Midterm for accounting

Cash flows from (used in) investing activities include amounts:

received from the sale of the company's office building

Which of the following is an accounting transaction?

A manger signs a promissory note and receives cash.

Which of the following statements about cash basis accounting and accrual basis accounting is correct?

Accrual basis accounting provides a better measure of operating performance than cash basis accounting.

Permanent accounts

Also referred to as real accounts. Accounts that do not close at the end of the accounting year. The permanent accounts are all of the balance sheet accounts (asset accounts, liability accounts, owner's equity accounts) except for the owner's drawing account.

Asset

An economic resource that is owned by a company and will provide future benefits

Interest Receivable

An example of an account that could be included in an accrual adjustment for expense

Which account would be decreased with a credit?

Cash

Which of the following items is reported on the income statement as an expense?

Cost of goods sold

Chart of accounts

Each account is assigned a number; this listing of all accounts

Adjustments help to ensure that all ________ are recorded in the period in which they are earned

Expenses

Which of the following statements about financial accounting is correct?

Financial accounting reports are primarily prepared to provide information for external decision makers

Liabilities

The obligations and debts of a business

Which of the following statements about cash basis accounting and 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.

In part, a transaction affects the accounting equation by decreasing a liability. There is no effect on assets. Which of the following statements is correct with regards to this transaction?

If other assets are unchanged, stockholders equity must be decreasing

Sole Proprietorship

The owner(s) of a business are not taxed on the profits of the business

Which activity is not part of the operating cycle?

Payment of employees salaries

Which of the following statements about the post-closing trial balance is correct?

The post-closing trial balance is an internal report prepared as the last step in the accounting cycle.

Depreciation

The process of allocating the cost of buildings, vehicles, and equipment to the accounting periods in which they are used

Cost principle

The requirement that transactions be recorded at their exchange price at the transaction date

After net income has been determined, it is then transferred to

The statement of retained earnings.

Which of the following steps is performed first at the end of each accounting period?

Prepare adjusting entries

Which of the following accounts does not have a normal credit balance?

Rent Expense.

Your company places an order for inventory with suppliers for delivery in two weeks

This is an activity that does not affect the balance sheet

Accumulated Depreciation appears on

balance sheet

Net income loss

Revenues - Expenses

separate entity assumption

The financial reports of a business include only the results of that business's activities

Where are dividends reported?

balance sheet if they aren't paid, under liabilities and stockholders equity if they are paid.

The book value of equipment is equal to which of the following?

asset's cost less accumulated depreciation.

Blake, Inc. pays its employees once a month and records the expense at the time of payment. On September 30, X paid its employees $X for work performed in September. The entry to record the payment includes a

credit to Cash for $12,210.

At the end of the year, accrual adjustments could include a

credit to a revenue and a debit to an expense.

what is an accounting transaction?

event that occurs that has an impact on your business' financial statements

Amortization is the concept that applies to the

long-term assets that lack physical substance and have a limited period of usefulness (ex: software)

Operating activities include

manufacturing, sales, advertising, and marketing

Financial statements are most commonly prepared

monthly, quarterly, annually

the companys management staff

use Managerial accounting reports prepared for internal use

journal

where transactions are entered each day they occur