accounting final
what are revenue expenditures
expenditures that are immediately charged against revenues as an expense
The area of accounting that provides external users with information is called _____.
financial accounting
what is the purpose of sarbanes oxley act of 2002
to maintain public confidence and trust in the financial reporting of companies
what is the role of accounting in business
to provide information for managers to use in operating the business
true
true/false: Accountants generally use spreadsheets for analyzing and summarizing data.
true
true/false: Under the revenue recognition principle, revenues are recorded when earned, which is when the services have been performed or products have been delivered to customers.
what is an example of accrued expenses
wages expense used hour by hour but is paid daily, weekly, biweekly, or monthly, and salary owed but not yet paid.
b
On November 26, Civic Company purchased $1,200 of supplies on account. The journal entry to record this transaction will include _____. a. a debit to Supplies and a credit to Cash b. a debit to Supplies and a credit to Accounts Payable c. a debit to Cash and a credit to Supplies d. a debit to Accounts Payable and a credit to Supplies
statement of owner's equity
Owner withdrawals would appear on the _____.
what is the normal balance of expenses
Debit
Net income would be overstated, and expenses would be understated.
If depreciation for a period is not adjusted, which of the following would occur?
Prepaid Expenses
All of the following accounts have normal credit balances except for _____.
Capital
All of the following accounts have normal debit balances except for _____.
c
All of the following accounts will appear on the post-closing trial balance except _____. a. accounts payable b. accounts receivable c. depreciation expense d. None of these choices are correct.
d
All of the following are asset accounts except _____. a. Cash b. Outstanding Salaries c. Building d. Plant and Machinery
in the same period as the related revenue
As per the matching principle, the expenses incurred in generating revenue are recorded _____.
What is the accounting equation?
Assets = Liabilities + Owner's Equity
0.0833
Assets for Lincoln Company totaled $13,000, liabilities totaled $1,000, and owner's equity totaled $12,000. What is the ratio of liabilities to owner's equity?
what are capital expenditures
Major investments in either tangible long-term assets such as land, buildings, and equipment or intangible assets such as patents, trademarks, and copyrights.
20.00% increase
Net income for year 1 was $75,000, and net income for year 2 was $90,000. What is the percent increase or decrease in the horizontal analysis?
be carried over to the Credit column of the balance sheet on the work sheet
Net income on the Income Statement section of the work sheet will
Accounts payable, cash
On December 15, Civic paid $1,900 to Sylvan Supply Company on the $1,900 debt owed from a previous transaction. The journal entry to record this transaction would include a debit to _____ account and a credit to _____ account.
cash
On May 21, the owner of Civic Store withdrew $1,000 cash for personal use. The journal entry to record this transaction would include a credit to _____.
Accounts Receivable
On November 21, Civic Company received $550 from customers in payment of their accounts. The journal entry to record this transaction will include a credit to _____.
analyze and record the transactions in the journal
The first step of the accounting cycle is to _____.
d
The following accounts are closed at the end of the accounting period except _____. a. revenue b. expenses c. withdrawals d. capital
Accounts receivable, fees earned
The journal entry for an accrued revenue (fees earned) includes a debit to _____ and a credit to ______.
a debit to Capital account and a credit to Drawing account
The journal entry required to close the Drawing account is _____.
prepare a post-closing trial balance
The last step of the accounting cycle is to _____.
assets
The resources owned by a business are its ________.
Liabilities
The rights and claims of creditors on a company's assets are represented by _____.
d
The spreadsheet can be used to prepare _____. a. the income statement. b. the balance sheet. c. the statement of owner's equity. d. All of these are correct.
Drawing
Which account flows into the statement of owner's equity?
a
Which account will not appear on the post-closing trial balance?a. Revenue b. Cash c. Accounts Receivable d. Accounts Payable
Accounts payable, accounts receivable, cash, supplies, unearned rent, and wages payable.
Which accounts flow into the balance sheet?
Fees earned, utilities expense, and wages expense.
Which accounts flow into the income statement?
all businesses, from the largest to the smallest.
Which businesses use an accounting equation?
Owner's equity
Which element of the accounting equation represents the rights of owners?
b
Which is the accounting equation?a. liabilities plus assets equal owner's equity b. assets equal liabilities plus owner's equity c. assets minus liabilities equal owners' equity d. owner's equity minus assets equal liability
land
Which of the following accounts does not have a contra asset account?
d
Which of the following accounts is a liability account? a. Notes Payable b. Accounts Payable c. Wages Payable d. All of these choices are correct.
Make a decision that is in the best interests of the company; other parties affected are not important.
