Accounting Unit 1- ch 1 and 2
a. Interest Revenue Credit b. Accounts Payable Credit c. Calhoun, Capital Credit d. Office Supplies Debit e. Advertising Expense Debit f. Unearned Revenue Credit g. Prepaid Rent Debit h. Utilities Expense Debit i. Calhoun, Withdrawals Debit j. Service Revenue Credit
2. Identify whether the account is increased with a debit (DR) or credit (CR).
a. Interest Revenue Credit b. Accounts Payable Credit c. Calhoun, Capital Credit d. Office Supplies Debit e. Advertising Expense Debit f. Unearned Revenue Credit g. Prepaid Rent Debit h. Utilities Expense Debit i. Calhoun, Withdrawals Debit j. Service Revenue Credit
3. Identify whether the normal balance is a debit (DR) or credit
D. All of the above
Accounting is the information system that A. processes information into reports. B. measures business activity. C. communicates the results to decision makers. D. All of the above
Accounting Equation
Assets = Liabilities + Equity
Equity Equation
Capital, Beginning + Owner contribution + Net income or - Net loss - Owner withdrawal = Capital, Ending
1. Rent Expense Equity 2. Brock, Capital Equity 3. Furniture Asset 4. Service Revenue Equity 5. Prepaid Insurance Asset 6. Accounts Payable Liability 7. Unearned Revenue Liability 8. Notes Receivable Asset 9. Brock, Withdrawals Equity 10. Insurance Expense Equity
Consider the following accounts and identify each as an asset (A), liability (L), or equity (E). 1. Rent Expense 2. Brock, Capital 3. Furniture 4. Service Revenue 5. Prepaid Insurance 6. Accounts Payable 7. Unearned Revenue 8. Notes Receivable 9. Brock, Withdrawals 10. Insurance Expense
a. customer --------- E b. company manager --------- I c. Internal Revenue Service -------- E d. lender ---------- E e. investor --------- E f. controller -------- I g. cost accountant ----------- i h. SEC -------- E
For each of the users of accounting information, identify whether the user is an external decision maker (E) or an internal decision maker (I):
a. investor Financial Accounting b. banker Financial Accounting c. IRS Financial Accounting d. manager of the business Managerial Accounting e. controller Managerial Accounting f. stockholder Financial Accounting g. human resources director Managerial Accounting h. creditor Financial Accounting
For each user of accounting information, identify if the user would use financial accounting or managerial accounting.
Financial Accounting Standards Board (FASB).
Generally Accepted Accounting Principles (GAAP) are currently formulated by the
a. Accounts Payable Liability b. Cash Asset c. Owner, Capital Equity d. Accounts Receivable Asset e. Rent Expense Equity f. Service Revenue Equity g. Office Supplies Asset h. Owner, Withdrawals Equity i. Land Asset j. Salaries Expense Equity
Identify each account as Asset, Liability, or Equity. a. Accounts Payable b. Cash c. Owner, Capital d. Accounts Receivable e. Rent Expense f. Service Revenue g. Office Supplies h. Owner, Withdrawals i. Land j. Salaries Expense
A. Economic Entity Assumption B. The Cost Principle C. Monetary Unit Assumption D. The Going Concern Assumption
Michael McNamee is the proprietor of a property management company, Apartment Exchange, near the campus of Pensacola State College. The business has cash of $8,000 and furniture that cost $9,000 and has a market value of $13,000. The business debts include accounts payable of $6,000. Michael's personal home is valued at $400,000, and his personal bank account has a balance of $1,200. Identify the principle or assumption that best matches the situation: a. Michael's personal assets are not recorded on the Apartment Exchange's balance sheet. b. The Apartment Exchange records furniture at its cost of $9,000, not its market value of $13,000. c. The Apartment Exchange reports its financial statements in U.S. dollars. d. Michael expects the Apartment Exchange to remain in operations for the foreseeable future.
a. Interest Revenue Equity b. Accounts Payable Liability c. Calhoun, Capital Equity d. Office Supplies Asset e. Advertising Expense Equity f. Unearned Revenue Liability g. Prepaid Rent Asset h. Utilities Expense Equity i. Calhoun, Withdrawals Equity j. Service Revenue Equity
Requirements 1. Identify each account as an asset (A), liability (L), or equity (E). (CR).
A. Financial Accounting Standards Board B. Generally Accepted Accounting Principles
Suppose you are starting a business, Wholly Shirts, to imprint logos on T-shirts. In organizing the business and setting up its accounting records, you take your information to a CPA to prepare financial statements for the bank. Name the organization that governs the majority of the guidelines that the CPA will use to prepare financial statements for Wholly Shirts. What are those guidelines called? The organization is called the A. ----------------------- The guidelines are called B. ----------------------- that the CPA will use to prepare financial statements for Wholly Shirts.
Assets=Liabilities+Equity
What is the accounting equation?
Faithful representation concept
Which of the following requires accounting information to be complete, neutral, and free from material error?
Sole proprietorship
Which type of business organization is owned by only one owner?
List two advantages of owning a sole proprietorship. 1. Easy to organize. 2. Unification of ownership and management
You would like to start a cellular telephone equipment service business. You are considering organizing the business as a sole proprietorship. Identify the advantages of owning a sole proprietorship.
List three disadvantages of owning a sole proprietorship. 1. Unlimited liability of owner. 2. The owner pays taxes on proprietorship's earnings since it is not a separate tax entity. 3. No continuous life or transferability of ownership.
You would like to start a cellular telephone equipment service business. You are considering organizing the business as a sole proprietorship. Identify the disadvantages of owning a sole proprietorship.
Account
a detailed record of all increases and decreases that have occurred in a particular asset, liability, or equity during a period of time
Compound Journal Entry
a journal entry that is characterized by having multiple debits and/or multiple credits
chart of accounts
a list of all accounts with their account numbers
trial balance
a list of all accounts with their balances at a point in time
Journal
a record of transactions in date order
Debit
left side of the t-chart
credit
right side of the t-chart
normal balance
side of an account when increases are recorded
Ledger
the record holding all the accounts of a business, the changes in those accounts, and there balances
posting
transferring amounts from the journal to the ledger
