Practice exam tracking assets and sales

Purchasing property and equipment with cash

-decreases one asset and increases another asset by the same amount

Q17

1,000, 800 cash-basis accounting.

Q22. Put the steps of the accounting cycle in the order they are completed.

1. Collect and analyze transactions 2. record and post transactions 3. prepare unadusted balance 4. prepare adjusted entires 5. Prepare adjusted trial balance 6. Prepare financial statements

Q19 What is the main purpose of the adjusting process in accounting?

13,000

Q18.

20,000 and 5,000

Q5

8,000, 8,000 keeping balanced.

example of non-current liability

A mortgage payable

what is true about the differ between notes receivable and accounts receivable?

All true except "Notes receivable are current assets, while acct recievable are long term assets" Receivable are long-term assets and acct receivable are current assets. (do not select last one)

net pay

Amount of income left after taxes and payroll deductions

What is debiting in accounting?

An increase in an asset or decrease in a liability or equity

John owns a small retail store that sells clothing. On Monday, he sold $500 worth of merchandise to a customer who paid in cash. On Tuesday, he sold $300 worth of merchandise to a customer who paid using credit card. which of the following statements correctly describes the effect of these sales transactions on the accounting equation for John's retail store?

Both Sales increase assets and decrease owner's equity.

In financial accounting systems we expect certain types of act to have a normal debit or credit balance This is "natural balance" all the acc that have natural balance

Cash Inventory Expenses act receivable

depreciating property equipment:

Decreases one asset and equity by the same amount

Which of the following are considered current assets?

EX: Cash acct receivable inventory marketable securities prepaid expenses, other liquid assets: laptop computer, Real Estate, goodwill, Trademarks are long assets

Q12

He should record the printer as an asset... and ignore ...

Q9

He should seperate his transactions into three

true about differences between inventory and supplies?

Inventory is the value of goods that a company plans to sell for profit or use to produce goods, while supplies are items that the company uses to support its daily operations, (office supplies or packaging materials) -Inventory is a stock of goods that is held to resale, while supplies are consumable items used in operations. -Inventory is directly used to manufacture or sell products, such as raw materials work in progress, or finished goods. supplies do not directly appear in the goods or services to customers, but they help the business run smoothly and efficiently. first two last one. X

Merchandise on hand

Merchandise on hand is the value of goods that are currently available for sale, including finished goods inventory. It represents the current asset that the company expects to sell within a year.

Q2

Politely decline Sarah's request and explain that she cannot disclose confidential client information.

Q3

Report unauthorized use of the compamy credit card to the owner or the appropriate authority.

Q9

The direct write off method is required for income tax purposes because it recongnizes bad debts only when specific acct are uncollectable. direct write-off method involves debiting the bad debts expense acct and crediting the acct receivable acct for the amount of the uncollectible acct.

Q4

The increase in liabilities will decrease the owner's equity.

Q13 Monetary unit assumption assumed that the currency unit is constant and does not change in purchasing power over time, so a company can record its transaction in terms of money w/o adjusting for (inflation) ..

The monetary unit assumption accounting principle means that only transactions or events that can be measured in monetary terms are recorded in the financial statements.

credit in accounting?

a decrease in assets or expense in liabilities, owners equity, or revenue.

pay stub

a document that outlines the details

wage garnishment

a legal process that allows the creditor to take money out

What is an asset in accounting

a resource business owns and controls.m

Purchasing property and equipment with cash all change the accounting equation. THRST THREE

accounting equation

benefit in the future.

assets

lAST ONE -SEOCND ONE

assets increase by the amount of inventory snd lisbilities by the amount of acct payble.

Q24 which statements are true about the balance sheet?

balance sheet does not show all of the income or money generated for a particular time period. everything else is correct.

A company must record its assets and revenues at the lowest possible value and its liabilities and expenses at the highest possible value.

conservatism Assumption

A company should use the same methods to record and report its transactions and events every year.

consistency principle

Q21

create new journal entry and post ledger in reference to the original transactions.

can be converted in one year

current assets

Q16 Assets= liabilities+ equity.

debit cash $500 and credit liability account unearned revenue $500.

you're the bookkeeper for the pampered pooch, a small mobile dog grooming business. The business received a 1,000 loan credit union and signed a promissory note How should they record this transaction in the accounting records?

debit cash account by 1,000 and credit notes payable account by 1,000

Q23

first answer

Q1

fix

Q11

full disclousure principle.

Q14 Which of the following events would most likely cause an auditor to issue a negative going concern opinion for a company?

high debt-to-equity ratio indicated that the company is heavily reliant on debit financing and may have difficulty meeting its repayments. could jeopardize the company's ability to countinue its operationd in the long term.

selling property and equipment for cash

increase one asset and decreases another asset by the same amount if sold at the book value.

puechashing property and equipment with credit

increases one asset and one liability by the same amount.

no physical form

intangible assets

long term operations

long-term assets

payroll

process of paying employees keeping track of compensation

Q15 what is the second step in the accounting cycle?

record and post journal entries. it involves documenting the financial transaction of business in chronological order. A journal entry consists of a debit and a credit entry that reflects the double-entry..

a company must have proof of what it records in its financial statements.

reliability assumption

withholding and deductions

the amount of money withheld from an employee

pay period

the length of time which an employee's wages are calculated

gross pay

the total amount of an employee's earnings before deductions

youre the bookkeeper for between the covers booksellers, a small book resale business. The company uses the accrual accounting method. You receive the following sales transaction detail (For this q we are not posting transactions for inventory to COGS): -On Jan 1, the company sells 250 books for $20 each to John, who pays in cash. The sales tax rate is 10%. -On Jan 2, the company sells 300 books for $15 each to Mary, who agrees to pay within 30 days. the sales tax rate is 10%

to record debit cash by the total amount received (5,000) and credits sales revenue by the amount earned (5,000) and the sales tax payable by the amount owed (500). mary's transaction debit acct receivable by the total amount owed (4950) and credit sales revenue by the amount earned (4,500), and sales ... 2nd to last