ACCT 2113 Exam 1
Which of the following accounts normally has a credit balance?
Service Revenue.
A debit to Salaries Expense will:
Decrease stockholders' equity.
The entry to close the expense accounts includes:
A debit to Retained Earnings.
Which of the following is considered cash for financial reporting purposes?
Amounts held in checking accounts.
Which of the following equations correctly represents the fundamental accounting equation?
Assets = Liabilities + Stockholders' Equity.
Which financial statement reports a company's assets and liabilities?
Balance Sheet.
Which financial statement shows that a company's resources equal claims to those resources?
Balance sheet.
Expenses represent:
Costs of providing products or services to customers.
On November 1, 2021, a company receives cash of $6,000 from a customer for services to be provided evenly over the next six months. Deferred revenue is recorded at that time. Which of the following adjusting entries is needed on December 31, 2021?
Debit Deferred Revenue for $2,000; Credit Service Revenue for $2,000.
Paying dividends to stockholders would be recorded with a:
Debit to Dividends.
After the closing entries are posted to the accounts, all temporary accounts:
Have zero balances.
Under cash-basis accounting, companies typically record revenue:
In the period in which we received cash from customers for goods and services.
In which financial statement does a company report its revenues?
Income Statement.
Financial accounting provides information primarily to:
Investors and creditors.
Which of the following transactions causes an increase in total assets?
Issue common stock in exchange for cash.
Which definition best describes financial accounting?
Measuring a company's business activities and communicating those measurements to external parties.
Which of the following describes the information reported in the income statement?
Net income for the period is calculated by subtracting expenses from revenues.
Purchasing land with cash would have what effect on the accounting equation?
No effect.
Which of the following transactions increases total assets?
Provide services to customers on account.
Which of the following is an example of a prepaid expense?
Rent has been purchased in advance.
On September 9, Clearmore Services receives a request for services from a customer. The service is scheduled for September 15. On September 15, the service is provided, and the customer pays one week later on September 22. Using accrual-basis accounting, on which date should Clearmore Services record service revenue?
September 15 (date of service).
When preparing a bank reconciliation, nonsufficient funds (NSF) checks would be:
Subtracted from the company's cash balance.
The balance in retained earnings represents:
The amount of income earned over the company's life minus the dividends paid to shareholders over the company's life.
In a classified balance sheet, liabilities are separated into two categories based on
The length of time until the obligation is expected to be satisfied—less than one year versus more than one year.
The primary reason the balance of cash in the company's records will differ from the balance of cash in the bank's records includes:
Timing differences of recording cash transactions by the company and by the bank.
Which of the following describes the closing process?
Transfer the balances of temporary accounts (revenues, expenses, and dividends) to retained earnings.
A debit is used to increase which of the following accounts?
Utilities Expense.
Which of the following transactions decreases stockholders' equity?
Which of the following transactions decreases stockholders' equity?
Which of the following represents a resource of the company?
asset
A credit is used to decrease which of the following accounts?
cash