Which of the following is not a guideline of ethical conduct?
b
Which of the following shows the correct order of events? a. Unadjusted trial balance, adjusting entries, financial statements, adjusted trial balance b. Unadjusted trial balance, adjusting entries, adjusted trial balance, financial statements c. Financial statements, unadjusted trial balance, adjusting entries, adjusted trial balance d. Financial statements, adjusted trial balance, unadjusted trial balance, adjusting entries
what is the first step of the accounting equation
analyzing and recording transactions in the journal
what is the fourth step in the accounting process
assembling and analyzing adjustment data
What is a prepaid expense? (an asset, liability, contra, owner's equity etc.)
asset
what is accounts receivable (an asset, liability, contra, owner's equity etc.)
asset
what is land (an asset, liability, contra, owner's equity etc.)
asset
what is office equipment (an asset, liability, contra, owner's equity etc.)
asset
what is supplies (an asset, liability, contra, owner's equity etc.)
asset
What is accumulated depreciation? (an asset, liability, contra, contra asset, owner's equity etc.)
asset (contra)
how do you calculate net book value or "book value of an asset"
cost of asset-accumulated depreciation of asset
what is the normal balance of a liability
credit
what is the normal balance of owners equity
credit
what is the normal balance of revenues
credit
What is depreciation?
decrease in usefulness
What is wages payable? (an asset, liability, contra, owner's equity etc.)
liability
what is accounts payable (an asset, liability, contra, owner's equity etc.)
liability
what is unearned rent (an asset, liability, contra, owner's equity etc.)
liability
what is the capital account (an asset, liability, contra, owner's equity etc.)
owners equity
what is the drawing account (an asset, liability, contra, owner's equity etc.)
owners equity
What is a fixed asset?
physical resources that are owned and used by a business and are permanent or have a long life
what is the second step in the accounting process
posting transactions to the ledger
what is an example of a prepaid expense
prepaid insurance, supplies on hand
how does the use of bank accounts help control cash
they reduce the amount of cash on hand, provide an independent recording of cash transactions, and facilitate the transfer of funds using EFT systems
what are the objective of internal control
- assets are safeguarded and used for business purposes - business information is accurate - employees and managers comply with laws and regulations
what are the elements of internal controls
1. control environment 2. risk assessment 3. control procedures 4. monitoring 5. information and communication
List the 4 financial Statements in order
1. income statement 2. statement if owners equity 3. balance sheet 4. statement of cash flows
accounts receivable
A claim against a customer is called _____.
$100
A company's accounting records reveal that Supplies had a beginning balance of $1,000. During the accounting period, the company purchased $500 of supplies. A physical count at the end of the accounting period confirmed that $1,400 of supplies were used. What will be the balance of the supplies account on the adjusted trial balance?
what is the normal balance of an asset
Debit
Salaries Expense for $10,000, Salaries Payable for $10,000
BizWorld Company pays weekly salaries of $12,500 on Friday for a five-day week ending on that day. The necessary adjusting journal entry at the end of the accounting period assuming that the period ends on Thursday will include a debit to _____ and a credit to _____.
160,000
Burr Publishers purchased a building on March 20, 20X1, for $160,000. Other amounts related to this purchase are as follows:• Price listed by seller on Jan. 1, 20X1, $180,000• Burr Publishers' initial offer to buy on Jan. 31, 20X1, $140,000• Purchase price on Mar. 20, 20X1, $160,000• Estimated selling price on Dec. 31, 20X3, $220,000• Assessed value for property taxes, Dec. 31, 20X3, $190,000Which amount related to this purchase should be recorded in the accounting records?
vertical analysis
Comparing each item on a financial statement with a total amount from the same statement is called _____.
$14,400, credit
During the accounting period, cash was debited for $4,000, $3,000, and $1,000. Cash was also credited for $3,000, $500, and $100. The beginning balance of Cash was a $10,000 debit. What would be the ending balance for Cash in the general ledger?
55.60% decrease
Fees earned for year 1 were $90,000 and for year 2 were $40,000. What was the percent increase or decrease as per the horizontal analysis?
what is an example of unearned revenues
Fees received but not yet earned
What is GAAP?
Generally accepted accounting principles. A set of rules and practices, having substantial authortitative support, that accounting profession recognizes as a general guideline for a financial reporting purposes
d
If the supplies account is not adjusted for the supplies used during a period, which of the following would occur? a. Assets and expenses would be overstated. b. Assets and expenses would be understated. c. Assets would be understated, and expenses would be overstated. d. Net income and owner's equity would be overstated.
Liabilities
In a balance sheet, accrued expense is recorded under the heading _____.
