ACTY

The closing entry for expenses includes:

A debit to Retained Earnings and a credit to all expense accounts.

Which of the following accounts would normally have a credit balance?

Accounts payable, service revenue, common stock

Independent auditors express an opinion on the:

Extent to which financial statements are in compliance with GAAP.

When should supplies be recorded as an expense?

In the period the supplies are used, regardless of when they were purchased

Receiving cash from an account receivable:

Increases one asset and decreases another asset

Which of the following statements is correct regarding the adjusting entry to record interest accrued on a note payable?

Interest on the note payable is classified as an expense since it is a cost of borrowing.

Limited liability means:

Stockholders of a corporation are not obligated to pay the corporation's debts out of their own pocket.

The primary purpose of closing entries is to:

Update the balance of Retained Earnings and prepare revenue, expense, and dividend accounts for next period's transactions.

occur when the cash flow occurs after either the expense is incurred or the revenue is earned.

accruals

A list of all accounts and their balances after adjusting entries have been prepared.

adjusted trial balance

A trial balance can best be explained as a list of:

all accounts and their balances at a particular date

A prepayment that is originally recorded as an asset will be Blank______.

allocated to future accounting periods based on the cost of the asset used during the period

current liability

an amount due within one year

Adjusting entries ensure that Blank______ balances are reported at amounts representing the economic benefits that remain at the end of the period.

asset

Prepaid insurance is a(n) Blank______. Multiple choice question.

asset in the balance sheet

Land owned by a company

assets

Expenses are best defined as:

costs of providing products and services

On a classified balance sheet, total liabilities represent the sum of and long-term liabilities.

current

Assets that will be used up or converted to cash within the next year are ______ assets.

current or short-term

Which of the following is a possible closing entry?

debit service revenue, credit retained earnings

The adjusting entry to record supplies used during the period includes a:

debit to supplies expense

Assets normally carry a _______ balance and are shown in the ______________.

debit, balance sheet

Expenses normally carry a _______ balance and are shown in the ______________.

debit, income statement

An expense has what effect on the accounting equation?

decreases stockholders' equity

A gym offers one-year memberships for $99 and requires customers to pay the full amount of cash at the beginning of the membership period. For the gym, this is an example of a(n):

deferred revenue

Receiving cash from customers before services are performed results in:

deferred revenue

Which of the following current liabilities does not involve the future payment of cash?

deferred revenue

The process of allocating the cost of an asset to expense over the useful life of the asset is called

depreciation

Adjusting entries are made at the ----- of the accounting period, while daily transactions are made throughout the accounting period.

end, closing, close

If an adjusting entry's credit is to a liability account, then the debit must be to Blank______.

expense

Which of the following describes the cost of selling to customers?

expenses

Workers' salaries for the current period

expenses

Financial statements are typically prepared before completing the adjusted trial balance.

false

A classified balance sheet Blank______.

groups asset and liabilities into current and long-term categories

Under accrual-basis accounting, companies typically report expenses:

in the same period as th revenue they help to generate

Under cash-basis accounting, companies typically report expenses:

in the same period in which cash is paid

A list of accounts showing total revenues minus total expenses equal net income.

income statement

Expenses are shown in which of the following statements?

income statement

In which financial statement does a company report its expenses?

income statement

In which financial statement does a company report its revenues?

income statement

A long-term liability:

is not due within the next year

Which of the following transactions increases total assets?

issue common stock in exchange for cash provide services on account

Transactions are recorded using debits and credits in a(n):

journal

The term commonly used in accounting to describe the format for recording a transaction is:

journal entry

Creditors' claims to a corporation's resources are referred to as:

liabilities

amounts owed to the bank

liabilities

Amounts owed to suppliers for supplies purchased on account are defined as a(n):

liability

Deferred revenue is a(n) Blank______.

