accounting

Equipment is a(n) (asset/liability/expense) account. It is reported on the (left/right) side of the accounting equation and is (increased/decreased) when equipment is purchased.

Blank 1: asset Blank 2: left Blank 3: increased

S. Sunshine received and paid for a utility bill of $50. Show how to record this transaction to the T-accounts by selecting the correct answer below.

$50 on left side of the Utility expense account; $50 on the right side of the Cash account.

S. Gunner purchased a piece of equipment costing $6,000. She paid $1,000 immediately and put the rest on account. Show how to record this transaction to the T-accounts by selecting the correct answer below.

$6,000 on left side of the Equipment account; $5,000 on the right side of the Accounts payable account; $1,000 on the right side of the Cash account.

Which of the following statements is the best definition of an asset?

Assets are resources owned or controlled by a company and that have expected future benefits.

Choose the statement below which is true regarding adjusting journal entries.

At least one income statement account and one balance sheet account are always involved.

Identify which of the following lists include only examples of assets.

Building, cash, accounts receivable

True or false: Assets are claims by creditors against the company.

False

True or false: The cost of land owned by a business is recorded in the Land account and this account is classified as an expense.

False

An account is a record of increases and __________ in a specific asset, liability, equity, revenue or expense.

decreases

The statement of owner's equity reports:

how equity changed over a period of time

The revenue recognition principle states that revenue:

should be recorded when goods or services are provided to customers at an amount expected to be received from them

An income statement reports:

the revenues less the expenses incurred by a business

Which statement best describes a T-account?

A T-account represents a ledger account and is a tool used to show the effects of one or more transactions.

Revenues cause equity to (decrease/increase) and they are increased on the (left/right) side of the T-account.

Blank 1: increase Blank 2: right

Cash basis accounting recognizes (equity/revenues/expenses) when cash is received and records (revenues/expenses/liabilities) when cash is paid.

Blank 1: revenues Blank 2: expenses

Identify which of the following formulas correctly defines how to calculate the debt ratio.

Total liabilities/Total assets

Supplies are (assets/expenses/liabilities) until they are used. When they are used up, their costs are reported as (assets/expenses/liabilities).

Blank 1: assets Blank 2: expenses

Which of the following items would be considered "cash" and reflected in a company's Cash account? (Check all that apply.)

Coins Checks Money orders

J. Jackson invested $1,000 in his business. Show how to use T-accounts to record this transaction by selecting the correct answer below.

Debit Cash; credit Owner, Capital.

From the lists of accounts below, which one contains only revenue accounts?

Interest revenue, Professional fees earned, Sales

Which of the following is correct regarding posting a transaction?

Posting means to transfer journal information to a ledger.

Describe the final step in the adjusting process.

The final step is to create an adjusting journal entry to get from step 1 to step 2.

Which of the following statements best describes the purpose of the Owner, Capital account?

When an owner invests in a business, the invested amount is recorded in the Owner, Capital account

Which of the following statements is the correct definition of a creditor?

A creditor is an individual or organization that has a right to receive payments from a business.

Which of the following statements is accurate regarding Accounts payable?

Accounts payable refer to promises to pay later, which may arise from the purchase of supplies or services.

Which of the following accounts would be considered an asset? (Check all that apply.)

Accounts receivable Cash Building Supplies

Jeff, the owner of a business, invests an additional $100 into his business from his personal checking account. How would this affect the equity of his business?

Owner, Capital would be increased and total equity would also increase.

Which of the following statements are accurate regarding supplies? (Check all that apply.)

When supplies are purchased, they are added to the Supplies account. Supplies are assets until they are used. Unused supplies are treated as assets. Unused supplies can be recorded as Store Supplies, Office Supplies or Supplies.

Place the steps in the adjusting process in the correct order in which they would be performed.

equal should equal record

A trial balance is a(n) (list/balance/chart) of accounts and their balances at a point in time and is used to confirm that the sum of debit account balances equals the sum of account balances. Use one word for each blank.

Blank 1: list Blank 2: credit

Accrual basis accounting recognizes (equity/revenues/expenses) when the service or product is delivered and records (revenues/expenses/liabilities) when (incurred/paid) in order to adhere to the matching principle.

Blank 1: revenues Blank 2: expenses Blank 3: incurred

Transferring entries from the journal to the ledger is called (posting/preparing/journalizing).

Blank 1: posting

Which of the following statements is the best definition of the Chart of Accounts?

It is a list of all ledger accounts which exist in a business and includes an identification number assigned to each account.

After entering a transaction into the accounting equation, an increase in total assets can be accompanied by a(n) (increase/decrease) in total liabilities or (equity/assets).

Blank 1: increase Blank 2: equity

Which of the following would be included on an income statement? (Check all that apply.)

Net income Total revenues Total expenses

Which of the following statements is (are) correct regarding the definition of a liability? (Check all that apply.)

A liability is a claim by creditors against the assets of a business. A liability is a debt owed by the business. A liability can be settled by transferring assets or providing products or services to others.

The correct definition of an "account" includes which of the following?

A record of increases and decreases in a specific asset, liability, equity, revenue, or expense.

