Financial Accounting Ch. 1-4
which of the following would not be recorded as an accounting transaction
hiring a new employee
which of the following situations result in unearned revenue
received 100 cash from a customer for an order of goods to be shipped next month
public corporations are business
whose stock is bought and sold on a stock exchange
alpha sold $2000 of services to Beta on credit. Beta promised to pay for it next month. Alpha will report a $2000
accounts receivable
when existing assets are used up in the ordinary course business
an expense is recorded
accrual adjustments involve increasing
assets and revenues or increasing liabilities and expenses
if the prepaid rent account is not adjusted at the end of the period, what effect will this have on the financial statements
assets will be overstated and net income will be overstated
if a company receives $20,000 cash from its customers on account and uses the cash to pay $20,000 to its suppliers on accounts, the net result is that
assets would decrease by $20000 and liabilities would decrease by $20000
which of the following financial statements does not cover a period of time but rather reports amounts at a specific point in time
balance sheet
adjusting entries affect
both income statement and balance sheet accounts
an accounting system is referred to as a double-entry system because
both what is received and what is given in exchanged are recorded
which of the following would not represent a financing activity
buying supplies on account
financing that individuals or institutions have provided to a corporation is
classified as a liability when provided by creditors and as stockholders' equity when provided by owners
the book value of equipment is equal to which of the following
cost of equipment is less related accumulated depreciation
who has first claim to a business's assets should the company go out of the business
creditors
a difference between debt financing and equity financing is that
debt financing must be repaid, while repayment of equity financing is not required
what is the main difference between accrual and deferral adjustments
deferral adjustments are required to update previously recorded items whereas accrual adjustments are required to include items not previously recorded
managerial accounting reports prepared for internal use are used by the company's
employees
one of the major advantages of making adjustments in order to improve the quality of financial statements is that they
ensure that revenues and expenses are recognized during the period they are earned and incurred
a cost of doing business is referred to as a(n) ______________ and it is necessary to earn______________
expense; revenue
which of the following statements about accrual basis accounting is correct
if a company uses accrual basis accounting, the company should record expenses in the same period as the revenues they generate
expenses are reported on the
income statement in the time period in which they are incurred
salaries and wages expense appears on the _____________, while salaries and wages payable is a(n)
income statement; liability on the balance sheet
when a company earns net income, the company's retained earnings
increase
a credit would make which of the following accounts decrease
inventory
if a company borrows money from a bank and signs an agreement to repay the loan several years from now in which account would the company report the amount borrowed
notes payable long term
a characteristic shared by all liabilities is that they
obligate the company to do something in the future
which of the following will result in an increase in revenue
selling $10000 of groceries
which of the following expressions of the accounting equation is correct
stockholders equity = assets - liabilities
how will a company's current ratio be affected by the purchase of equipment for cash
the current ratio will decrease because the current assets decrease
which of the following items are reported on the income statement as a expense
the months utility bill
which of the following is a characteristic of a sole proprietorship
the owner is personally responsible for the debts of the business even if the debts are more than the owner has invested in the business
what is the effect on the balance sheet if a company purchases $100 of supplies using cash
total assets will remain the same