Accounting Final WSU fall 2016 chaps 1-2
Which of the following are components of calculating net income?
Revenues Expenses
Income Statement has
Revenues and Expenses
What are the three components of retained earnings?
Revenues, expenses, and dividends
what is a Revenue
Services performed for customers on account.
what is the second step applied in ethical decision making
Specify the alternative courses of action
What are assets?
Supplies, Inventory
The heading of a balance sheet for the 2018 fiscal period would include which of the following
The title "Balance Sheet", At December 31, 2018, The name of the business
first step for measuring transactions in the correct order.
Use a source document to identify accounts affected
Which is an internal transaction?
Using supplies on hand
Accounting maintains records of
a company's operations and communicates information to decision makers.
Financial Statements represent
a company's primary means of communicating information to external users.
A dividend represents
a payment of cash to the stockholders or a company
Elements of the accounting equation are represented by
accounts, which are contained in the general ledger.
A balance sheet lists the
assets, liabilities, and stockholders' equity as of a specific date.
Investing activities involve
buying and selling of land, buildings, and equipment used in the business.
A General Ledger is a
collection of accounts used to keep track of increases and decreases in financial position elements.
Accountants' primary information-related roles are to:
communicate measurements of companies' activities to others measure companies' activities
The qualitative characteristic of using the same accounting method each period over time refers to the concept of
consistency
An expense is a
cost of doing business that is necessary to produce revenue
A revenue account increased with a
credit
The two external users of financial accounting information that contribute financial resources to a company are
creditors & investors
Accounts receivable are assets which represent the amount owed by
customers
A proper journal entry includes the
date, the account debited, the account and amount credited, and a brief explanation of the transaction.
what is Managerial accounting
deals with the concepts and methods used to provide information to an organization's internal users
An account should have an account title, account number, a place for the date of the transaction, and two columns for
debits and credits.
A t-account has space at the top for the account title and two sides for recording
debits; credits and increases; decreases to the account
After the accountant analyzes the impact of a transaction on the accounting equation, the next step in the measurement process is to
determine the accounts to debit and credit
A distribution of net income to owners is called a
dividend
Crane purchases equipment by signing a note payable with the equipment dealer for $10,000. The accounts affected for Crane are
equipment and notes payable
An internal transaction is an
event that affects the financial position of the company but does not include an exchange with a separate economic entity.
The monetary unit assumption states that
financial statement elements should be measured in terms of the U.S. dollar
The classification on the statement of cash flows are cash flows from
financing activities, investing activities, operating activities
Borrowing from a bank is an example of
financing activity
The financial statement that summarizes revenues and expenses for a period of time is the
income statement
When a company earns net income, its retained earnings:
increase
Transactions are classified as
internal or external transactions
Amounts owed to creditors are
liabilities
An advantage of the corporate form of organization is that a corporation has
limited liability
Accountants' key roles are to
measure the activities of the company and to communicate those measurements to others.
Revenues minus expenses equals
net income
The characteristic that a new accounting standard should not favor one group of companies over others or achieve a particular social outcome is an example of
neutrality
Two sources of stockholders' equity are amounts
paid in from shareholders, earned by corporation
The process of transferring information from a journal entry to the specific accounts affected in the general ledger is referred to as
posting
The term "accounting cycle" refers to the full set of
procedures utilized to measure and communicate business transactions to external decision makers
Operating activities involve
purchasing goods from suppliers, designing and manufacturing products, and selling products to customers
To be useful for decision making, information should posses the primary qualities of
relevance and faithful representation.
Prepaid rent is
rent paid in advance
A company reports a net loss if its
revenues were less than its expenses
Revenue is the
sale of goods or services to customers
The three most common forms of business organization are
sole proprietorship, partnership, and corporations.
The financial statement that provides information about cash receipts and cash disbursements for the period is the
statement of cash flows
For a corporation, the owners' claim to the resources of a company are called
stockholders' equity.
An external transaction involves an exchange between
the company and a separate economic entity.
In a double-entry accounting system
the debit represents the left side of the account.
The basic accounting equation is referred to as
the fundamental model of business valuation
The sum of accounts with debit balances must equal
the sum of the accounts with credit balances.
