Accounting Test 1 Review Palmer

The purpose of adjusting entries for income taxes is to record income taxes __________ the accounting period.

accrued, but not yet paid, at the end of

Which of the following would not be reported on the balance sheet?

Advertising Expense

After the adjustments have been completed, the adjusted balance in Deferred Revenue represents the:

Amount of the sales or services still owed to the customer

An economic resource that is owned by a company and will provide future benefits is referred to as:

An Asset

Adjusting entries affect

Both income statement and balance sheet accounts

When a business issues stock, what does it give to its owners?

Common Stock

Which of the following would not be reported as a liability on the balance sheet?

Common Stock

Creditors are owners of a corporation. True or false?

False

Generally Accepted Accounting Principles (GAAP) require profitable companies to distribute some of their earnings to their stockholders. True or false?

False

The obligations and debts of a business are referred to as:

Liabilities

The creditors' claims to a company's resources are represented by:

Total Liabilities

Borrowing money from a bank is a financing activity on the statement of cash flows. True or false?

True

If the closing entry for revenues and expenses results in a credit to Retained Earnings for $3,600, the company had a net income of $3,600.

True

Permanent accounts include all asset, liability, and stockholders' equity accounts.

True

Stockholders' equity is the difference between a company's assets and its liabilities. True or false?

True

The acquisition of inventory in an exchange for a company's stock would increase the current ratio of the company.

True

The list of account names and reference numbers that the company will use when accounting for transactions is called the chart of accounts.

True