Accounting Final exam Pt 1
A customer may receive a sales discount for goods that are damaged or defective
False
A worksheet can be used as a basis for posting the adjustments to the ledger
False
An account will have a credit balance if the total debit amounts exceeds the total credit amounts
False
An expense paid with cash would result in an equal decrease in liabilities and owners equity
False
An important purpose of closing entries is to set permanent account balance to zero in order to begin the next period
False
Assets are increased by debits and liabilities are decreased by credits
False
Certified Public Accountants are only permitted to prepare audit reports and tax returns
False
Collection of an accounts receivable will increase both cash and accounts receivable
False
Cost less accumulated depreciation is a measurement of the current value of an asset such as equipment or a building
False
Gross profit is equal to net sales minus operating expenses
False
If prepaid costs are initially recorded as an asset, no adjusting entries will be required in the future
False
In a single-step income statement, gross profit and operating income are shown on the income statement
False
In posting, one should enter "J2" in the post. Ref Column on Page two of the journal
False
In preparing a worksheet for a merchandising firm, all income statement column debits represent expenses
False
Income from operations is determined by subtracting other expenses and losses from gross profit
False
Intangible assets are not listed on the balance sheet because they do not have physical substance
False
Liabilities represent the ownership claim on total assets
False
Monthly and quarterly time periods are commonly referred to as fiscal periods
False
Returns of merchandise increase the liability of a creditor
False
Sales discounts is classified as a contra asset account
False
Short term receivables are reported in the balance sheet immediately below cash
False
The adjusting entry for unearned revenues result in a debit to an asset account and a credit to revenue account
False
The allowance method for uncollectible accounts violates the expense recognition principle
False
The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique
False
The content of the owner's equity section of a proprietorship is the same as the content of the owners equity section of a corporation
False
The cost of a depreciable asset less accumulated depreciation reflects the book value of the asset
False
The cost of goods sold is determined only at the end of the accounting period under a perpetual inventory system
False
The entry to record the cost of inventory sold includes a credit to cost of goods sold
False
The entry to record the purchase of inventory on account in a perpetual inventory system includes a credit to accounts receivable
False
The maturity date of a 60 day note dated December 1 is January 31
False
The number and types of accounts used by different business enterprises are the same if generally accepted accounting principles are being followed by the enterprises
False
The owner's drawing account is closed to the income summary account in order to properly determine net income (or loss) for the period
False
The preparation of reversing entries is a required step in the accounting cycle
False
The principle amount of a 9%, 3 year, note receivable is $300,000 and is date January 1, 2012. The interest revenue to be recognized on December 31, 2012 is $9,000
False
The revenue recognition principle requires that companies recognize revenue in the period in which cash was received rather than when it was earned
False
Under the perpetual inventory system, the purchase of merchandise is recorded with a debit to the purchase account
False
When accrual-basis accounting is applied, adjusting entries are not necessary
False
When the columns of the trial balance equal each other, it proves no errors occurred in recording and posting
False
current assets are resources that can be converted into cash, but are not expected to be converted within one year
False
long term liabilities such as bank notes payable, mortgages payable, and bonds payable are expected to be paid from existing current assets
False
A Contra asset account is an account whose balance is deducted from a related asses in the financial statements
True
Accounting communicates financial information about a business enterprise to both internal and external users
True
Accounting is the information system that identifies, records, and communicates the economic events of an organization to interested users
True
Adjustments are journalized and posted only at the end of an accounting period, whereas correcting entries are journalized and posted whenever an error is discovered
True
Adjustments for accrued expenses are necessary to record the obligations that exist at the balance sheet date and to recognize the expenses that are applicable to the current accounting period
True
After closing entries have been Journalized and posted, all temporary accounts in the ledger should have zero balances
True
An aging schedule shows a required balance in Allowance for Doubtful Accounts of $8,600 is there a credit balance in the allowance account of $2,000 prior to adjustment, the adjustment amount is $6,600
True
Assets=Liabilities+owners Capital-Drawing+Revenues-Expenses
True
Bookkeeping deals with the record-keeping process and is only one aspect of accounting
True
Cost of goods sold is credited during the closing process
True
Depreciation is the process of allocating the cost of an asset to expense over its useful life in a rational and systematic manner
True
E commerce creates its own risk such as stolen credit card numbers, computer viruses and trojan horses
True
Financing charges added to a customer's credit card balance with a retailer are recorded as a debit to accounts receivable and a credit to interest revenue
True
If a worksheet is used, financial statements can be prepared before adjusting entries are journalized
True
In a manual system, processing includes journalizing transactions, posting the accounts, and preparing financial statements
True
In the balance sheet, inventory is reported as a current asset immediately below accounts receivable
True
In the closing entry process, the sales returns and allowances account is credited
True
Internal control is the organizational plan and all the related measures that an entity adopts to safeguard assets, encourage adherence to company policies, promote operational efficiency and ensure accurate and reliable accounting records
True
Measuring net income for a merchandising company is conceptually the same as for a service company
True
Merchandising companies report non operating activities in the income statement immediately after the company's primary operating activities
True
Net Income is the excess of revenues over expenses for the accounting period
True
Operating expenses are divided into administrative expenses and selling expenses on the income statement
True
Outputs are the reports used for decision making
True
Payments of expenses that will benefit more than one accounting period are referred to as prepaid expenses
True
Receivables are classified as accounts, notes, or other
True
Sale of a receivables to a factor may result in a debit to Service Charge Expense at the time of sale
True
Sales discounts is a contra revenue account and has a debit balance
True
Since companies find it desirable and necessary to report the results of their own activities frequently, the time period assumption assumes that the economic life of a business can be divided into artificial time periods
True
The AICPA code of professional conduct and the standards of ethical conduct for management accountants set the minimum standards of conduct for members of the AICPA and IMA
True
The accounts payable account in the general ledger controls the accounts payable subsidiary ledger
True
The adjusting entry at the end of the period to record an expired cost may be different depending on whether the cost was initially recorded as an asset or an expense
True
The balance of accumulated depreciation will appear in the credit side of the worksheet's balance sheet column
True
The balance of the depreciation expense account will appear in the income statement debit column of a worksheet
True
The basic steps in the recording process are: -analyze each transaction -Enter the transaction in a journal -Transfer the journal entry to the appropriate ledger accounts
True
The double-Entry system helps ensure the accuracy of the recorded amounts and helps to detect errors
True
The economic entity assumption requires that the activities of an entity be kept separate and distinct from the activities of its owner and all other economic entities
True
The economic entity assumption requires that the activities of the entity be kept separate and distinct from the activities of its owner and all other economic entities
True
The entry to record the purchase of inventory on account in a perpetual inventory system includes a debit to the inventory account
True
The ledger is the entire group of accounts maintained by a company
True
The maturity value of a $5,000 note is $5,300. If $180 of interest has been accrued prior to maturity, the entry to record the honoring of the note at maturity should include a credit to interest revenue for $120
True
The person to whom a check is drawn is referred to as the payee
True
The relationship between current assets and current liabilities is important in evaluating a company's liquidity
True
Transferring journal entries to the ledger is called posting and should be performed in chronological order
True
internal users are those who manage the business
True
the financial accounting standards board is the primary accounting standard-setting body in the United States
True
the owners capital account is increased by credits
True
