Accounting Chapter 1 and 2

Accumulated depreciation account correct

-account allows the original cost of the asset to remain in the plant asset account -accumulates the total depreciation taken on an asset since its purchase -is substracted from its plant asset on the balance sheet -is a contra account

Depreciation truths

-original cost for an asset minus any residual value & this amount is expensed over its useful life -is recognized at the end of an accounting period -is recorded as am adjusting entry -process of allocating the cost of an asset to the period the asset benefits

The F. Mercury Capital account has a credit balance of $37k before closing entries are made. If total revenues for the period are $55,200 total expenses are $39,800, and withdrawals are $9k, what is the ending balance in F. Mercury Capital account after all closing entries are made?

43,400

A depreciation adjustment would include a debit to the depreciation expense account and a credit to the accumulated depreciation account

A depreciation adjustment would include a debit to the DEPRECIATION EXPENSE account and a credit to the ACCUMULATED DEPRECIATION account

The income statement reports all the following except

Assets owned by a business

A financial statement providing information that helps users understand a company's financial status, and which lists the types and amounts of assets, liabilities, and equity of a specific date, is called

Balance Sheet

Marsha Bogswell is the owner of Bogswell Legal Services, Inc. Which accounting principle requires Marsha to keep her personal financial information separate from the financial information of Bogswell Legal Services, Inc.?

Business entity assumption

what is not included in net income

Cash

The accounting principle that requires accounting information to be based on actual cost and requires assets & services to be recorded initially at the cash equivalent amount given in exchange is the

Measure principle

When expenses exceed revenues, the resulting change in equity is called

Net Loss

Atkins Company collected $1750 as payment for the amount owed by a customer from services provided the prior month on credit. How does this transaction affect the accounting equation for Atkins?

One asset would increase $1750 and different asset would decrease $1750, causing no net change in the accounting equation

Jay's Limo services paid $300 cash to employees for work performed in the current period.

Salaries Expense 300 Cash 300

Wiley Consulting purchased $7,000 worth of supplies and paid cash immediately. Which of the following general journal entries will Wiley Consulting make to record this transaction?

Supplies 7,000 Cash 7,000

Purpose for Accumulated Depreciation

The account allows both the original cost of plant assets and total depreciation taken to be shown simultaneously

a report that lists a businesses' accounts and their balances, in which the total debit balances should equal the total credit balances, is called

Trial Balance

J. Brown Consulting paid $500 cash for utilities for the current month. Given the choices below, determine the general journal entry that J. Brown Consulting will make to record this transaction.

Utilities Expense 500 Cash 500

If a company receives $12,000 from the owner to establish a proprietorship, the effect on the accounting equation would be

assets increase $12,000 + equity increases $12,000

J. Smith withdrew $100 from Jay's Limo Services for personal use.

j. Smith w/d 100 Cash 100

The expense recognition principle, also called the matching principle

prescribes that a company record the expenses it incurred to generate the revenue reported

which of the following accounts would be considered a prepaid expense or prepaid asset account

supplies, prepaid rent, prepaid insurance

The account that is classified as a liability in a company's chart of accounts

unearned revenue