Accounting Chapters 1 - 3 & 13

All of the following are part of the FASB conceptual framework:

- Objectives - Elements - Recognition and measurement - Qualitative characteristics

Which of the statement(s) below define(s) an asset?

- Resources controlled by the business - An amount owned - Resources with expected future benefits

Johna's Plant Nursery Company pays the salaries of its two employees. How will this transaction affect the accounting equation?

- Salaries expense will be increased. - Equity will be decreased.

The correct definition of a balance sheet includes which of the following statements?

- The statement reports the financial position of a company at a point in time. - The statement reports assets, liabilities and equity at a point in time. - The statement reports the equality of the accounting equation at a point in time.

The three sections of the statement of cash flows includes all of the following:

- investing - financing - operating

When supplies are purchased on credit it means that:

- the business will pay for the supplies at a later time. - the Accounts Payable account will be increased. - a liability has been incurred.

Smith Company purchased $100 of supplies for her business and paid immediately. She would record this transaction in the accounting equation by which of the following?

Decrease Cash; increase Supplies.

From the following statements, select the one that describes the effect of dividends on equity.

Dividends cause equity to decrease.

Jack Pickle decided to start a small business as a corporation. His initial investment was $4,000 cash in exchange for common stock. Demonstrate how to record this transaction in the accounting equation.

Increase Cash by $4,000; Increase Common Stock by $4,000

Melton's Door Company pays rent on the building facilities of $5,000 on May 1. Show how to record this transaction in the accounting equation of Melton's Door Company.

Rent Expense will be increased.

Identify the correct definition of an asset:

Something of value that a business owns or controls

Which of the following statements below lists the rules of entering transactions into the accounting equation?

The accounting equation must always remain in balance so that assets always equal the sum of liabilities and equity.

Which of the following statements best represents the accounting equation?

The total of everything owned by a business must always equal the total of what the business owes to creditors and owners.

True or false: Dividends are resources paid to the stockholders.

True

Dividends cause a(n) _____ in equity and are recorded directly in the ______ account.

decrease; dividends

A company pays monthly office rent of $1,500 in cash. Demonstrate how to use the accounting equation to record the transaction by completing the following sentence: The company would increase _____ and _____ _____ in the accounting equation

expenses decrease assets

The revenue recognition principle states that revenue is recognized when:

goods or services are provided to customers

Jackson's Catering Company provided cookies worth $3,000 to the local college. The college paid immediately. Record this transaction in Jackson's accounting equation by:

increasing Cash; increasing Revenues

On 8/1, supplies costing $500 were purchased on credit. Record this transaction in the accounting equation by:

increasing Supplies, and increasing Accounts Payable

Russell's Consulting Services Company provided $1,000 of services to the local college and immediately collected $700, but the college wants to pay the rest next month. Record this transaction in the accounting equation for Russell's Consulting Service by:

increasing both Cash and Accounts Receivable; and increasing Revenues

Buying and selling of long-term assets such as land and equipment would be included in the _______ activities section of the Statement of Cash Flows.

investing

The principle which states that accounting information is based on actual cost is called the

measurement principle

Generally accepted accounting principles (GAAP) wants information to have:

relevance faithful representation

Artificial intelligence includes:

repetitive tasks