accounting

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In accounting, depreciation refers to the

allocation of asset cost.

When are adjusting entries done?

always done at the end of the month

The cost of doing business is also known as

an expense.

When are expenses recognized?

are recognized when incurred/period they are incurred.

In accrual accounting when are revenues recognized?

are recognized when services are performed.

cash

asset

An adjusting entry would not include which of the following accounts?

Cash

Which of the following accounts is a contra account?

Accumulated Depreciation-Machinery

Which type of account is cost of goods sold?

An expense account

What is the formula for calculating retained earnings? What type of account is it?

Beginning R.E + Net Income - Dividends = End R.E Equity Account

To which account is the cost of inventory transferred when a product is sold?

Cost of goods sold

Which of the following is not a subtotal?

Cost of goods sold

Liabilities have which of the following two major categories?

Current and long term

The normal operating cycle helps define which of the following balance sheet sections?

Current assets

retained earnings (beginning)

Equity

In which category would office salaries expense be included?

General and administrative expenses

Which of the following should be classified as an intangible asset?

Goodwill

Why is it necessary to adjust the accounts?

If not our financial statements will be over or under

Which of the following is not a permanent account?

Insurance Expense

Patents would appear in which section of the balance sheet?

Intangible assets

Which of the following accounts is not classified as a selling expense on the income statement?

Interest expense

Which of the following is not considered an operating expense?

Interest expense

Who is responsible for preparing financial statements?

Management of the company

Which of the following appears on the balance sheet?

Merchandise inventory

Which of the following does not represent a sale?

Merchandise placed aside for a customer who plans to come in next week and pay with cash

Is the cash account involved in the adjusting process? Why or why not?

Never involve cash. Because either you have already received or it will be in the future

Which of the following transactions results in an increase in expenses?

Receive a bill for the usage of utilities

Which of the following transactions will not result in an increase in revenues?

Sale of stock to investors for cash

Which of the following accounts would be found on the credit side of the adjusted trial balance?

Service Revenue

What is the adjustment entry for that portion of revenue received in advance which has now been earned?

Unearned Revenue - Debit; Revenue from Services - Credit.

Which of the following is a measure of liquidity?

Working capital

When expenses exceed revenues

a net loss occurs.

A physical inventory is usually taken

at the end of the fiscal year.

Revenues are increases in stockholders' equity and result from

both selling goods and rendering services.

Each of the following companies is a merchandising business except a

car wash.

Accumulated depreciation--buildings

contra long term asset

Accumulated depreciation--furniture/fixtures

contra long term asset

Accumulated depreciation is classified as a(n)

contra-asset account.

Gross margin equals the difference between net sales and

cost of goods sold.

accounts receivable

current asset

merchandise inventories

current asset

office supplies

current asset

prepaid rent

current asset

What is the difference between a current asset and property, plant and equipment?

current asset expected to convert to cash, sell or consume with in a year. long term assets are used to produce sell and deliver goods, thy last for longer than a year.

accounts payable

current liability

income tax payable

current liability

interest payable

current liability

Current assets divided by current liabilities is known as the

current ratio.

The principal difference between depreciation expense and most other types of expenses is that depreciation

does not require an immediate cash outlay.

additional paid in capital

equity

capital stock

equity

dividends

equity

buildings

fixed/long term asset

land

fixed/long term asset

furniture and fixtures

fixed/long term assets

Income from operations is arrived after considering all except

interest income.

Machinery might be depreciated over 10 years because

it will help to generate revenue for the company over 10 years.

Merchandise inventory becomes part of cost of goods sold when a company

sells the inventory.

long term notes payable

long term liability

advertising expense

operating expense

commissions expense

operating expense

depreciation expense--buildings

operating expense

depreciation expense--furniture/fixtures

operating expense

insurance expense

operating expense

rent expense

operating expense

salary expense

operating expense

The carrying value of a depreciable asset equals

original cost minus accumulated depreciation.

cost of goods sold

other expense

income tax expense

other expense

interest expense

other expense

interest revenue

other revenue

Interest expense on a mortgage would be classified on a multistep income statement under the heading

other revenues and expenses.

Interest paid on debt would be entered on the multistep income statement in the category called

other revenues and expenses.

Define the matching principle

record expenses and revenue in the correct period

The other revenues and expenses section of a multistep income statement could include all the following except

rent expense.

sales revenue

revenue

Working capital measures

the excess of current assets over current liabilities—what is on hand to continue business operations.

The matching rule is applied

to help produce an accurate measurement of a company's performance


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