ACCT 2301 22 - Chapter One

Classify each of the following items as assets, liabilities, or equity from the drop down provided.

1. Accounts payable: Liabilities 2. Supplies: Assets 3. Taxes payable: Liabilities 4. Computer equipment: Assets 5. Equipment: Assets 6. Land: Assets

Identify each of the following items as revenues, expenses, or withdrawals from the drop down provided.

1. Advertising expense: Expenses 2. Insurance expense: Expenses 3. Sales revenue: Revenues 4. Postage expense: Expenses 5. Freight expense: Expenses 6. Rental revenue: Revenues 7. Legal fees paid: Expenses 8. Owner withdrawal: Withdrawals

Identify the fraud triangle risk factor (Opportunity, Pressure, or Rationalization) in each situation.

1. Company computers are not password protected: Opportunity 2. Managers are expected to grow business or be fired: Pressure 3. There is no supervision of employees handling inventory: Opportunity 4. A worker sees other employees regularly take inventory for personal use: Rationalization 5. Officers are told to report rising income or risk layoffs: Pressure 6. Payroll manager feels she is greatly underpaid: Rationalization

Match each of the descriptions with the term or phrase it best reflects.

1. Procedures set up to protect company property and equipment, ensure reliable accounting, promote efficiency, and encourage adherence to policies.: Internal controls 2. Three factors push a person to commit fraud: opportunity, pressure, and rationalization: Fraud triangle 3. Examines whether financial statements are prepared using GAAP: Audit 4. Beliefs that distinguish right from wrong: Ethics 5. A less expensive and more effective means to stop fraud: Prevention

Assets, Liability, and Equity

Assets = Liabilities +Equity Assets - Liabilities = Equity Assets - Equity = Liabilities

The primary objective of financial accounting is to:

Provide accounting information that serves external users.

Indicate in which financial statement each item would most likely appear, by selecting income statement, balance sheet, or statement of cash flows from the drop down provided.

a. Net decrease (or increase) in cash: Statement of cash flows b. Insurance expense: Income statement Taxes expense: Income statement c. Wages payable: Balance sheet e. Utilities expense: Income statement f. Taxes payable: Balance sheet g. Fuel expense: Income statements h. Rent payable: Balance sheet