When financial statements are prepared, unexpired prepaid accounts are recorded as (expenses/assets/liabilities) and the expired portion of the prepaid account is reported as a(n) (expense/asset/liability).

Blank 1: assets Blank 2: expense

Holt Computer Services purchased $2,000 of new equipment and paid immediately. Illustrate how to record the transaction into T-accounts of Holt Services by completing the following sentence. The Equipment account would be (debited/credited) on the (left/right) side of the T-account and the Cash account would be (debited/credited) on the (left/right) side of the T-account.

Blank 1: debited Blank 2: left Blank 3: credited Blank 4: right

Given the descriptions below, which is (are) true regarding notes receivable? (Check all that apply.)

It is the promise of another entity to pay a specific sum of money on a specified future date. Notes receivable is classified as an asset. Another name for a note receivable is a promissory note.

Which of the following would be included on a statement of owner's equity? (Check all that apply.)

Net income (loss) Owner investments Owner withdrawals Capital balance at end of period Capital balance at beginning of period

Which of the following could be a logical or realistic accounting period for a business when preparing their financial statements? (Check all that apply.)

One-year period Six-month period One-month period

Which of the following statements about the Owner, Withdrawal account is (are) correct? (Check all that apply.)

Owner Withdrawals is increased when the owner withdraws assets for personal use. Owner Withdrawals decrease equity. Owner Withdrawals is used to record distributions of assets to the owner of a business.

There are several types of accounts that impact equity. Which of the accounts below cause equity to increase?

Owner's capital and revenues

Which of the following statements is the correct definition of owner's equity?

Owner's equity is the owner's claim on a company's assets.

Which of the following accounts impact equity? (Check all that apply.)

Owner, Capital Revenue Owner, Withdrawal Expenses

Simon, the owner of a business, invests $10,000 in his new business, Simon's Sports. How would this affect the equity of a business?

Owner, Capital would be increased, so equity is increased.

$800 of supplies were purchased at the beginning of the month and the Supplies account was increased. As of the end of the period, $200 of supplies still remain. Which of the following is the correct adjusting entry?

Supplies expense would be debited for $600.

An annual insurance policy is paid in advance by a company. How will the company treat this initial payment and the subsequent expiration of a portion of the policy over time? (Check all that apply.)

The initial payment will be recorded as an increase to a Prepaid Insurance account. Over time, the expired portion of the policy must be removed from the asset account as it has been used up and is no longer considered an asset. As a portion of the policy expires, the expired portion will be removed and transferred to an expense account.

Accrual basis accounting is defined as: (Check all that apply.)

an accounting system that uses the adjusting process to recognize revenues when earned and expenses when incurred. an accounting system that uses the matching principle to determine when to recognize revenues and expenses.

Jeff, the owner of a business, withdrew $100 from the business for personal use. How would this affect the total equity of his business?

Owner, Withdrawals would be increased and total equity would decrease as well.

When Myrtle withdraws $50 from the business for personal use, how would this affect the equity of a business?

assets are decreased and equity is decreased.

Cash can take many forms. From the lists of items below, choose the one which includes only items that would be defined as cash.

Coins, checks, money orders

Which of the following statements is (are) correct regarding a T-account? (Check all that apply.)

A T-account will show the debit and credit effects of transactions. A T-account represents a ledger account. A T-account may be used as a tool to visualize the effects of a transaction.

J. Brown provided services to a customer and immediately collected $1,900 cash. Show how to record the transaction to the T-accounts by completing the following sentence. Service Revenue would be (debited/credited) on the (left,/right) side of the T-account, and Cash would be (debited/credited) on the (left/right) side of the T-account.

Blank 1: credited Blank 2: right Blank 3: debited Blank 4: left

L. Lyons started a business and invested $4,000. Illustrate how to record the transaction in the T-accounts by completing the following sentence. The Cash account would be (debited/credited) on the (left/right) side of the T-account and the Owner, Capital account would be (debited/credited) on the (left/right) side of the T-account.

Blank 1: debited Blank 2: left Blank 3: credited Blank 4: right

P. Butter purchased $300 of supplies for cash. Illustrate how to record the transaction into T-accounts by completing the following sentence. The Supplies account would be (debited/credited) on the (left/right) side of the T-account and the Cash account would be (debited/credited) on the (left/right) side of the T-account.

Blank 1: debited Blank 2: left Blank 3: credited Blank 4: right

Which of the statements below is true regarding the statement of owner's equity?

Both the beginning and ending Capital balances are reported on the statement.

Which of the following is (are) true regarding timeliness and the importance of periodic reporting? (Check all that apply.)

Businesses report financial information at regular intervals to ensure timeliness of data. The value of information is often linked to its timeliness. Useful information must reach decision makers frequently.

A 12-month insurance policy was purchased on Dec. 1 for $4,800 and the Prepaid insurance account was initially increased for the payment. The required adjusting journal entry on December 31 includes a: (Check all that apply.)

debit to Insurance expense for $400. credit to Prepaid insurance for $400.

Choose the statement below that correctly explains a general journal..

A journal is a complete record of each transaction in one place and includes the debit and credit of each transaction.

