.

Assume that in the current year a company performed $100 of services for a client but only $30 was collected in cash at the time the services were performed. This transaction would be recorded in the horizontal model with:

+30 Cash and +70 Accounts Receivable in the Assets column and +100 Service Revenue in the Revenues column.

Assume that in the current year a company paid $50 in cash for advertising services that were availed in a prior period. This amount was recorded as an expense at the time of availing the services. This transaction would be recorded in the horizontal model with:

-50 Cash in the Assets column and -50 Accounts Payable in the Liabilities column.

List the correct (normal) order of the five questions of transaction analysis methodology shown below: 1 What accounts are affected? 2 How are the accounts affected? 3 Does my analysis make sense? 4 What's going on? 5 Does the balance sheet balance?

4, 1, 2, 5, 3

Identify a correct statement regarding the usage of plus or minus signs along with the dollar amounts in the horizontal model of financial statements.

A minus sign for expenses indicates that net income is reduced because expenses are higher.

Identify the statements that are correct about reclassification year-end adjustments.

A reclassification year-end adjustment is required when cash for a revenue has been received but the revenue has not been recognized yet. A reclassification year-end adjustment is required when cash has been paid for an expense but the expense has not been incurred yet.

Which statement is true regarding the closing process?

All expense and loss accounts, as well as dividends, are credited for amounts equal to their year-end debit balances All revenue and gain accounts are debited for amounts equal to their year-end credit balances.

Assets = Liabilities + Paid-in capital + Retained earnings (beginning/ending) + (Revenues/Expenses) - (Revenues/Expenses)

Beginning Revenue Expenses

When a bank (debits/credits) your account for the interest earned during the month, what it is really communicating is that it is (increasing/decreasing) the (asset/liability) recorded in its accounting records to represent your account from its perspective.

Blank 1: credits Blank 2: increasing Blank 3: liability

Merchants who send you a notice that they have "charged" your account are really communicating that they have (debited/credited) your account in their accounting records to (increase/decrease) your account balance, which is shown as a(n) (asset/liability) from their perspective, since you owe them money

Blank 1: debited Blank 2: increase Blank 3: asset or assets

When a bank (debits/credits) your account for the service charges incurred during the month, what it is really communicating is that it is (increasing/decreasing) the (asset/liability) recorded in its accounting records to represent your account from its perspective.

Blank 1: debits Blank 2: decreasing Blank 3: liability

Accounts are summarized in financial (statements/entities/transactions), whereas (statements/entities/transactions) are summarized in accounts.

Blank 1: statements Blank 2: transactions

The name(s) and amount(s) of any accounts to be (debited/credited) are listed first and shown to the left.

Debited

Which accounts would be closed during the year-end closing process?

Dividends Rent Expense Sales Loss on Sale of Buildings Wages Expense

Which statements are true in regard to the five questions of transaction analysis methodology?

Does the balance sheet balance?" is essentially the same question as "Do the debits equal the credits?" "What accounts are affected?" is where you identify the specific accounts affected by the transaction. "Does my analysis make sense?" is a feedback loop to ensure that the entry you recorded is consistent with your understanding of "What's going on?"

The abbreviation for debit is and the abbreviation for credit is .

Dr Cr

Which entry can be recorded as an accrual adjusting entry?

Dr. Interest Receivable 200 Cr. Interest Income 200

Which entry can be recorded as a reclassification adjusting entry? Multiple choice question. Dr. Supplies 300 Cr. Supplies Expense 300 Dr. Supplies Expense 300 Cr. Cash 300 Dr. Supplies 300 Cr. Cash 300 Dr. Supplies Expense 300 Cr. Supplies Payable 300

Dr. Supplies 300 Cr. Supplies Expense 300

Which entry can be recorded as an accrual adjusting entry?

Dr. Wages Expense 100 Cr. Wages Payable 100

Under accrual accounting, what circumstances would likely prompt a year-end adjustment?

Employees worked during December but were not paid until early January.

On which side of a balance sheet would these normal account balances be posted?

Expenses on the debit side and revenues on the credit side

Which group of accounts would be closed in the year-end closing process?

Insurance Expense, Service Revenue, Loss on Sale of Equipment, and Sales

Which group of accounts would all be closed in the year-end closing process?

Interest Income, Supplies Expense, Dividends, and Gain on Sale of Land

Which of these statements accurately describe a chart of accounts?

It is usually sequenced with assets listed first, followed by liabilities, stockholders' equity, revenues, and expenses. It serves as an index to a company's ledger.

A chart of accounts serves as an index to a company's (journal/ledger/income statement/transactions).

Ledger

In bookkeeping and accounting, debit means , and credit means .

Left right

Which statements regarding the closing process are true?

