Mitchel Final

An expense incurred in 2010 is not paid until 2011. Using the accrual basis of accounting, the expense should appear on:

the 2010 income statement

Retained Earnings is

the accumulation of income that has not been distributed to owners in the form of dividends

Depreciation Expense is

the amount of depreciation for the current period that is recorded on the income statement

Earning revenue means

the company has provided the product or service to the customer

Incurring an expense means

the company has used some type of resource

A debit means

the event had an effect on the left side of the T-account

Accumulated Depreciation is

the total amount of depreciation that has been recorded for an asset since the asset was acquired. It is reported on the balance sheet as a contra-asset.

Sean Corp. issued a $40,000, 10-year bond, with a stated rate of 8%, paid semiannually. How much cash will the bond investors receive at the end of the first interest period?

$1,600

A company had the following balance sheet amounts at the beginning of the year: Total assets $650,000 Total stockholders' equity $250,000 During the year, total assets increased by $350,000, total liabilities increased by $100,000, and dividends were paid in the amount of $300,000. No other transactions occurred except revenues and expenses. How much is net income for the year?

$550,000

Bonds in the amount of $100,000 with a life of 10 years were issued by the Roundy Company. If the stated rate is 6% and interest is paid semiannually, what would be the total amount of interest paid over the life of the bond?

$60,000

On January 1, 2019, a company reported assets of $1,000,000 and liabilities of $600,000. During 2019, assets decreased by $100,000 and Stockholders' Equity decreased $200,000. What is the amount of liabilities at December 31, 2019?

$700,000

True or False? Dividends are increased by credits and decreased by debits?

False

Expenses

The cost of assets used, or the liabilities created, in the operations of a business

When a customer pays a company before the company provides the product or service, which of the following accounts would be involved?

Unearned revenue

If bonds are issued at 101.25, this means that

a $1,000 bond sold for $1,012.50

What best describes the discount on bonds payable account

a contra-liability

Bower Company sold $100,000 of 20-year bonds for $95,000. The stated rate on the bonds was 7%, and the interest is paid annually on December 31. What entry would be made on December 31 when the interest is paid?

a debit to interest expense and a credit to discount on bonds payable and cash

The premium on bonds payable account is shown n the balance sheet as

an addition to a long-term liability

A prepaid expense account, such as Prepaid Rent or Prepaid Insurance is

an asset arising from the payment of cash for a resource which has not been used or consumed by the end of the period

Cost of goods sold is

an expense that represents the outflow of resources caused by the sale of inventory

In order for accounting information to be useful in making informed decisions, it must be

both relevant and faithful representation

Accumulated depreciation is classified as an

contra-asset account

Accounts payable is a

current liability account used to record purchases on credit from a company's suppliers

Receiving a check from a customer on account would include a

debit to cash and credit to accounts receivable

When the amount for a debit entry in a journal entry is transferred to a specific account in the general ledger, it must be posted as a:

debit to the account in the general ledger

The normal balance of an expense account is _____ because expenses decrease

debit, stockholders' equity

Under the revenue recognition principle, a business should record revenue when the business...

delivers goods or services to a customer

The matching principle

helps produce an accurate measurement of a company's performance by recording an expense in the same period as the revenue it helped generate

In what order are financial statements generally prepared?

income statement, statement of retained earnings, balance sheet

When bonds are issued by a company, the accounting entry typically shows an

increase in assets and an increase in liabilities

Bonds are sold at a premium if the

market rate of interest was less than the stated rate at the time of issue

When bonds are issued at a premium, the interest expense for the period is the amount of interest payment for the period

minus the premium amortization for the period

Accounts Receivable is...

money due from another business or individual as a payment for services performed or goods delivered

When bonds are issued at a discount, the interest expense for the period is the amount of interest payment for the period

plus the discount amortization for the period

When a business records revenue before it is earned, it has violated the measurement issue of revenue...

recognition