ACCT 3020 - Chapter 2 Concept Overview Videos

Which of the following statements regarding adjusting entries is correct? -Adjusting entries are recorded for all external transactions. -Adjusting entries are recorded to make sure all cash inflows and outflows are recorded in the current period. -After adjusting entries, all temporary accounts should have a balance of zero. -Adjusting entries are needed because we use accrual-basis accounting.

Adjusting entries are needed because we use accrual-basis accounting.

During its first month of business, Kochanski Company reported net cash flows from operating activities of $5,000, net cash flows from investing activities of ($10,000), net cash flows from financing activities of $50,000. What was the net increase in cash?

$45,000

Which of the following would ordinarily be classified as current assets on the balance sheet? Check All That Apply -Accounts receivable -Accounts payable -Cash -Equipment

-Cash -Accounts receivable

Which of the following accounts are closed at the end of the year? Check All That Apply -Accounts receivable -Retained earnings -Salaries expense -Service revenue

-Salaries expense -Service revenue

Match the term and the definition. _____ Transferring debits and credits recorded in individual journal entries to the specific accounts affected. _____ Captures the effect of a transaction on financial position in debit/credit form. _____ Process of reviewing source documents to determine dual effect on the accounting equation. _____ Collection of accounts that organizes the accounts and allows for keeping track of increases and decreases and resulting balances. _____ A chronological record of all economic events affecting financial position.

1. Posting 2. Journal entry 3. Transaction analysis 4. Ledger 5. Journal

The purpose of closing entries is to transfer: -Cash to the owners of the company -Assets and liabilities when operations are discontinued -Balances in temporary accounts to a permanent account -Inventory to customers

Balances in temporary accounts to a permanent account

Which of the following describes the purpose of the statement of shareholders' equity? -Disclose investments by owners, distributions to owners, net income, and other comprehensive income. -Disclose the impact of investments by owners, distributions to owners, net income, and other comprehensive income on the company's cash. -Disclose the events that caused cash to change during the period. -Disclose the changes in the company's assets, liabilities, and equity during the period.

Disclose investments by owners, distributions to owners, net income, and other comprehensive income.

Which of the following equations is correctly stated? -Comprehensive income +/− Other comprehensive income or loss items = Net income -Net income +/− Other comprehensive income or loss items = -Comprehensive income -Sales − Operating expenses = Gross profit -Sales + Gross profit − Operating expenses = Net income

Net income +/− Other comprehensive income or loss items = Comprehensive income

Put the descriptions of the steps that are performed at the end of the accounting period in order. Step 5. _____ Step 6. _____ Step 8. _____ Step 7. _____

Step 5. - Prepare an unadjusted trial balance Step 6. - Record and post adjusting entries Step 7. - Prepare an adjusted trial balance Step 8. - Prepare the financial statements

A characteristic of an accrued expense is: -Cash is paid, but an expense is never recorded. -An expense is recognized, but the cash payment is never paid. -Cash payment occurs before expense recognition. -The expense is recognized before the payment of cash.

The expense is recognized before the payment of cash.