liability

Closing entries are:

made to transfer the balances of temporary accounts to retained earnings

Who ultimately is responsible for properly applying GAAP? The company's:

management

Item13On March 4, Tonkawa Law asks Green Lawn Services for basic lawn maintenance totaling $200. Green Lawn provides maintenance on March 8, and Tonkawa pays for the lawn maintenance on March 12. Under accrual-basis accounting, on which date should Tonkawa record lawn maintenance expense?

march 8(date of lawn maintenance service)

Long-term assets are expected to provide benefits for

more than one year

Which of these is a long-term liability?

mortgage payable due in 20 years

Which of the following describes the information reported in the statement of cash flows?

net cash flows from operating, investing, and financing activities

Adam Corporation uses the cash-basis of accounting. Adam Corporation should record expenses when:

paid

Which of the following transactions causes a decrease in stockholders' equity?

paying advertising expense for the current month

assets, liabilities, Stockholders's equity

permanent accounts

Which of the following is true concerning temporary and permanent accounts?

permanent accounts represent activity over the entire life of the company

List of permanent accounts and their balances.

post-closing trial balance

The process of transferring debit and credit information from the general journal to the general ledger is known as:

posting

The balance sheet:

presents the financial position of the company on a particular date

Which of the following is an example of a prepaid expense?

rent has been purchased in advance

Which of the following transactions would normally be recorded as an asset when cash is paid? current months salaries current months utilities rent paid in advance advance payments from customers

rent paid in advance

Which of the following transactions would normally be recorded as an asset when cash is paid? rent paid in advance current month salaries advance payments from customers current month utilities

rent paid in advance

Which of the following transactions causes a decrease in total liabilities?

repay amounts previously borrowed from the bank

The assets of a company represent:

resources that will be used to benefit the company

Stockholders' equity consists of two main components, common stock and Blank______.

retained earnings

Which government agency has the authority to set accounting and reporting standards in the United States?

securities and Exchange commission

A credit is used to increase which of the following accounts?

service revenue

Which of the following accounts normally has a credit balance?

service revenue

Generally Accepted Accounting Principles (GAAP) are best defined as:

standards for presenting financial accounting information

Dividends reported on

statement of stockholders' equity

The post-closing trial balance helps to verify that:

the accounts are ready for next period's transactions we prepared and posted closing entries correctly

After the adjusting entries have been completed, the adjusted balance in the Deferred Revenue account represents:

the amount of the sales or services still owed to the customer.

A company may properly classify an asset that provides benefits for 15 months as a current asset if

the company's operating cycle is longer than one year

Financial accounting is often referred to as a:

the language of business

What is a benefit to a career in accounting?

wide range of job opportunities high salaries high demand for accounting graduates

A company reports the following in its income statement: Total revenues of $500,000 and total expenses of $300,000. Which of the following is true?

$200,000

Use the following amounts to calculate net income: Assets, $165,000; Dividends, $9,000; Expenses, $61,000; Liabilities, $74,000; Revenues, $82,000.

$21,000

Deferred revenues refer to

Customers paying cash in advance of the good or service to be provided

The accounting basis that records revenues when goods or services are provided to customers and expenses with related revenues is referred to as:

Accrual-basis

The basic principle involved with expense recognition is:

All costs that are used to generate revenue are recorded in the period the revenue is recognized

During December, Mainzel Interior Design Corporation redecorated the reception areas of a local hotel. The project was completed on December 31 with payment due in 30 days. Payment was received on January 21 of the following year. When should Mainzel recognize the related revenue using accrual accounting?

Dec 31

GAAP is an abbreviation for:

Generally Accepted Accounting Principles

Which of the following would be referred to as "accruals?" (Select all that apply.) Cash collected prior to goods or services being provided Cash paid prior to expenses being incurred Goods and services provided, not yet collected Expenses incurred, not yet paid

Goods and services provided, not yet collected Expenses incurred, not yet paid

How do temporary accounts differ from permanent accounts?

Only temporary accounts are cleared out at the end of the accounting period.

Which of the following is an operating activity?

Paying electricity bills for the month.

Making rent payments in advance is an example of a(n):

Prepaid expense

Which of the following is a permanent account?