Which of the following statements is the correct definition of a liability?

A liability is a claim by a creditor against the assets of a business.

Which of the following statements explains what a trial balance is?

A trial balance confirms that the sum of debit account balances equals the sum of credit account balances.

Which statement is correct regarding entering transactions into the accounting equation?

After recording a transaction, the total of the right side of the accounting equation must equal the total of the left side of the accounting equation

J. Brown purchased $900 of supplies on credit. Illustrate how to record the transaction to T-accounts by completing the following sentence. Accounts payable would be (debited,/credited) on the (left/right) side of the T-account, and Supplies would be (debited/credited) on the (left/right) side of the T-account.

Blank 1: credited Blank 2: right Blank 3: debited Blank 4: left

When entering a transaction into a general journal, the entry would be dated; then the accounts (debited/credited) would be listed first; then the accounts (debited/credited) would be listed next.

Blank 1: debited Blank 2: credited

J. Brown paid his only employee his weekly wages of $400. Show how to record the transaction to the T-accounts by completing the following sentence. The Wages expense account would be (debited/credited) on the (left/right) side of the T-account, and the Cash account would be (debited/credited) on the (left/right) side of the T-account.

Blank 1: debited Blank 2: left Blank 3: credited Blank 4: right

Stan Programming Services provided $8,000 of services and received payment immediately. Show how to record this transaction to the T-accounts by selecting the correct answer below.

Enter $8,000 on left side of Cash; enter $8,000 on the right side of Service revenue.

Stan Smith purchased $8,000 of supplies on credit for his company. Show how to record this transaction to the T-accounts by selecting the correct answer below.

Enter $8,000 on left side of the Supplies account; enter $8,000 on the right side of the Accounts payable account.

Which of the following statements is (are) accurate regarding equipment purchased within a business? (Check all that apply.)

Equipment purchases are reported on the balance sheet. Equipment is reported on the left side of the accounting equation. Equipment cost is initially recorded as an asset and the cost is allocated over time to expense. Equipment is an asset.

Which of the following statements describes the expense recognition (matching) principle? (Check all that apply.)

Expenses should be matched in the same accounting period as the revenues that are earned as a result of those expenses. Matching of expenses with revenues is a major part of the adjusting process.

Which of the following accounts are examples of revenues? (Check all that apply.)

Fees earned Sales Service revenue

Review each of the following statements to determine which is correct regarding the importance of assessing a company's risk of paying debt. (Check all that apply.)

If a company has a lot of debt, they may not be able to afford to take on new debt. A company that finances their assets by borrowing will need to make enough money to pay off the debt. A company's required debt payments may be greater than its ability to generate money to make those payments.

Which of the following statements is (are) correct regarding a journal? (Check all that apply.)

In a journal, both the debit and credit side of the transaction can be seen. Transactions are generally entered in chronological order. A journal is used to record business transactions.

Select the statement below that best defines prepaid accounts.

Prepaid accounts are assets that represent prepayments of future expenses.

Which of the following accounts are examples of expenses? (Check all that apply.)

Rent expense Supplies expense

From the following lists of accounts, choose the list(s) which contains only expense accounts.

Rent expense, salaries expense, insurance expense

Which of the following statements about revenues is correct?

Revenues cause equity to increase, and they are increased on the right side of the T-account.

The business earns $700 of consulting revenue. How would these earnings affect the total equity of a business?

Revenues increase, so total equity is increased.

The business earns $2,800 cash for services performed. How would this transaction affect the total equity of a business?

Revenues would be increased, so equity is increased.

Which of the following accounts is considered a prepaid expense?

Supplies

On Nov.1, L. Lyons pays $2,400 cash for supplies. Show how to use T-accounts to record this transaction by selecting the correct answer below.

Supplies would be debited, and Cash would be credited.

Which of the following statements is accurate about the Land account? (Check all that apply.)

The Land account is increased on the left side of its T-account. The Land account is an asset. The Land account is used to record the costs of land purchased by the business.

Which of the following statements is (are) correct regarding the Owner, Capital account? (Check all that apply.)

The Owner, Capital account is an equity account. The Owner, Capital account is increased on the right side of the T-account. The Owner, Capital account is used to record investments by the owner.

Cash basis accounting is defined as:

an accounting system which recognizes revenues when cash is received and records expenses when cash is paid

Accounts payable refer to promises to pay later by the business and are classified as a(n) (asset/liability/expense) account.

liability

Notes receivable is considered a(n) (asset/liability).

asset

The Owner, Withdrawal account is used to record (investments/withdrawals/expenses/revenues) by the owner and has a (positive/negative) impact on equity.

Blank 1: withdrawals Blank 2: negative

Which of the following statements correctly explains how to prepare a trial balance? (Check all that apply.)

Compute the total of debit balances and the total of credit balances. List each account title and its amount from the ledger. Verify that the total debit balances equals the total credit balances.

Which of the following best and fully describes a general ledger?

The general ledger is a record containing all accounts used by a company.

The general ledger can be used to determine which of the following: (Check all answers which apply)

increases and decreases in all accounts in a business. common and unique accounts used by a business. all accounts used by a company and their balances.