Mort 165 Exam 1

Accounting terms are used to communicate information about business operations. Therefore, accounting is known as

"the language of business."

The beginning capital of the business totals $4,000. If the net income for the period totals $14,000 and the withdrawals by the owner total $3,000, what will be the new capital balance reported?

$15,000

If assets total $9,000 and owner's equity $4,000, liabilities must total:

$5,000

Partnership

1 or more partners.

Financial accounting is one of the functions performed by managerial accountants.

?

What group designs accounting information systems and focuses on analyzing and interpreting information?

Accountants

What is a system of gathering financial information about a business and reporting this information to users called?

Accounting

Examining a transaction or event to determine its fundamental significance to the business so that the relevant information may be properly processed is called:

Analyzing

A managerial accountant can achieve professional status by becoming a:

Certified M A

Stockholders of a corporation share unlimited liability for debts of the corporation.

False.

The owner of a computer services business acquired a new computer costing $5,000 by establishing an account with the computer supplier, Com Pewters Unlimited. There was no down payment. Recording the transaction will:

Increase asset, increase liability.

On a trial balance, debits and credits may, under special circumstances, have different totals and the trial balance will still be correct.

NO

Only the asset, liabilities, and owner's equity accounts will be listed on the trial balance of the business.

No, everything.

The type of business that has only one owner is a:

Sole Proprietorship

A corporation is owned by:

Stockholders

What is the fourth step in the accounting process?

Summarizing

The normal balance is a debit in:

an expense account

Prepaid Insurance is an blank account.

asset

Liability accounts normally have blank balances.

credit

A withdrawal of cash by the owner requires an entry blanking the Cash account and crediting the Drawing account.

crediting

A blank increases asset accounts.

debit

If assets decrease $1,200 and liabilities decrease $800 during the period, owner's equity must:

decrease 400

A business recorded the payment of an account payable to an office supplies store for supplies purchased earlier on credit. Recording the transaction will:

decrease asset, decrease liabilities.

Joe paid $70 for utilities for his office. This transaction blank Cash and blank Utilities Expense.

decrease, increase

The fact that each transaction has a dual effect on the accounting elements provides the basis for what is called

double-entry accounting.

Owner's equity accounts normally have credit balances.

false

Totals on the debit and credit sides of an account, entered to determine the balance of the account, are known as:

footings

Assets are the properties owned (resources) that are used to

generate the revenues of the business operation.

The financial statement that shows the results of a firm's operations over a specific time period is called the

income statement

The statement which summarizes the results of business activities for a specific period of time is the:

income statement

The three basic financial statements are the

income statement, balance sheet, and the statement of owner's equity.

If assets increase $500 and liabilities decrease $200 during the period, owner's equity will:

increase $700

The purchase of supplies for cash and the payment of an insurance premium both are transactions that increase

increase an asset and decrease an asset.

A business recorded the purchase of supplies on account. Recording the transaction will:

increase asset, increase liabilities.

The purchase of an asset on account with a partial down payment results in all of the following EXCEPT:

increase in owner's equity

Revenues

increase owner's equity

public auditing

is a function for which companies must hire outside, public accounting firms.

Interpreting

is deciding the meaning and importance of the information in various reports.

Recording

is entering financial information about events into the accounting system.

Corporate

is owned by shareholders.

Classifying

is sorting and grouping similar items together.

The process of entering a transaction in a journal is called

journalizing

To debit an account is to enter an amount on the blank side of the account.

left

The purchase of office supplies on account will require a debit to the Office Supplies account and a credit to the blank account.

liabilities

Which of the following normally have credit balances?

liability

A business that buys products from other businesses to sell those products to consumers is called

merchandising business.

Total expenses reported on the income statement are $45,000, while revenues for the same period are $46,000. Which statement below is correct?

net income $1,000

Earning fees for performing services for a customer or client will increase an asset account and increase the

owner's equity account.

The income statement is also called the

profit loss statement and operating statement.

Generally Accepted Accounting Principles, developed by the Financial Accounting Standards Board,

provide procedures and guidelines to be followed in the accounting and reporting process.

Balance sheet

reports assets, liabilities, and owners equity on a specific date.

The income earned from the performance of services or sale of products is called

revenue.

Which of the following account classifications will not be found on a balance sheet?

revenues

Tax accounting

services focused on tax planning, preparing tax returns, dealing with IRS

The three major parts of a T account are:

title, debit, credit

Examples of revenue accounts include all of the following except:

wages