Accounting

An adjusting journal entry to record an accrued expense would necessarily involve a ____________ to an expense account.

Debit

The method wherein prepaid expenses are initially recorded into the expense account is called the ____________ approach.

Income statement

Amounts in the adjusted trial balance columns of the worksheet are extended to the ____________, ____________ or ____________columns of the work sheet.

Income statement, retained earnings, balance sheet

Rent

Which of these items would be accounted for as an expense?

The ____________ account is closed directly to retained earnings.

income summary

The ____________ account is used only in closing, and summarizes the net income or net loss of a business.

income summary

____________ assets usually follow property, plant, and equipment on a classified balance sheet.

intangible

For purposes of measuring business income, the life of a business is:

Divided into discrete accounting periods.

Revenues-Expenses=

Income

Objective, Verifiable

The historical cost principle holds that accounting valuations be tied to ____________ and ____________ past transactions.

Accounts Receivable 500/Service Revenue 500

The proper journal entry to record Ransom Company's billing of clients for $500 of services rendered is: Cash 500 Accounts Receivable 500 Accounts Receivable 500 Capital Stock 500 Accounts Receivable 500 Service Revenue 500 Cash 500 Service Revenue 500

Purchase of land from the proceeds of a bank loan

Which of the following transactions would have no impact on stockholders' equity? Purchase of land from the proceeds of a bank loan. Dividends to stockholders. Net loss. Investments of cash by stockholders.

Sales

Which of the following would not be included on a balance sheet? Accounts receivable. Accounts payable. Sales. Cash.

Working capital is computed by subtracting ____________ from ____________.

current liabilities, current assets

The appropriate journal entry to record equipment depreciation expense would consist of a debit to Depreciation Expense and a credit to which of the following accounts?

Accumulated Depreciation: Equipment

Financial statements may be prepared directly from the ____________.

Adjusted trial balance

Accounting equation

Assets=Liabilities+Owner's Equity or Owner's Equity=Assets-Liabilities

Under the ____________ basis of accounting, revenues are recorded in the period of receipt and expenses in the period of payment. This method is generally regarded as being inferior to the ____________ basis of accounting.

Cash, accrual

The Accumulated Depreciation account is termed a ____________ asset.

Contra

At the end of the current accounting period, Johnson Company failed to record utilities consumed during the period. Johnson will be billed for the utilities during the next accounting period. As a result, current period assets, liabilities, equity, and income, respectively, are:

Correct, understated, overstated, overstated

An Overstatement of Equity

Failure to record the receipt of a utility bill for services already received will result in: An overstatement of assets. An overstatement of liabilities. An overstatement of equity. An understatement of assets.

An accounting year that covers a period of time other than January 1 through December 31 is typically referred to as a ____________ year.

Fiscal

The 4 Core Financial Statements

Income Statement, Balance Sheet, Statement of Cash Flows, Statement of Retained Earnings

On November 1, 20X1, Limit Company purchased a one-year insurance policy for $12,000. Limit Company debited Cash and credited Prepaid Insurance for $12,000. At the end of December, 20X1, $2,000 of insurance had expired. The journal entry to properly state all accounts involved on December 31, 20X1, would be:

Insurance Expense 2,000 Prepaid Insurance 22,000 Cash 24,000

Land 5,000/Capital Stock 5,000

Lynn Lipincott invested land valued at $5,000 in her business. This transaction would be recorded by: Cash 5,000 Capital Stock 5,000 Land 5,000 Capital Stock 5,000 Land 5,000 Service Revenue 5,000 Capital Stock 5,000 Land 5,000

The ____________ holds that expenses should be recorded in the same time period as the revenues they helped to produce.

Matching principle

The reported amount for an asset, less its accumulated depreciation, is frequently referred to as ____________ .

Net book values

Assets and Expenses

Of the following account types, which would be increased by a debit? Liabilities and expenses. Assets and equity. Assets and expenses. Equity and revenues.

The ____________ is paramount to income measurement, and holds that an organization's life can be divided into discrete measurement intervals.

Periodicity assumption

____________ are goods and services purchased for future consumption and paid for in advance.

Prepaid expenses

Auditing, Income Tax, Consulting

Public accounting firms perform numerous services including ____________, ____________, and ____________.

Accrual basis revenue is generally recognized at the time services are ____________ or when goods are ____________ and ____________ to a customer.

Rendered, sold, delivered

Net Income

Retained earnings will change over time because of several factors. Which of the following factors would explain an increase in retained earnings?

Under the the income statement approach to adjusting entries, the receipt of $5,000 of unearned revenue would be recorded by debiting Cash. What account should be credited?

Revenue

Adjusting entries at the end of an accounting period would not be required for which of the following

Revenue that has been earned and recorded in the accounting records.