Retained Earnings

Which of the following relationships is correct?

Total assets = total liabilities plus stockholders' equity

Ethics is best described as:

a code or moral system that provides criteria for evaluating right and wrong behavior

The adjusting entry for an accrued revenue always includes: (Select all that apply.)

a credit to a revenue account a debit to an asset account

Revenue in the income statement for the year ended December 31, 2021 equals the:

amount earned by selling goods or services to customers during 2021.

The accounts that represent the resources of the company are called:

assets

Current assets include:

assets that will be used up or converted to cash within 12 months cash, marketable securities, accounts receivable, and inventories

permanent accounts

assets, liabilities, equity

To ensure that management has in fact appropriately applied GAAP, the SEC requires independent outside verification of the financial statements of public traded companies by an:

auditor

A list of accounts showing total assets equal total liabilities plus total stockholders' equity.

balance sheet

The financial statement that represents the accounting equation is the:

balance sheet

On May 1, 2021, Townsley borrowed $250,000 from Prime Bank by signing a three-year, 6% note payable. Interest is due each May 1. What adjusting entry, if any, should Townsley record on December 31, 2021?

debit interest expense and credit interest payable for $10,000

Providing services on account would be recorded with a:

debit to accounts receivable

is an allocation of the cost of buildings, vehicles, and equipment to expense over time as they are used.

depreciation

payments made to stockholders

dividends

One disadvantage of the corporate form of business is:

double taxation

An advantage of a classified balance sheet is that it is easy to see:

if current assets are large enough to pay current liabilities

If an adjusting entry's debit is to an expense account, then the credit must be to which of the following?

liability prepaid expense

The adjusting entry for a deferred revenue includes a debit to a(n) ____ account and a credit to a(n) _____ account. (Enter only one word per blank.)

liability revenue

An asset that can quickly be turned into cash has the characteristic of

liquidity

Adjusting entries for accrued expenses ensure that liabilities are reported for all amounts Blank______ at the end of the accounting period.

owed

Costs of assets acquired in one period that will be recorded as expense in a future period are referred to as Blank______ and are initially recorded as Blank______.

prepaid expenses assets

Cleaning services provided to customers

revenues

Which of the following financial statements typically is prepared last?

statement of cash flows

A statement showing the change in the balance of common stock and retained earnings for the period.

statement of stockholder' equity

Cash typically is the first current asset reported on the balance sheet because it is:

the most liquid asset

After the adjusting entries have been completed, the adjusted balance in the Supplies Expense account represents the cost of supplies:

used during the accounting period

A credit to Cash will:

decrease assets

Which of the following is true about an income statement?

Reports activity for a period off time, does not include dividends paid, reports revenues and expenses

Prepaid expenses should be Blank______ by the cost of the asset used during the accounting period.

decreased

The costs of providing goods and services to customers are referred to as:

expenses

Which financial statement conveys a company's ability to generate profits in the current period?

income statement

revenues and expenses

income statement

On a classified balance sheet, long-term assets may be reported in these sub-categories:

property, plant, and equipment intangible assets long term investments

Which of the following transactions causes an increase in stockholders' equity?

provide services to customers on account

A career in a public accounting firm traditionally involves working in the area of:

tax prep/planning business consulting auditing

revenues, expenses, dividends

temporary accounts

Accounting information is used by investors to decide whether to invest in a company's stock.

true

All accounts that appear in the balance sheet, including Retained Earnings, are permanent accounts, and we carry forward their balances from period to period.

true

If you are able to predict the change in financial accounting's measure of profitability, you can predict the change in stock prices, too.

true

In a journal entry, there are two amount columns: the left-hand column is for debits, and the right-hand column is for credits.

true

The main functions of financial accounting are to measure business activities and to communicate those measurements to investors and creditors.

true

If stockholders' equity is $50,000 and liabilities are $78,000, then assets must equal:

$128,000

Cash$11,200 Supplies Expense 1,500 Dividends 2,600 Service Revenue 23,500 Prepaid Rent 4,300 Salaries Expense 8,200 Accounts Payable 12,700 Land 36,900 What amount would the company report for net income?