Office Supplies Expense for $255, Office Supplies for $255
Prior to recording adjusting entries, the office supplies account had a $360 debit balance. A count of the supplies showed $105 of unused supplies remaining. The required adjusting entry will include a debit to _____ and a credit to _____.
what is the direct write off method
Recording bad debt expense at the time we know the account to be uncollectible
income statement
Revenue accounts appear on the _____.
no
Should accumulated depreciation on equipment be closed at the end of the fiscal year?
$1500
Supplies had a beginning balance of $4,000. A physical count at the end of the accounting period revealed $2,500 supplies on hand. What adjustment amount will appear for Supplies in the Adjustments section of the work sheet?
the debit column of the balance sheet on the work sheet
The Cash balance on the adjusted trial balance will be carried over to
liquidity
The ability to convert assets into cash is called _____.
asset account, revenue account
The adjusting entry for accrued revenues will include a debit to a/an _____ and a credit to a/an _____.
balance sheet
The financial statement that lists assets, liabilities, and owner's equity as of a specific date, usually at the close of the last day of a month or a year, is called _____.
income statement
The financial statement that reports revenues and expenses for a period of time is called _____.
statement of owner's equity
The financial statement that summarizes the changes in the owner's equity that have occurred during a specific period of time, such as a month or a year is called _____.
True
True/False: An adjusting entry will always involve a revenue or an expense account and an asset or a liability account.
True
True/False: In a vertical analysis, revenues are most likely to represent 100 percent.
True
True/False: Increases in assets and owner's equity as a result of selling services or products to customers is called revenue.
False
True/False: The trial balance guarantees the accuracy of the ledger.
cash basis of accounting
Under the _________, revenues and expenses are reported on the income statement in the period in which cash is received or paid.
accrual basis of accounting
Under the_____, revenues and their related expenses are reported on the income statement in the period in which a service has been performed or a product has been delivered.
Accounts payable, accumulated depreciation, capital account, cash, office equipment, salaries payable, and supplies.
What accounts will usually appear in the post-closing trial balance?
1) Transactions are analyzed and recorded in the journal. 2)Transactions are posted to the ledger. 3)An unadjusted trial balance is prepared. 4)Adjustment data are assembled and analyzed. 5)An optional end-of-period spreadsheet is prepared. 6)Adjusting entries are journalized and posted to the ledger. 7)An adjusted trial balance is prepared. 8)Financial statements are prepared. 9)Closing entries are journalized and posted to the ledger. 10)A post-closing trial balance is prepared.
What are the 10 steps in the accounting cycle in order?
d
Which of the following statements is not true about adjusting entries? a. Adjusting entries should be dated as of the last day of the accounting period. b. An explanation is normally included with each adjusting entry. c. After adjusting entries are made in the journal, they are posted to the ledger. d. Adjusting entries are typically recorded on the last day of the accounting period.
SEC
Which organization has the overall authority over the accounting and financial disclosures for companies whose shares of ownership (stock) are traded and sold to the public?
Proprietorship
Which type of business is owned by one individual?
creditors have the first right to assets
Why are liabilities usually shown before owner's equity in the accounting equation?
Prepaid expenses
_____ are expenses that have been paid but are yet to be recognized.
Accrued Revenue
_____ is the amount that has been earned but has not been recorded.
what are the classifications of receivables
accounts, notes, interest, and tax
what is cash (an asset, liability, contra, owner's equity etc.)
an asset
what are the controls for safeguarding inventory
internal controls, control environment, risk assessment, control procedures, and monitoring
what is step six of the accounting process
journalizing and posting adjusting entries
what is step 9 of the accounting process
journalizing and posting closing entries
what is step 10 of the accounting process
preparing a post closing trial balance
what is step seven of he accounting process
preparing an adjusted trial balance
what is the third step in the accounting process
preparing an unadjusted trial balance
what is the fifth step in the accounting process
preparing and optional end of period spreadsheet
what is step eight of the accounting process
preparing the financial statements
What is the allowance method?
records bad debt expense by estimating uncollectible accounts at the end of the accounting period
what is fees earned
revenue
what is rent revenue
revenue
what is an example of accrued revenues
revenues recorded only when cash is received. earned but not yet recorded
no
should a capital account (ex John Doe-capital) be closed at the end of the fiscal year?
yes
should a drawing account be closed at the end of the fiscal year?
no
should accounts payable be closed at the end of the fiscal year?
no
should equipment be closed at the end of the fiscal year?
yes
should expenses on equipment depreciation be closed at the end of the fiscal year?
yes
should fees earned be closed at the end of the fiscal year?
no
should land be closed at the end of the fiscal year?
no
should supplies be closed at the end of the fiscal year?
yes
should supplies expense be closed at the end of the fiscal year?
yes
should wages expense be closed at the end of the fiscal year?
no
should wages payable be closed at the end of the fiscal year?