Blankenship Company pays its employees every Friday for work rendered that week. The payroll is typically $10,000 per week. Blankenship's year-end occurred on Wednesday, at which time a correct adjusting entry was recorded. On the following Friday, which of the following payroll journal entries should be recorded?

Salary Expense 4,000 Salary Payable 6,000 Cash 10,000

Blankenship Company pays its employees every Friday for work rendered that week. The payroll is typically $10,000 per week. Which of the following journal entries would Blankenship ordinarily record on the Friday payday?

Salary Expense 10,000 Cash 10,000

Blankenship Company pays its employees every Friday for work rendered that week. The payroll is typically $10,000 per week. What journal entry would be recorded (on Wednesday) if the end of the accounting period occurred on a Wednesday?

Salary Expense 6,000 Salary Payable 6,000

Simmons Company received and recorded a $5,000 payment for services to be rendered in the future. If the income statement approach to adjusting entries is used, the appropriate adjusting entry at the end of the accounting period for $3,000 of revenue not yet earned would be:

Service Revenue 3,000 Unearned Service Revenue 3,000

Auditing

The accounting profession can be divided into three major categories; specifically, the practice of public accounting, private accounting, and governmental accounting. A somewhat unique and important service of public accountants is:

Transaction, source document, journal entry, ledger account, trial balance.

The basic sequence in the accounting process can best be described as: Transaction, journal entry, source document, ledger account, trial balance. Source document, transaction, ledger account, journal entry, trial balance. Transaction, source document, journal entry, trial balance, ledger account. Transaction, source document, journal entry, ledger account, trial balance.

Balance Sheet, Income Statement, Statement of Cash Flows, Statement of Retained Earnings

The four primary financial statements are the ____________ , ____________ , ____________ , and ____________.

Debit

The nature of an action to an account to indicate an increase (assets, expenses, and dividends) or decrease (liabilities, equity, and revenue); usually left-justified in an entry

Credit

The nature of an action to an account to indicate an increase (liabilities, equity, and revenue) or decrease (assets, expenses, and dividends); usually right-justified in an entry

FASB or Financial Accounting Standards Board

The private sector agency that currently oversees external financial reporting is the ____________.

Dividends 1,000/Cash 1,000

The proper journal entry to record $1,000 of Dividends paid by Myer's Corporation is: Dividends 1,000 Cash 1,000 Accounts Payable 1,000 Cash 1,000 Dividends Expense 1,000 Cash 1,000 Dividends Expense 1,000 Service Revenue 1,000

Assets, Liabilities, Owners Equity

The shortened form of the accounting equation is ____________ equals ____________ plus ____________.

Provides a listing of the balance of each account in active use

The trial balance: Is a formal financial statement. Is used to prove that there are no errors in the journal or ledger. Provides a listing of every account in the chart of accounts. Provides a listing of the balance of each account in active use.

Accountants downplay the economic concept of profit and employ a more objective ____________ in computing net income.

Transaction approach

____________ revenue represents future revenue that has been collected but not yet earned, whereas ____________ revenues have been earned but not yet received.

Unearned, accrued

Posting only the debit portion of a particular journal entry.

Which of the following errors will be disclosed in the preparation of a trial balance? Recording transactions in the wrong account. Duplication of a transaction in the accounting records. Posting only the debit portion of a particular journal entry. Recording the wrong amount for a transaction to both the account debited and the account credited.

The Historical-Cost Principle, The value is tied to objective and verifiable past transactions.

Wilson Company owns land that cost $100,000. If a "quick sale" of the land was necessary to generate cash, the company feels it would receive only $80,000. The company continues to report the asset on the balance sheet at $100,000. Which of the following concepts justifies this?

The ____________ is a large columnar form that assists in the preparation of an entity's financial statements.

Worksheet

Managerial

____________ accounting involves reporting results of operating activity to administrators within an organization.

Net Income

____________ appears in both the income statement and the statement of retained earnings.

Accounting

____________ is a set of concepts and techniques that are used to measure and report financial information about an economic unit.

Income

____________ is the excess of a company's revenues over expenses for a given time period.

Current assets should be listed on a balance sheet in order of ____________ .

liquidity

Revenue, expense, and dividend accounts must be closed or reduced to zero so amounts are not carried over from one period to the next. These accounts are appropriately known as ____________ or ____________accounts.

nominal, temporary

The ____________ is the length of time it takes a company to turn cash back into cash via investing in inventory and accepting accounts receivable.

operating cycle

To determine whether the accounts are still in balance after closing entries have been journalized and posted, accountants often prepare a ____________.

post closing trial balance

Accounts whose balances are carried forward from period to period are commonly called ____________ accounts.

real, permanent

A ____________ is the exact opposite of an adjusting entry.

reversing entry