$13,800

Accounts Receivable$14,700 Rent Expense 7,500 Insurance Expense 2,100 Common Stock 24,000 Service Revenue 28,300 Supplies 4,300 Equipment 21,600 Income Tax Expense 4,200 calculate net income

$14,500

On November 1, 2022, Movers, Inc., paid $24,000 for 2 years' rent beginning on November 1. The Prepaid rent balance at December 31, 2022 equals Blank______.

$22,000

Emmitt had the following final balances after the first year of operations: assets, $36,100; stockholders' equity, $13,100; dividends, $2,500; and net income, $10,200. What is the amount of Emmitt's liabilities?

$23,000

DW has an ending Retained Earnings balance of $53,000. If during the year DW paid dividends of $4,500 and had net income of $22,800, then what was the beginning Retained Earnings balance?

$34,700

On August 1, 2022, a firm prepaid $53,520 for 2 years' rent of an office building. On March 1, 2023, the firm prepaid $34,800 for 2 years' rent of a warehouse. The rent agreements on both buildings went into effect on the dates the rents were prepaid. What amount will be shown for prepaid rent on the December 31, 2023 balance sheet?

$35,910 Reason: (($53,520/24 months) x 7 months remaining)+(($34,800/240 months) x 14 months remaining). Note that the question is asking for the Prepaid rent on the balance sheet on December 31, 2023 and not the expense on the income statement.

The retained earnings account had a beginning credit balance of $26,050. During the period, the business had a net loss $12,500, and the company paid dividends of $8,950. The ending balance in the retained earnings account is:

$4,600

In the statement of stockholders' equity, Retained Earnings had a beginning balance of $60,000. During the period, the company reports a net loss of $10,000 and net cash outflows of $15,000. The ending balance in the Retained Earnings account is:

$50,000

A company has the following three events in December: December 1 - Pay last month's rent (November), $500. December 15 - Pay rent for the current month (December), $500. December 31 - Pay rent for the following year, $6,000. How much would be recorded as Rent Expense for the month of December using accrual-basis accounting?

$500

use the following appropriate amounts to calculate net income: Revenues, $10,700; Liabilities, $3,800; Expenses, $4,600; Assets, $17,300; Dividends, $1,900.

$6,100

A company plans to own and operate a storage rental facility. For the first month of operations, the company has the following transactions. 1. January 1 Issue 10,000 shares of common stock in exchange for $31,000 in cash. 2. January 5 Purchase land for $18,500. A note payable is signed for the full amount. 3. January 9 Purchase storage container equipment for $7,900 cash. 4. January 12 Hire three employees for $1,900 per month. 5. January 18 Receive cash of $11,900 in rental fees for the current month. 6. January 23 Purchase office supplies for $1,900 on account. 7. January 31 Pay employees $5,700 for the first month's salaries.

1. debit cash, credit common stock 2. debit land, credit notes payable 3. debit equipment, credit cash 4. no journal entry required 5.debit cash, credit service revenue 6. debit supplies, credit accounts payable 7.debit salaries expense, credit cash

Which of the following transactions are examples of prepayments that will require an adjustment at the end of the accounting period on December 31? (Select all that apply.) A company records interest expense that has accrued, but will not be paid until next year. A company pays a 6-month insurance premium at the beginning of October. A company pays for 4 months of advertising in the Wall Street Journal on November 1. A company pays a utility bill for charges incurred in the previous month.

A company pays a 6-month insurance premium at the beginning of October. A company pays for 4 months of advertising in the Wall Street Journal on November 1.

Which of the following is true of public accounting?

A public accountant usually gets to work with multiple clients.

Which of the following statements describes the effect that adjusting entries may have on liabilities? Multiple choice question. Adjusting entries increase liabilities for the amount of any accrued and unpaid expenses at the end of the period. Adjusting entries do not have any effect on liabilities, since cash is not included in the adjusting entries. Adjusting entries reduce liabilities for the amount of any accrued and unpaid expenses at the end of the period.

