ACC 207 CH 1, 2, & 3

Chart of accounts

A list of all account names used to record transactions

X Corporation provides services to customers on account for $3K dollars, recording this transaction would include

A credit to revenue and a debit to accounts receivable

Chronological record of all economic events affecting a firm are recorded in

A journal

Which of the following accounts would normally have a debit balance on the trial balance

Accounts receivable, dividends, and equipment

When recording an adjustment for the cost of using equipment during the current accounting period, which two accounts are affected?

Accumulated Depreciation and Depreciation Expense

How do adjusting entries for accrued expenses affect liabilities and expenses?

Adjusting entries for accrued expenses can increase liabilities and increase expenses.

A journal entry should contain the following

Amount credited/debited, date, and description

Step three of measuring external transactions

Assess whether the transaction results in a debit or credit to account balances

Identify the entries needed for the closing process.

Debit each revenue, credit each expense, and record the difference in Retained Earnings. Credit Dividends Declared and debit Retained Earnings.

After the accountant analyzes the impact of a transaction on the accounting equation the next step is to

Determine accounts to debit and credit

DEA of DEALOR

Dividends, expenses, and assets

Internal transactions

Do not include other entity, reported at the end of the month

Which of the following accounts are located in the income statement

EXPENSES AND REVENUE

Last step for GENERALLY analyzing the effects of transactions

Ensuring that A=L+E

Is deferred revenue an asset, liability, or equity?

Liability

External transaction

Includes other entity, reported when they happen

Which of the following statements is true?

Income statement accounts are temporary accounts, while balance sheet accounts are permanent accounts.

What changes does net income have on retained earnings?

Increased retained earnings

When services are provided on account, what is the effect on stockholders' equity?

Increases it

LOR of DEALOR means

Liability, owners' equity, revenues

prepaid rent has what TOTAL change?

No changes to assets because cash was exchanged for prepaid rent

Which of the following pre-payments requires an adjusting entry at the end of the year?

On November 1, the company pays rent for the next six months.

This principle means that companies record revenue at the time goods are provided to customers

Revenue

Net income =

Revenue - Expense

A payment of cash dividends decreases which of the following

SE, Retained earnings, and assets

Revenue

Services performed for customers for cash on account

Equipment traded for cash, what will happen to assets?

Stay same

The purpose of an account is to

Summarize all transactions for that item

An account that is used informally for analysis instead of drawing a formal general ledger account is referred to as a

T-account

T/F A debit to expenses is a debit to retained earnings

TRUE

Domino's received inventory on the 15th and paid the 27th, when will they record the transaction?

The day received and paid

Which of the following statements is correct regarding a long-lived asset such as a building?

The original cost in the building account will not change when an adjusting entry is recorded for depreciation.

The purpose of a trial balance is?

To assist in preparing to adjust entries and to ensure that debits equal credits

What are the effects on the accounting equation from an adjusting entry for revenues earned, but not yet collected, during the accounting period?

Total assets will increase and total stockholders' equity will increase.

Step one of measuring external transactions

Use source documents to ID accounts affected by an external transaction

The adjusting entry for an accrued revenue always includes:

a debit to an asset account a credit to a revenue account

In an adjusting entry for expenses incurred but not yet paid ______.

a liability is increasing since cash will be paid in the future due to the expense incurred

occur when the cash flow occurs after either the expense is incurred or the revenue is earned.

accruals

A prepayment that is originally recorded as an asset will be ______.

allocated to future accounting periods based on the cost of the asset used during the period

After the adjusting entries have been completed, the balance in the Rent Expense account represents the:

cost of rent for the accounting period

Sabrina Company recorded an adjusting entry for salaries owed to employees at the end of the year. As a result of this entry, Sabrina Company's: (Select all that apply.)

equity decreases liabilities increase

A primary purpose of adjusting entries is to record events that

have occurred but that have not yet been recorded.

Consistent with accrual-basis accounting, expenses should be recognized

in the period when the related revenue is generated

Does net income include dividends?

nO

The journal entry to close dividends _____ retained earnings.

reduces

Wald Corporation's adjusted trial balance shows the following temporary accounts: service revenue: $20,000; salaries expense $8,000; insurance expense: $2,000; utilities expense: $3,000; interest expense $200; and depreciation expense: $1,400. As part of the the closing process, Wald should debit

service revenue.

Retained earnings is debited for

sum of expenses

Retained earnings is credited for

sum of revenue

After the adjusting entries have been completed, the adjusted balance in the Interest Expense account represents:

total interest that has been paid or accrued during the period

After the adjusting entries have been completed, the balance in the "Salaries Expense" account represents:

total salaries, paid and unpaid, that have been incurred during the accounting period

There is a cause-and-effect relationship between revenues and expenses that dictates:

when costs are recognized as expenses in the income statement

A company records the effects of transactions for a particular item in an

Account

Used to record the summary of effects on one item

An account

Step two of measuring external transactions

Analyze the impact on the accounting equation

Accounts receivable are an

Asset

Deferred Revenue

Cash received from customers for services to be performed in the future

Which of the following would be referred to as "accruals?"

Expenses incurred, not yet paid Goods and services provided, not yet collected

This contains alistt of transactions affecting each account and the account's balance

General ledger

Does net income affect retained earnings?

Increases retained earnings

Which of the following transactions requires an adjusting entry for accrued revenue?

Interest earned, but not yet collected, on a note receivable

Which of the following represents a common advantage of a computerized accounting system

Journal entries are instantly posted to the ledger

Which of the following accounts would normally have a credit balance on the trial balance

Notes payable, deferred revenue, and common stock, and retained earnings

Step five of measuring external transactions

Post the transaction to the general ledger

Step six of measuring external transactions

Prepare a trial balance

Purpose of a general ledger is to

Provide in a single location the list of transactions affecting each account and the account balance

Chart of accounts

Record of a company's daily transactions

Step four of measuring external transactions

Record the transactions in a journal using debits and credits

Which situations does a corporation record revenue in the current period?

Services on account OR services for cash

T/F Revenue is recorded when services are performed, whereas deferred revenue is recorded when cash is received from customers in advance before services are performed

TRUE

T/F a debit to dividends is a debit to retained earnings?

TRUE

Taggert Company paid $1,800 for a 6-month insurance premium on December 1. Which of the following statements are correct regarding the accounting for this insurance over the six-month period? (Select all that apply.)

Taggert will debit Insurance Expense for $300 on Dec. 31. Taggert will debit Prepaid Insurance for $1,800 on Dec. 1. Taggert will credit Prepaid Insurance for $300 on Dec. 31.

The type of information included in an account includes

The account title and the columns for debits and credits

Accounts receivable are assets which represent

The amounts owed by customers

Under accrual-basis accounting, which of the following result in an expense being recorded in May?

The company pays cash in April for supplies used in May. The company pays cash in June for salaries earned in May.

Which of the following statements most accurately describes the purposes of the closing entries?

To establish zero balances in the income statement and dividend accounts and to transfer net income and dividends into retained earnings