​ date? Debit Cash for​ $3300 and credit Revenue for​ $3300. Debit Accounts Payable for​ $3300 and credit Revenue for​ $3300. Debit Cash for​ $3300 and credit Accounts Receivable for​ $3300. Debit Accounts Receivable for​ $3300 and credit Revenue for​ $3300

Debit Cash for​ $3300 and credit Accounts Receivable for​ $3300.

A business received the current​ month's utility bill for​ $1625, and immediately paid it. Which journal entry is​ prepared? Debit Accounts Payable for​ $1625 and credit Cash for​ $1625. Debit Utilities Expense for​ $1625 and credit Cash for​ $1625. Debit Utilities Payable for​ $1625 and credit Cash for​ $1625. Debit Operating Expense for​ $1625 and credit Accounts Payable for​ $1625.

Debit Utilities Expense for​ $1625 and credit Cash for​ $1625

The two types of accounting​ are: financial and management. profit and nonprofit. internal and external. bookkeeping and decisionminus−oriented.

Financial and management

A doctor performed surgery in March and did not receive cash from the patient until July. Under accrual​ accounting, the doctor recognizes​ revenue: in March. in July. in either March or July. at a time that cannot be determined from the facts

In March

Posting​ is: copying the information from the ledger to the financial statements. entering the data into the journal. copying the information from the journal to the ledger. copying the information from the journal to the trial balance.

copying the information from the journal to the ledger

The entry to close expense​ account(s) includes​ a: credit to the expense accounts. credit to Retained Earnings. debit to the expense accounts. debit to the revenue accounts

credit to the expense accounts

An important rule of debits and credits​ is: debits decrease asset accounts. debits increase liability accounts. credits increase expense accounts. credits increase revenue accounts

credits increase revenue accounts

A business paid​ $1900 on account. The journal entry​ would: debit Accounts Receivable for​ $1900 and credit Revenue for​ $1900. debit Accounts Payable for​ $1900 and credit Cash for​ $1900. debit Cash for​ $1900 and credit Accounts Payable for​ $1900. debit Cash for​ $1900 and credit Retained Earnings for​ $1900

debit Accounts Payable for​ $1900 and credit Cash for​ $1900

On December​ 1, 2015,​ Carrie's Day Care receives​ $1500 in advance for an agreement to care for​ Susan's children for the months of​ December, January, and February.​ Carrie's Day Care will make an adjusting entry on December​ 31, 2015​ to: ($1500 / 3) credit Revenue for​ $1000. debit Unearned Revenue for​ $500. credit Revenue for​ $1500. credit Prepaid Revenue for​ $1000

debit Unearned Revenue for​ $500

A company started the year with​ $300 of supplies. During the​ year, the company purchased an additional​ $1200 of supplies. There were​ $500 of supplies on hand at the end of the year. An adjusting entry prepared at the end of the accounting period includes​ a: (300 + 1200 - 500) debit to Supplies for​ $900. debit to Supplies for​ $500. debit to Supplies Expense for​ $200. debit to Supplies Expense for​ $1000

debit to Supplies Expense for​ $1000

If adjusting entries are not​ prepared, which financial statements are​ misstated? balance sheet only income statement only income​ statement, balance sheet and statement of retained earnings statement of retained earnings only

income​ statement, balance sheet and statement of retained earnings

In what order are the financial statements generally​ prepared? balance​ sheet, income​ statement, and statement of retained earnings income​ statement, balance​ sheet, and statement of retained earnings statement of retained​ earnings, balance​ sheet, and income statement income​ statement, statement of retained​ earnings, and balance sheet

income​ statement, statement of retained​ earnings, and balance sheet

The assets of a​ company: represent economic resources that are expected to produce a future benefit. must equal the liabilities of the company. include​ property, plant, and equipment and accounts payable. include shortminus−term investments and notes payable.

represent economic resources that are expected to produce a future benefit

The first step in recording a transaction in the journal​ is: specifying each account affected by the transaction and classifying the account by type. determining whether each account is increased or decreased by the transaction. entering the debit side of the journal entry on the left margin and the credit​ side, which is indented to the right. copying the information from the journal to the ledger.

specifying each account affected by the transaction and classifying the account by type

After the closing entries are prepared and​ posted: the Retained Earnings account will have the correct ending balance. all liability accounts will have a zero balance. all asset accounts will have a zero balance. the temporary accounts will have debit balances

the Retained Earnings account will have the correct ending balance

Assume the balance in the Retained Earnings account at January​ 1, 2017 is​ zero, and no dividends are declared in 2017. If a debit balance of​ $6000 exists in Retained Earnings after closing out revenues and expenses at the end of​ 2017, this​ indicates: the company had a net loss of​ $6000. an increase in cash of​ $6000. a decrease in cash of​ $6000. that the company had net income of​ $6000

the company had a net loss of​ $6000


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