ACT 205 CH. HW

On January 31, an entity's balance sheet showed total assets of $750 and liabilities of $250. Stockholders' equity at January 31 was:

$500

If an organization purchases $700 of supplies on account, with terms of 2/15, n50:

$686 can be paid within 15 days of the invoice date, or $700 must be paid within 50 days of the invoice date.

An engineering consultant provided $300 of services to a client; the client paid $50 when the bill was submitted and will pay the balance within a week. The consultant will record this transaction by:

A) Dr. Cash 50 Dr. Fees receivable 250 Cr. Fees revenue 300

The balance sheet equation can be represented by:

Assets - Liabilities = Stockholders' Equity. Assets = Liabilities + Stockholders' Equity. Net Assets = Stockholders' Equity.

An expanded version of the accounting equation could be:

Assets = Liabilities + Paid-in Capital + Beginning Retained Earnings + Revenues - Expenses - Dividends

The ethical concept of independence means that an accountant employed:

By an auditing firm cannot own any stock in the company being audited.

When a firm purchases supplies for use in its business, and the cost of the supplies purchased is recorded as an asset, the following adjustment to recognize the cost of supplies used will probably be required:

C) Dr. Supplies expense Cr. Supplies

Who are qualified to express an auditor's opinion about an entity's financial statements?

CPA Certified Public Accountant

The provisions of the Sarbanes-Oxley Act of 2002 had the following components:

Enforce auditing, Attestation and Quality control are correct.

The authoritative financial accounting standards-setting body in the United States is presently the:

Financial Accounting Standards Board (FASB).

What are three reasons that Enron failed?

Inaccurate financial reporting Fraud Ineffective ineffective control framework

Which classification of accounting is most concerned with the use of economic and financial information to plan and control many of the activities of the entity?

Managerial Accounting

Stockholders' equity refers to...

The ownership right of the stockholder(s) of the entity.

When an uncollectible account receivable is written off against the allowance for bad debts:

When an uncollectible account receivable is written off against the allowance for bad debts:

The time frame associated with an income statement is:

a past period of time.

The ethical concept of integrity means that an individual must:

attempt to be honest and forthright in dealings and communications with others.

The allowance for uncollectible accounts is a(n):

contra current asset.

FIFO results in higher profits than LIFO when...

costs are rising over time

Retained Earnings represents:

cumulative net income that has not been distributed to stockholders as dividends.

Major classifications of accounting activity would not include:

financial accounting, national accounting, cost accounting.

One of the most important reasons for having a system of internal control is to:

improve the effectiveness and efficiency of the operations of the organization.

A credit entry will:

increase a liability account

In the seller's records, the sale of merchandise on account would:

increase assets and increase expenses.

In the buyer's records, the purchase of merchandise on account would:

increase assets and increase liabilities

A fiscal year:

is frequently selected based on the firm's operating cycle.

The accounting concept or principle applied when an allowance is provided for estimated uncollectible accounts receivable is:

matching revenue and expense.

A journal entry recording an accrual:

results in a better matching of revenues and expenses.

The income statement shows amounts for:

revenues, gains, expenses and losses.

An unqualified auditors' opinion about an entity's financial statements:

states that they are presented in conformance with U.S. generally accepted accounting principles.

The reason for recording a prepaid expense as a current asset is:

that the prepaid item has not yet become an expense.

The going concern concept refers to a presumption that:

the entity will continue to operate in the foreseeable future.