The qualitative characteristic wherein information is available early enough allowing it to be useful for a decision describes the concept of
timeliness
The term debit means
to place the entry on the left side of the account
For every journal entry, total debits must be equal to
total credits
A list of all accounts and their balances at a particular date showing that debits equals credit is referred to as a
trial balance
The accounting characteristic that requires a user to comprehend the information within the context of the decision being made is referred to as
understandability
When the cost of an item can be traced to objective evidence of a transaction, such as a sales receipt, canceled check, and bank statement, the information has the quality of
verifiability
What is the correct order of the items found on the balance sheet?
1. Assets 2. Liabilities 3. Stockholders' Equity
Place the three steps for analyzing the effect of transactions in the correct order.
1. Determine one account in the accounting equation that will increase or decrease 2. Determine a second account in the accounting equation that will increase or decrease 3. Confirm that assets are equal to liabilities plus stockholders' equity
Rank the following steps applied in ethical decision making in the proper order beginning with the first step
1. Identify the ethical issue and stakeholders 2. Specify the alternative courses of action 3. Evaluate the courses of action in terms of their impact on stakeholders 4. Make a decision
Arrange the steps for measuring transactions in the correct order.
1. Use a source document to identify accounts affected 2. Analyze the impact of the transaction on the accounting equation 3. Assess whether the transaction results in a debit or credit to account balances 4. Record the transaction in a journal 5. Post the transaction to the general ledger
Which of the following are internal transactions?
1.Using supplies purchased and paid for last month 2.Earning revenues after cash is received in advance from customers
The two roles of financial accounting are to
1.communicate information to external parties for decision making purposes 2.measure business activities of the company
Financial accounting should provide information that:
1.tells about economic resources, claims to resources, and changes in resources and claims 2. is useful to investors and creditors in making decisions 3. helps to predict cash flow
If a transaction decreases cash by $100, the balance sheet will balance if which of the following occurs?
A liability is decreased Another asset is increased.
second step for measuring transactions in the correct order
Analyze the impact of the transaction on the accounting equation
third step for measuring transactions in the correct order
Assess whether the transaction results in a debit or credit to account balances
Using the accounting equation, stockholders' claims on the resources of the corporation can be expressed as
Assets - Liabilities
Balance Sheet has
Assets, liabilities, and stockholders' equity
Which of the following are external transactions
Borrowing money from the bank Purchasing inventory from suppliers Paying salaries to employees
Shriver Corp. borrows $25,000 from a bank and signs a two-year promissory note. What accounts will be affected by this transaction and what is the effect?
Cash increases, Notes payable increases
what is Deferred Revenue
Cash received from customers for services to be performed in the future
A list of all account names used to record transactions of a company is referred to as the
Chart of Accounts
Which of the following are stockholder equity accounts?
Common stock Retained Earnings
third step in analyzing the effect of transactions in the correct order
Confirm that assets are equal to liabilities plus stockholders' equity
what is an Expense
Cost of conducting business during the period
Daryl Inc. pays $2,000 for advertising for the month. Recording this transaction will include which of the following?
Credit Cash Debit Advertising Expense
second step in analyzing the effect of transactions in the correct order
Determine a second account in the accounting equation that will increase or decrease
first step in analyzing the effect of transactions in the correct order
Determine one account in the accounting equation that will increase or decrease
what is a Dividend
Distribution of cash to stockholders
Which of the following appears on the statement of stockholders' equity?
Dividends, Beginning balance of retained earnings, Net Income
what is the third step applied in ethical decision making
Evaluate the courses of action in terms of their impact on stakeholders
Faithful representation requires information to have which of the following three characteristics?
Free from material error, Neutrality, Completeness
Generally accepted accounting principles are abbreviated as
GAAP
what is the first step applied in ethical decision making
Identify the ethical issue and stakeholders
Which of the following are financial statements
Income statement, Balance sheet, Statement of stockholders' equity
What effect does revenue have on retained earnings?
Increases
In financial accounting which of the following are the three types of business activities of a company?
Investing activities, Financing activities, Operating activities
what is a Computerized System
Journal entries are instantly posted to the general ledger
what is a Manual System
Journal entries are posted periodically to the general ledger
what is the fourth step applied in ethical decision making
Make a decision
Statements of Cash Flows has
Operating, investing, and financing activities
fifth step for measuring transactions in the correct order
Post the transaction to the general ledger
Which of the following is an external transaction?
Purchasing supplies from a vendor
fourth step for measuring transactions in the correct order
Record the transaction in a journal