Adjusting entries increase liabilities for the amount of any accrued and unpaid expenses at the end of the period.

A list of all accounts and their balances after updating account balances for adjusting entries is referred to as:

An adjusted trial balance

The accounting equation is defined as:

Assets = Liabilities + Stockholders' Equity

What are current assets?

Assets that provide benefits within the next year.

Palmer Corporation borrows $40,000 cash by signing a note with the bank. Which of the following statements correctly shows the effect of this transaction on the accounting equation?

Assets will increase by $40,000, liabilities will increase by $40,000, and stockholders' equity will remain unchanged

Bell Company purchased supplies for $700 cash. Which of the following statements correctly shows the effect of this transaction on the accounting equation?

Assets will remain unchanged, liabilities will remain unchanged, and stockholders' equity will remain unchanged

The accounting basis that records revenues when cash is received and expenses when cash is paid is referred to as:

Cash-basis

A list of all account names used to record transactions of a company is referred to as a:

Chart of accounts

What are the primary components of stockholders' equity?

Common stock and retained earnings

Expenses represent:

Costs of providing products or services to customers.

Which of the following expressions correctly calculates "total assets?"

Current assets plus long-term assets

On June 30, a company provides $900 of services to customers on account. It usually takes the company one week to mail bills to customers and another week for customers to pay. In June, the adjusting entry is recorded as:

Debit Accounts Receivable $900, Credit Service Revenue $900

The closing entry for Service Revenue includes:

Debit Service Revenue, credit Retained Earnings.

At the end of May, a company receives a utility bill for $500 associated with operations in May. The company plans to pay the bill on June 10. In May, the adjusting entry is recorded as:

Debit Utilities Expense $500, Credit Utilities Payable $500

On December 10, a company pays $500 for advertising to appear on December 20. On which date should the expense be recorded under accrual-basis accounting?

Dec 20

A debit to Salaries Expense will:

Decrease stockholders' equity.

True or false: Total assets must always be equal to total liabilities less stockholders' equity

False total liabilities plus stockholder's equity

True or false: Adjusting entries ensure that assets in the balance sheet are reported at amounts that have been used up or expired during the period.

False; Adjustments remove the value of assets that have been used up or expired during the period, leaving a balance that represents the economic benefit remaining in the account.

A publisher sends magazines on a monthly basis to a customer throughout Year 2. The customer had paid for this subscription in December Year 1. For the February Year 2 edition of the magazine, the publisher purchases paper in January Year 2 by paying cash. When should the company report the costs associated with the purchase of paper?

February Year 2

The term GAAP stands for:

Generally Accepted Accounting Principles

A company orders office supplies in June. Those supplies are received and used in July. The supplies are paid for in August. In which month should the company record supplies expense?

July

What is the primary purpose of financial accounting?

Measure business activities and communicate those measures to external users to make decisions.

On November 15, Meier Company received $3,000 cash from a customer for services that were performed on November 1. According to the Revenue Recognition Principle, on which date should the revenue be recorded?

Nov 1

On November 15, Meier Company received $3,000 cash from a customer for services that were performed on November 1. On which date should the revenue be recorded under cash-basis accounting?

Nov 15

Use the drop-down menus to indicate whether each of the following events would be recorded as expenses at the time it happens under the accrual-basis and cash-basis accounting methods.

October: Purchase supplies totaling $10,000 on account. Do not record on AB or CB November: Pay cash for the supplies that were purchased in October. do not record on AB, record on CB December: Pay $900 cash for utilities for the current month. record on AB and CB

Use the drop-down menus to indicate whether each of the following events would be recorded as revenues at the time it happens under the accrual-basis and cash-basis accounting methods.

October: Receive cash in advance from customers for services to be performed in November.Do not record revenue November: Receive cash for services performed in November.Record revenue November: Perform services for customers who paid in advance during October. Record revenue

Which of the following pre-payments requires an adjusting entry at the end of the year? On December 31, the company pays next year's fire insurance. On December 20, the company pays its liability insurance; coverage starts January 1. On November 1, the company pays rent for the next six months.

