Accounting 1,2,3

If assets are $365,000 and equity is $120,000, then liabilities are:

$245,000. (Liabilities = $365,000 - $120,000 = $245,000)

On June 30 of the current year, the assets and liabilities of Phoenix Phildell are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of owner's equity as of July 1 of the current year?

$31,100 ($20,500 + $7,250 + $650 + $12,000 - $9,300 = $31,100)

On April 1, 2009, a company paid the $1,350 premium on a three-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the year ended December 31, 2009?

$337.50. ($1,350 x 9/36 = $337.50)

If equity is $300,000 and liabilities are $192,000, then assets equal:

$492,000

If assets are $99,000 and liabilities are $32,000, then equity equals:

$67,000 (Equity = $99,000 - $32,000 = $67,000)

A company earned $2,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:

20%. ($2,000/$10,000 = 20)

Unearned revenue is reported in the financial statements as:

A liability on the balance sheet.

Generally accepted accounting principles:

A. Are based on long used accounting practices. B. Are basic assumptions, concepts, and guidelines in preparing financial statements. C. Are detailed rules used in reporting on business transactions and events. D. Arise from the rulings of authoritative bodies. -E. All of these.-

The statement of cash flows reports on cash flows for:

A. Operating activities. B. Investing activities. C. Financing activities. D. Planning activities. -E. A, B and C only.-

The general journal provides a place for recording:

A. The transaction date. B. The names of the accounts involved. C. The amount of each debit and credit. D. An explanation of the transaction. -E. All of these.-

The description of the relation between a company's assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity, is known as the:

Accounting equation.

The length of time covered by a set of periodic financial statements is referred to as the:

Accounting period.

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

Accrual basis accounting.

Incurred but unpaid expenses that are recorded during the adjusting process with a debit to an expense and a credit to a liability are:

Accrued expenses

A trial balance prepared after adjustments have been recorded is called a(n) :

Adjusted trial balance.

Adjusting entries:

Affect both income statement and balance sheet accounts.

The financial statement that reports whether the business earned a profit and also lists the types and amounts of the revenues and expenses is called:

An Income statement.

The accounting process begins with:

Analysis of business transactions and source documents.

Expenses:

Are the costs of assets or services used to earn revenues.

Resources owned or controlled by a company that are expected to yield future benefits are:

Assets

Prepaid expenses are:

Assets that represent prepayments of future expenses.

A financial statement providing information that helps users understand a company's financial status, and which lists the types and amounts of assets, liabilities, and equity as of a specific date, is called a(n):

Balance sheet.

The difference between the cost of an asset and the accumulated depreciation for that asset is called

Book Value.

Marian Mosely is the owner of Mosely Accounting Services. Which accounting principle requires Marian to keep her personal financial information separate from the financial information of Mosely Accounting Services?

Business entity principle

to include the personal assets and transactions of a business's owner in the records and reports of the business would be in conflict with the:

Business entity principle

A list of all accounts and the identification number assigned to each account used by a company is called a:

Chart of accounts.

An account linked with another account that has an opposite normal balance and that is subtracted from the balance of the related account is a(n):

Contra account.

Management Services, Inc. provides services to clients. On May 1, a client prepaid Management Services $60,000 for 6-months services in advance. Management Services' general journal entry to record this transaction will include a:

Credit to Unearned Management Fees for $60,000.

The difference between a company's assets and its liabilities, or net assets is:

Equity

Decreases in equity that represent costs of assets or services used to earn revenues are called:

Expenses.

The private group that currently has the authority to establish generally accepted accounting principles is the:

FASB

A Partnership:

Has unlimited liability.

Accounting is an information and measurement system that:

Identifies business activities. Records business activities. Communicates business activities. Helps people make better decisions. (all of the above)

The total amount of depreciation recorded against an asset or group of assets during the entire time the asset or assets have been owned:

Is referred to as accumulated depreciation.

Prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues are all examples of:

Items that require adjusting entries.

The record in which transactions are first recorded is the:

Journal.

Which of the following assets is not depreciated?

Land.

Unearned revenues are

Liabilities created when a customer pays in advance for products or services before the revenue is earned.

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

Matching principle.

An example of a financing activity is:

Obtaining a long-term loan.

A company made no adjusting entry for accrued and unpaid employee wages of $28,000 on December 31. This oversight would:

Overstate net income by $28,000.

An example of an operating activity is:

Paying wages.

The process of transferring general journal information to the ledger is:

Posting.

Which of the following statements is correct?

Promises of future payment are called accounts receivable.

the primary objective of financial accounting is:

Provide financial statements to help external users analyze and interpret an organization's activities.

An example of an investing activity is:

Purchase of land.

A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is:

Recorded as a credit to an unearned revenue account.

The accounting principle that requires revenue to be reported when earned is the:

Revenue recognition principle.

The rule that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash, and (3) measures the amount of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services, is called the:

Revenue recognition principle.

Which of the following groups of accounts are not balance sheet accounts?

Revenues.

Of the following accounts, the one that normally has a credit balance is:

Sales Salaries Payable.

external users of accounting information include:

Shareholders. Customers. Government regulators. Creditors. (all of the above)

The financial statement that shows the beginning balance of owner's equity; the changes in equity that resulted from new investments by the owner, net income (or net loss); withdrawals; and the ending balance, is the:

Statement of owner's equity.

A simple account form widely used in accounting as a tool to understand how debits and credits affect an account balance is called a:

T-account

Double-entry accounting is an accounting system:

That records the effects of transactions and other events in at least two accounts with equal debits and credits.

An account balance is:

The difference between the total debits and total credits for an account including the beginning balance.

Net income is:

The excess of revenues over expenses.

A debit is:

The left-hand side of a T-account.

Which of the following statements is incorrect?

The normal balance of an expense account is a credit.

A report that lists accounts and their balances, in which the total debit balances should equal the total credit balances, is called a(n):

Trial balance.

Revenue is properly recognized:

Upon completion of the sale or when services have been performed and the business obtains the right to collect the sales price.

A payment to an owner is called a(n): A. Liability.

Withdrawal.

The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:

cost principle

a corporation:

is a business legally separate from its owners.

internal users of accounting information include:

managers