Accounting Assessment
After making aa sale of $3000, where $1200 is paid in cash and $1800 is sold on credit, how would the balance sheet be updated?
$3000 credit to revenue, $1200 debit to cash, and $1800 debt to accounts receivable
In which forms can the income statement be prepared?
1. Single step income statement 2. Condensed Income Statement 3. Common sized income statement
What is the minimum number of entries per transaction?
2 - Double entry accounting
What is the result of the following transaction. Company A's customer is unable to pay for a previous credit sale in accordance with the company's 90 day payment terms. The customer makes a promissory not to the company that extends the payment over a 24 month term including 5% interest.
A note receivable is recorded in non-current assets
How is a purchase of property, plant, and equipment reflected on the statement of cash flows?
As a use of cash in the "cash from investing" section
What is a current asset
Assets that will be turned into cash or used up within one year. (i.e. Accounts Receivable, Inventory cash...)
Which accounts increase by debits in double-entry accounting?
Assets, Expense, and losses
What are the main sections on a balance sheet
Assets, liabilities and equity
CPA's must have in-depth knowledge of...
Auditing
Which is NOT a core financial statement? a. The income statement b. Statement of cash flows c. The trial balance d. The balance sheet
C. The Trial Balance
What would the journal entry be for a company that takes out a 5yr $100,000 business loan?
Debit $100,000 current assets, Credit $100,000 non-current liabilities
Which side are debt and credits recorded on?
Debts left, Credits right
Which organizations are involved in the development of the US Generally Accepted Accounting Principles (GAAP)?
FASB, SEC, FASAB & GASB
Increasing an asset involves crediting the account. True of False
False
Assets are recorded on the balance sheet at their estimated fair market value. True or False
False - they are recorded at the purchase price
Which inventory valuation method reflects the most current market value for inventory on hand?
First - in - First - out (FIFO)
How are a company's financial statements used?
For analysis, external negotiation, and compliance
What is the formula used to calculate operating income?
Gross income - Operating Expenses = operating Income
Which account is associated with Cost of goods sold?
Inventory
Unearned revenues are recorded on a company's balance sheet under which kind of account?
Liability
What method of depreciation is not GAAP compliant?
MACRS
Intercompany accounting, does it impact taxes
No
What is the most used method to amortize intangible assets on financial statements?
Straight-line method
The listing of all financial accounts within a company's general ledger is called...
The Chart of Accounts
Which financial statement is a report of a company's revenue and expenses during a certain time period?
The Income Statement
Accounts receivable are found in the current asset section of a balance sheet True of False
True
Balance sheets reflect a company's financial position at a certain point in time True of False
True
If the business has provided the goods or services and can reasonably expect to receive cash,, it can recognize the revenue in that period. True or False
True
When are liabilities under the accrual basis of accounting?
When Incurred
A company that uses the cash basis of accounting will a. record revenue when it is collected b. record revenue when it is earned c. record revenue at the same time as accounts receivable d. record bad debt expense on the income statement
a. record revenue when it is collected
Which of the following increases accounts payable? a. A customer fails to pay an invoice b. A supplier delivers raw materials on credit c. Office supplies are purchased with cash d. None of the above
b. A supplier delivers raw materials on credit
Debits decrease which if the following accounts? a. Cash b. Accounts payable c. Supplies expense d. Both a & c
b. Accounts payable
Which is not an example of financing cash flow? a. Paying off a debt of $25,000 b. Investing in equipment worth $90,000 c. Paying $12,000 worth of dividends to shareholders d. Issuing $42,000 worth of shares
b. Investing in equipment worth $90,000 It's an investing activity
Which one of these WILL NOT yield earnings before interest and taxes (EBIT)? a. Revenue - Cost of goods sold - Operating expenses b. Net income + Tax expense + Interest expense c. Sales + Taxes + Interest d. Gross profit - Operating expenses
c. Sales + Taxes + Interest
Describe the double-declining depreciation method
the depreciation expense is larger in the early years and gets smaller as time goes on