On November 1, the company pays rent for the next six months.

On November 1, 2022, Movers, Inc., paid $24,000 for 2 years' rent beginning on November 1 (assume rent is the same amount each month). Movers' year-end financial statements as of December 31, 2022 will show:

Prepaid rent of $22,000 Rent expense of $2,000

Public accounting firms refer to:

Professional service firms that traditionally focus on auditing and tax preparation.

The term "cooking the books" refers to:

Purposely providing misleading financial information to investors and creditors.

The revenue recognition principle states that:

Revenue should be recognized in the period goods and services are provided.

temporary accounts

Revenue, expense, and dividend accounts whose balances a company transfers to Retained Earnings at the end of an accounting period.

Which of the following best describes revenue?

Sales of goods and services to a customer.

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.

The primary difference between accrual-basis and cash-basis accounting is:

The timing of when revenues and expenses are recorded

Which of the following is an objective for preparing closing entries?

To transfer the balances of temporary accounts to the Retained Earnings account.

Which of the following is true about a trial balance?

Total debit amounts should always equal total credit amounts.

Posting is the process of

Transferring the debit and credit information from the journal to individual accounts in the general ledger.

Which of the following questions is most likely to be asked by an investor?

Will the company's stock increase in value?

The entry to close the expense accounts includes:

a debit to Retained Earnings and credits to the respective expense accounts.

Making insurance payments in advance is an example of

a prepaid expense transaction

All transactions related to a particular item over a period of time are summarized in a(n):

account

Which of the following accounts has a credit balance?

accounts payable

Which of the following is not an asset account? accounts payable cash equipment supplies

accounts payable

Which of the following items would not appear in an income statement?

accounts payable

Which of the following accounts would normally have a debit balance and appear in the balance sheet?

accounts receivable

Indicate how to increase and decrease each account listed below by selecting debit or credit.

accounts receivable, equipment, cash, buildings, salaries expense increase with debit, decrease with credit salaries payable, deferred revenue, common stock, accounts payable, common stock, retained earnings, service revenue increase with credit, decrease with debit

Financial statements are prepared from which of the following trial balances?

adjusted trial balance

List of permanent and temporary accounts and their balances.

adjusted trial balance

To complete the measurement process, companies need to update balances of assets, liabilities, revenues and expenses for changes created by ____ entries.

adjusting

update the accounts to their proper balances. are needed before financial statement preparation.

adjusting entries

In recording an accrual adjusting entry to account for revenues earned but not yet collected,

an asset is increased since cash will be collected at a later date

In recording an accrual adjusting entry to account for revenues earned but not yet collected, Blank______.

an asset is increased since cash will be collected at a later date

At the beginning of the accounting period, the balances of temporary accounts

are zero

Which of the following represents a resource of the company?

asset

A classified balance sheet shows subtotals for current _____ and current _____.

asset liability

Norbert Inc. delivered goods and services during December. Payment is expected during the first week of January. The related adjusting entry should consist of a debit to a(n) Blank______ account and a credit to a(n) Blank______ account.

asset revenue

A prepayment such as "Prepaid Insurance" is originally recorded as a(n) ___ when an insurance policy is purchased and will later be expensed in the period used.

asset or debit

Borrowing cash from the bank would have what effect on the accounting equation?

assets increase and liabilities increase

For each transaction recorded in an accounting system, the basic equation that must be maintained at all times is:

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

assets and liabilities

balance sheet

Reporting revenues only when cash is received and expenses only when cash is paid is called the ___ basis of accounting.

cash

Which of the following items would not appear in an income statement?

cash

typically is the most liquid asset reported on the balance sheet.

cash

When cash payments are made to stockholders, what is the effect on the company's accounts?

cash decreases and dividends increase

Dividends represent:

cash payments to stockholders

A list of all account names used to record transactions of a company is referred to as the:

chart of accounts

The distinction between current and long-term activities.