Losses and dividends are closed in the same way that expenses are closed. All expense accounts are closed by crediting each account for an amount equal to the adjusted year-end debit balance. All revenue accounts are closed by debiting each account for an amount equal to the adjusted year-end credit balance.

Which statements regarding the closing process are true?

Losses and dividends are closed in the same way that expenses are closed. All revenue accounts are closed by debiting each account for an amount equal to the adjusted year-end credit balance. All expense accounts are closed by crediting each account for an amount equal to the adjusted year-end debit balance.

Which of these are source documents that often support journal entries?

Purchase order Invoice from a supplier Check stub

an expense amount means that net income is (reduced/increased) because of expenses being (lower/higher).

Reduced Higher

Which transactions would require a reclassification adjusting entry? (Check all that apply).

Rent received in advance Prepaid insurance

Assets = Liabilities + Paid-in capital + Blank______.

Retained earnings (beginning of period) + Revenues (during the period) - Expenses (during the period)

Which accounts would be closed during the year-end closing process?

Service Revenue Gain on Sale of Land Rent Expense

Which statements are true of revenue accounts?

They decrease with debit entries. They increase with credit entries. They normally have a credit balance.

Which statements are true of stockholders' equity accounts?

They normally have a credit balance. They increase with credit entries. They decrease with debit entries.

Under accrual accounting, year-end adjustments are made for what reasons?

To account for over- and under-recorded transactions at the end of the year To ensure that all expenses are reported in the year in which they occurred

Under accrual accounting, what circumstances would likely prompt a year-end adjustment?

To ensure that all expenses are reported in the year in which they occurred To account for over- and under-recorded transactions at the end of the year

True or false: The key to using the horizontal model is to keep the balance sheet in balance.

True

A(n) (accrual/reclassification) period-end adjustment is required when an expense has been incurred but not yet paid in cash.

accrual

Normal account balances Blank______.

are on the debit side for assets and on the credit side for liability and stockholders' equity accounts

Transactions Blank______.

are summarized in accounts, and accounts are further summarized in financial statements provide the raw data that ends up being analyzed in financial statements

If debits equal credits, what will be shown on the balance sheet?

assets will equal the sum of liabilities and stockholders' equity.

When a firm earns revenue prior to the end of the current fiscal period but has not yet received the associated revenue, there occurs a Blank______.

cash lag

When a firm receives cash prior to the end of the current fiscal period but has not yet earned all the associated revenue, there occurs a Blank______.

cash lead

When a firm receives cash prior to the end of the current fiscal period but has not yet earned all the associated revenue, there occurs a Blank______. Multiple choice question. cash lag cash outflow cash lead cash accrual

cash lead

In bookkeeping and accounting, debit means left and means .

credit Right

Merchants who send you a notice that they have "charged" your account are really communicating that they have:

debited your account to increase your account balance, which is shown as an asset (accounts receivable) in their accounting records.

Credit entries:

decrease asset accounts and increase liability and stockholders' equity accounts.

When a bank debits your account for the service charges incurred during the month, what the bank is really communicating is that the bank is:

decreasing your account balance, which is shown as a liability from the bank's perspective.

In period-end adjustment entries, Blank______.

either the debit or the credit affects the income statement

Although revenues and expenses are reported on the income statement, they also:

impact stockholders' equity on the balance sheet.

When using the horizontal model for a transaction that affects both the balance sheet and the income statement, the balance sheet will balance when the Blank______.

income statement effect on stockholders' equity is considered

Debit entries:

increase asset accounts and decrease liability and stockholders' equity accounts.

debit entries

increase expense accounts and decrease revenue accounts

When a bank credits your account for the interest earned during the month, what it is really communicating is that it is:

increasing your account balance, which is shown as a liability from its perspective.

Transactions are initially recorded in a (journal/ledger/chart of accounts).

journal

After transactions have been recorded in a journal, they are posted to a (roster/ledger/log).

ledger

The report format of the balance sheet Blank______.

presents assets above liabilities and stockholders' equity items

The account format of the balance sheet:

presents assets on the left and liabilities and stockholders' equity items on the right.

A(n) (accrual/reclassification) period-end adjustment is required when the cash related to a revenue has been received but the revenue has not yet been earned.

reclassification

Period-end adjustment entries

result in recording expenses in the period during which they were incurred. affect both the balance sheet and the income statement.

In a balance sheet, net income from the income statement is added to the beginning balance of __.

retained earnings in the statement of changes in retained earnings.

A chart of accounts:

serves as an index to a company's ledger.

An invoice from a supplier, a copy of a customer's credit card purchase receipt, and a check stub are examples of Blank______.

source documents

If debits equal credits, then:

the company's balance sheet equation will be in balance.