RETL 261 Exam 1
Accounts Receivable, Prepaid Accounts, Supplies, and Land are examples of ______ accounts.
Asset
Classify each of the following accounts as an asset (A), liability (L), or equity (EQ) account. Cash
Asset
If a company purchases equipment costing $5,300 on credit, the effect on the accounting equation would be:
Assets increase $5,300 and liabilities increase $5,300.
Accounts payable appear on which of the following statements?
Balance sheet
Why is accounting important?
Businesses, regulatory agencies, and the general public use accounting information.
The ______ is a record containing all accounts used by a company, including account balances.
General Ledger
Which of the following is a proper reflection of the sequence of steps when deciding on the preferred course of action in making an ethical decision?
Identify ethical concerns; Analyze options; Make ethical decision
Entering a list of the sales invoices, including the prices and quantities, for the company's record keeper.
Identifying
The four basic financial statements are:
Income Statement, Statement of owner's equity, Balance sheet, and Statement of cash flows
Marketing Managers are internal or external users?
Internal Information User
Payroll Clerks are internal or external users?
Internal Information User
Net income:
Is the excess of revenues over expenses
Suppliers are internal or external users?
External Information User
During its first year of operations, Mario Lupo personally invested $15,000 in his business, Lupo Company. Mario withdrew $2,000 for personal use. Lupo company earned $35,000 of revenues and incurred $23,000 of expenses. At the end of the year, Lupo Company's equity totaled:
$25,000
Charlie's Chocolates' owner made investments of $74,000 and withdrawals of $32,000. The company has revenues of $107,000 and expenses of $76,000. Calculate its net income.
$31,000
If equity is $30,000 and liabilities are $19,000, then assets must equal:
$49,000
Order the following steps in the accounting process that focus on analyzing and recording transactions.
1. Analyze each transaction from source documents. 2.Record relevant transactions in a journal. 3. Post journal information to ledger accounts. 4.Prepare and analyze the trial balance.
Indicate how to increase each of the accounts listed below. 1. owners capital 2. professional fees earned 3. owner's withdrawals 4. salaries expense
1. credit 2. credit 3. debit 4. debit
Indicate how to increase each of the accounts listed below. 1. Cash 2. Accounts Payable 3. Supplies 4. Accounts Receivable
1. debit 2.credit 3. debit 4.debit
Balance sheet accounts are arranged into ______ general categories.
3
Use the following information as of December 31 to determine equity. Cash$71,000 Buildings 189,000 Equipment 220,000 Liabilities 155,000
=325,000... Cash+Buildings+Equipment-Liabilities
All of the following are classified as liabilities except: Accounts Receivable. Correct Notes Payable. Wages Payable. Accounts Payable. Taxes Payable.
AR
A(n) ______ is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item.
Account
Increases and decreases in a specific asset, liability, equity, revenue, or expense are recorded in a(n)______.
Account
Accounting
Accounting is an information and measurement system that aims to identify, record, and communicate information about business activities. It helps assess opportunities, products, investments, and social and community responsibilities.
Accounting certifications include:
CPA
Identify which items belong on the balance sheet.
Cash, accounts receivable, and owner capital
Interpreting information from financial reports
Communicating
Preparing financial statements for creditors
Communicating
The Sarbanes-Oxley Act requires the following?
Documentation and verification of internal controls.
Owner Withdrawals
EQ
Owner, Capital
EQ
Owner, Capital and Owner, Withdrawals are examples of ______ accounts.
Equity
Analyze the following transaction and select the best answer. The business pays $2,000 in cash to the landlord for office space rent.
Equity reduces by $2,000
Board of Directors are internal or external users?
External Information User
Customers are internal or external users?
External Information User
Labor Union is internal or external?
External Information User
A(n) ______ has a complete record of every transactions recorded.
Journal
The process of recording transaction in a journal is called:
Journalizing
Accounts Payable, and Note Payable are examples of ______ accounts.
Liability
If a company uses $1,600 of its cash to purchase supplies, the effect on the accounting equation would be:
One asset increases $1,600 and another asset decreases $1,600, causing no effect.
Preparing and entering a list of checks issued
Recording
Using a cash register to enter sales
Recording
Identify which items belong on the income statement.
Revenue, expenses and net income
Which of the following accounts is not included in the asset section of the balance sheet? Cash. Accounts receivable. Supplies. Land. Services revenue.
Service Revenue
Why are posting references entered in the journal when entries are posted to the ledger accounts?
So we will know that the entry has been posted.
Identify which items belong on the statement of owner's equity.
Withdrawals, beginning owner capital and ending owner capital
Correctly identify steps 3 and 4 of the accounting process:
Step 3: record transactions into the journal; Step 4: post entries into the ledger.
On January 31, Jean Consulting Company receives a bill for that month's utilities in the amount of $500. Jean sets it aside because she does not plan to pay the bill until its due date of February 15. What effect, if any, does this event have on the company's accounting equation as of January 31?
The business must record this event, which would increase liabilities and decrease equity on January 31.
Chart of Accounts
The chart of accounts is a list of all accounts and usually includes an identification number assigned to each account.
Which of the following statements are true about the general ledger?
The general ledger contains all of the accounts that a company uses, along with detail of the balances in those accounts.
What is the general ledger
The ledger (or general ledger) is a record containing all accounts used by a company and their balances. It is referred to as the books.
Recordkeeping
The recording of transactions and events only, either manually or electronically.
A balance sheet lists:
The types and amounts of assets, liabilities, and equity of a business as of a specific date.
Revenue is properly recognized:
When goods or services are provided to customers and at the amount expected to be received from the customer.
A record of the increases and decreases in a specific asset, liability, equity, revenue or expense is a(n):
account
Which of the following accounts is a liability? company truck prepaid advertising capital accounts payable
accounts payable
Prepaid Rent
asset
office equipment
asset
office supplies
asset
prepaid insurance
asset
A ______ of accounts is a list of all accounts a company uses not including account balances.
chart
Upon her promotion to manager at the regional public accounting firm that has employed her for the past five years, Gail Mahaffey moves to the firm's Chicago office. After welcoming her to the office on her first day, the partner managing the Chicago office shares some great news. The firm just learned of its successful bid to audit Morrison's reports. Morrison's business has been expanding and the company is expected to become an important client of the firm. The partner then congratulates Gail; he has decided to assign her to head up the team that will audit Morrison. Thrilled by the exciting news, Gail leaves the office, eager to meet the rest of the team. As she walks to the meeting room, she considers the fact that she inherited a share of Morrison's stock last year under the terms of her grandfather's will. She recalls that the stock is currently trading at $15 per share. Assuming that Gail wants to make an ethical decision in this situation, she will:
decline the assignment; even though she only owns a single share of stock, that direct investment in the stock of Morrison would cast doubt on decisions that she makes during the audit.
Managerial accounting
includes opportunities in general accounting, cost accounting, and internal auditing
Accounts Payable
liability
Unearned Rent Revenue
liability
Which of the following accounts is equity? company truck prepaid advertising owner's capital accounts payable
owner's capital
Which of the following accounts is an asset? owner, capital prepaid advertising supplies expense accounts payable
prepaid advertising
The majority of accounting opportunities are in...
private accounting
A(n) ______ describes transactions entering an accounting system, such as a purchase order.
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