classified

The entries that transfer the balances of all temporary accounts to retained earnings are referred to as

closing entries

Transfer of temporary balances to retained earnings.

closing entries

The closing process includes which of the following?

closing the balances of revenue, expense and dividend accounts to zero

Which activities are part of the operating cycle?

collecting cash from customers, paying cash to suppliers, buying goods and services

The form of business organization that is legally separate from its owners is a:

corporation

Which business form has the advantage of limited liability?

corporation

depreciation is an allocation of the ____of buildings, vehicles, and equipment to expense over time as they are used. (Enter one word per blank.)

cost

Andy records an adjusting entry for deferred revenue. Andy should:

credit revenue account debit a liability account

A company pays cash for utilities. The company records this transaction with a:

credit to cash

The adjusting entry to record interest earned during the period includes a:

credit to interest revenue

A company bills customers for services provided. The company records this transaction with a:

credit to service revenue

Liabilities normally carry a _______ balance and are shown in the ______________.

credit, balance sheet

Revenues normally carry a _______ balance and are shown in the ______________

credit, income statement

A company is in its first month of operations. On January 1, the company pays 3 months of rent in advance for $2,100. What adjusting entry would be made at the end of January? Post the adjusting entry for the scenario provided.

debit rent expense $700 credit prepaid rent $700

A company is in its first month of operations. Supplies worth $4,000 were purchased on January 5. At the end of the month supplies worth $3,000 were in hand. What adjusting entry would be made at the end of January? Post the adjusting entry for the scenario provided

debit supplies expense $1,000 credit supplies $1,000

At the beginning of December, Global Corporation had $1,300 in supplies on hand. During the month, supplies purchased amounted to $2,100, but by the end of the month the supplies balance was only $2,000. What is the appropriate month-end adjusting entry?

debit supplies expense $1,400, credit supplies $1,400

An adjusting entry for accrued expenses involves:

debit to an expense credit to a liability

The adjusting entry for an accrued revenue always includes: (Select all that apply.)

debit to asset account credi to revenue account

A company borrows cash from a local bank. The company records this transaction with a:

debit to cash

When a company records an adjusting entry for services previously recorded as Deferred Revenue, it records which two of the following?

debit to deferred revenue credit to revenue

Dividends normally carry a _______ balance and are shown in the ______________.

debit, statement of stockholders' equity

Incurring an expense for advertising on account would be recorded by:

debiting an expense account

A company purchases supplies for cash. The company records this transaction with a:

debt to supplies

Liabilities are best defined as:

debts or obligations the company owes resulting from past transactions

Initially a prepayment for items such as rent or insurance are recorded as assets and later are recorded as a(n) ----in the period the benefit expires. (Only one word per blank)

expense

The two major categories reported in the income statement are:

expense revenue

A publisher receives cash for a magazine subscription during Year 1. The publisher sends magazines on a monthly basis to that customer in Year 2. According to the revenue recognition principle, the publisher should report the related magazine subscription revenue in its income statement for Year 1 since it received cash for the magazine subscription in Year 1.

false

In preparing journal entries, it is acceptable for the amount of total debits to be higher than the amount of total credits.

false

Under both accrual-basis and cash-basis accounting, all revenues and expenses are recorded at the same point in time.

false

With a finance degree, you can apply for almost any position available to accounting majors.

false, accounting degree can get any financing job

Which body has the primary responsibility for the establishment of Generally Accepted Accounting Principles?

financial accounting standards Board (FASB)

receive investments from stockholders

financing

Transactions of a company involving external sources of funding are referred to as:

financing activities

After transactions are recorded in the journal, they are posted to the:

general ledger

The assumption that a business will continue to operate into the future is the:

going concern assumption

An adjusting entry is necessary to record interest expense at year-end because the interest:

has already been incurred

After the closing entries are posted to the accounts, all temporary accounts:

have zero balances

Which of the following statements regarding the statement of cash flows are correct?

he final financial statement that is typically prepared reports cash disbursements reports cash receipts

The revenue recognition principle states that companies typically record revenue:

in the period in which we provide goods and services to customers

Under cash-basis accounting, companies typically record revenue:

in the period in which we receive cash form customers for goods and services

Consistent with accrual-basis accounting, expenses should be recognized

in the period when the related revenue is generated

Under the accrual basis of accounting, costs used to generate revenue are recorded as expenses:

in the same period as related revenue.

