ACC 111 Financial Accounting

The journal entry to record a payment made in January for rent for the months of February and March would include:

a debit to Prepaid Rent and a credit to Cash.

The account numbers from the ledger are recorded in the Posting Reference column of the general journal:

after each amount is posted.

On the worksheet, the Balance Sheet columns should balance:

after the net income amount is added to the Balance Sheet Credit column.

All financial statements submitted to the SEC by publicly owned corporations must include an auditor's report prepared by

an independent certified public accountant.

The rent paid for future months is a(n):

asset.

Owner's equity is alternatively referred to as which of the following?

net worth

The following are all government agencies except the

AICPA.

The adjusted Accumulated Depreciation balance will appear within which of the following worksheet columns?

Balance Sheet Credit column

Identify which of the following parties would not be involved in maintaining internal controls.

Banks

An independent accountant who is licensed by the state and provides accounting services to the public for a fee is a

CPA

Which of the following is not a section of a worksheet?

Depreciation

GAAP are developed by what body?

FASB

Accounting is used to communicate financial information and therefore is called the "language of data".

False

Currently, generally accepted accounting principles are developed by the American Institute of Certified Public Accountants (AICPA).

False

In a sole proprietorship, the owner is NOT responsible for the debts of the business if the company is unable to pay

False

To become a Certified Bookkeeper a candidate must either pass a four-part exam or meet a work experience requirement.

False

What is the correct order in which to prepare the three financial statements?

Income Statement; Statement of Owner's Equity; Balance Sheet

Which of the following is NOT a service of public accounting firms?

Investment services

Which of the following statements regarding the fundamental accounting equation is accurate?

It is in balance after every transaction.

Owners and managers need financial information in order to

Make decisions

If $3,450 of insurance is purchased for the subsequent six months, what would be the credited account and amount within the necessary adjusting entry after the first month of insurance coverage has expired?

Prepaid Insurance for $575

The government agency that has final authority over the financial reporting of publicly owned corporations is the

Securities and Exchange Commission.

Which of the following is a true statement in regards to the International Accounting Standards Board?

The IASB deals with issues caused by the lack of uniform accounting principles existing in different countries

Which of the following statements is CORRECT? 1. The general ledger contains the accounts that are used to prepare the financial statements. 2. Some companies use the general ledger instead of a general journal. 3. When entries are posted from the general journal to the general ledger, the account number is written in the Posting Reference column in the general ledger. 4. When entries are posted from the general journal to the general ledger, the page number is written in the Posting Reference column in the general journal.

The general ledger contains the accounts that are used to prepare the financial statements.

What is the purpose of the adjusting entry related to supplies?

To account for the supplies that were used during the period.

A business partnership consists of two or more owners.

True

Accountants provide financial information to various parties so they can make business decisions.

True

Public accounting firms provide three major types of services: auditing, tax accounting, and management advisory services.

True

The Securities and Exchange Commission (SEC) requires that publicly owned corporations submit financial statements to it at least one time each year.

True

The purpose of accounting is to provide financial information about a business.

True

On December 1, the Accounts Receivable account had a $22,000 debit balance. During December the business earned $10,500 in revenue on account and collected $13,200 from its charge-account customers. After posting these transaction, the balance in the Accounts Receivable account on December 31 is

a $19,300 debit balance.

Identify the form of business that is considered a separate legal entity.

a corporation

The separate entity assumption dictates that which of the following should be kept separate?

a firm's financial records and an owner's personal financial records

The balance sheet shows:

all revenues and expenses.

The review of financial statements to assess their fairness and adherence to GAAP is

auditing

The Sarbanes-Oxley Act includes rules on

auditor rotation.

Owners are not personally responsible for the debts of the business if the form of business organization is a

corporation.

The form of a business organization that is not affected by the withdrawal or death of an owner and can continue indefinitely is the

corporation.

Which of the following is NOT a task undertaken by the accountant within an organization?

create generally accepted accounting principles upon which the accounting system is based

Identify the entry below that records the payment of an amount owed as a result of the purchase of equipment two months earlier.

debit Accounts Payable; credit Cash

On a worksheet, the adjusting entry to account for depreciation of equipment consists of a:

debit to Depreciation Expense and a credit to Accumulated Depreciation.

The three-line heading at the top of a financial statement displays what information on the second line?

name of the financial statement

Identify the advantages of forming a business as an S Corporation.

owners avoid double taxation and owners have limited liability

Which of the following accurately describes tax compliance?

preparing tax returns and the audit of those returns by the IRS

Which of these accounts would appear on a firm's income statement?

revenues and expenses

When a general journal entry is created, which of the following is entered on the final line?

the description of the transaction

Centrum Services purchased $4,400 worth of equipment. The equipment has an estimated useful life of seven years and a salvage value of $200. Using the straight-line method, the depreciation for the first month is:

$50.

Identify the account below that is classified as an asset account and would therefore appear on the left side of the accounting equation.

Accounts Receivable.

Public accountants work on the staff of federal, state, or local governmental units.

False

The SEC uses financial information to determine a company's tax base. Group starts

False

When a business is organized as a sole proprietorship, the owner should combine his/her personal financial information with the business financial information.

False

Which of the following is NOT a goal of an accounting system?

to interpret the relative success of a business through the examination of data about its financial affairs

If an adjusting entry relating to prepaid insurance is not entered onto the worksheet, assets on the balance sheet:

will be overstated.

After all account balances have been transferred from the Adjusted Trial Balance section of the worksheet to the financial statement sections, the Income Statement section of the worksheet includes the following totals. The Credit column total is $120,000 and the total of the Debit column is $80,000. The Income Statement section of the worksheet:

would be completed by entering $40,000 in the Debit column with the words "Net Income" in the Account Name column.

Red Company purchased $900 of Prepaid Advertising on September 1, 20X1. The advertising will run for the next three months. What adjusting entry should be recorded on September 30, 20X1 to properly account for this advertising?

Debit Advertising Expense for $300, credit Prepaid Advertising for $300

A company purchased equipment costing $15,000. They paid $1,000 right away and agreed to pay the balance in 30 days, the journal entry to record the purchase of equipment would include:

a debit to Equipment for $15,000, a credit to Cash for $1,000 and a credit to Accounts Payable for $14,000.

The balance sheet shows each of the following except the:

net income of the business.

If the Supplies account lists $600 in the Trial Balance Debit column of a worksheet, and lists $480 in the Adjustments Credit column of the worksheet, what will appear within the Adjusted Trail Balance columns for the Supplies account?

$120 in the Adjusted Trial Balance Debit column

If the beginning capital balance for William's Consulting Service is $23,000, net income is $4,000, and the ending capital balance is $20,000, what were the withdrawals for the period?

$7,000

Publications Unlimited purchased machinery for $20,000 on March 1, 20X1. The machinery has an estimated useful life of 10 years and an estimated salvage value of $2,000. As of March 31, 20X1, after the firm has recorded the adjusting entry for depreciation of this machinery, what is the book value of the machinery?

$19,850

On February 9, Teddy Accounting Professionals purchased $400 of supplies on account. The journal entry to record this transaction is:

Accounts payable - Debit $400 Supplies - Credit $400

The Financial Accounting Standards Board has the authority to develop generally accepted accounting principles. Choose the option below that contains the steps used by the FASB in developing GAAP.

steps include: issuing a discussion memorandum, issuing an exposure draft, and issuing a statement of principle.