Revenues and expenses are reported in the:

income statement

Which financial statement is typically prepared first?

income statement

Which financial statement shows a company's revenues and expenses?

income statement

Revenues have what effect on the accounting equation?

increase stockholder's equity

Providing services to customers for cash would have what effect on the accounting equation?

increase total assets and total stockholders' equity

The cost of borrowing money is called:

interest

The expense that relates to a formal note payable and accumulates or accrues throughout the accounting period is referred to as an ___ expense

interest

purchase office building

investing

Transactions of a company that include the purchase and sale of long-term assets are referred to as:

investing activities

Financial accounting provides information primarily to:

investors and creditors

An adjusted trial balance:

is a list of all accounts and their balances after adjusting entries.

With respect to current assets, ____refers to how quickly an asset can be converted to cash.

liquidity

Assets that provide benefits for more than one year are classified as

long term

Property, plant, and equipment and intangible assets are typically classified as Blank______ assets.

long term

Resources owned by the company that will provide a benefit for more than one year are called:

long-term assets

Which of the following best explains a company's stock price performance?

net income

Which single piece of information best explains most companies' stock price performance?

net income

While many financial accounting numbers have an impact on stock prices, which of the following has the single greatest impact, on average?

net income

The statement of stockholders' equity includes these amounts:

net income ending balance retained earnings dividends for the period

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

On December 1, Bears Lawn Maintenance, Inc. signed a contract with a retailer to supply maintenance for the next calendar year. How should this transaction be recorded on December 1?

no transaction should be recorded on Dec 1

pay utilities

operating

A career in private accounting indicates:

providing accounting services to the company that employs you

Which of the following transactions increases total liabilities?

purchase office supplies on account

At year-end, companies that utilize accrual-based accounting systems complete the measurement process through

recording of adjusted entries

Which of the following accounts should be classified as stockholders' equity?

retained earnings common stock

is the amount earned from selling goods or services to customers.

revenue

Sales of products or services are referred to as

revenues

Net income can best be described as:

revenues minus expenses

Which of the following accounts has a debit balance?

salaries expense

Which of the following accounts is not listed in a post-closing trial balance?

salaries expense

Which financial statement would report all of the following information: beginning balances for common stock and retained earnings; current period net income or loss; current period dividends; common stock issued during the year; ending balances of common stock and retained earnings?

statement of stockholder's equity

common stock issued to investors

stockholders equity

Stockholders' claims to the company's resources are referred to as:

stockholders' equity

The stockholders' interest in a corporation is called:

stockholders' equity

Closing entries move the balances from the Blank______ accounts into the Retained Earnings account.

temporary

On a classified balance sheet, the sum of current and long-term liabilities refers to____ liabilities.

total

The sum of current and long-term assets reported on the balance sheet is referred to as

total assets

Which of the following describes the information reported in the balance sheet?

total assets equal total liabilities plus stockholders' equity

Providing services to customers for cash would have what effect on the accounting equation?

total assets increase, total stockholders' equity increases

Which of the following correctly describes a list of accounts and their balances, showing that total debits equal total credits?

trail balance

Which of the following describes the closing process?

transfers the balances o temporary accounts (revenues, expenses, and dividends) to retained earnings

According to the cost constraint, financial accounting information is provided when the benefits of providing the information exceed the costs.

true

The organization primarily responsible for establishing accounting and reporting standards in the United States is the Financial Accounting Standards Board (FASB).

true

Which of the following questions is most likely to be asked by a creditor?

will the company be capable of repaying its debt when it is due?