Business Accounting 1-5 Proc.Exam

FASB takes the following steps to develop an accounting standard:

1. The issue is placed on the Board's agenda. 2. After researching the issue, a Preliminary Views document is issued. 3. Public hearings are held. 4. An Exposure Draft is issued. 5. The Board issues an Accounting Standards Update which amends the FASB Accounting Standards Codification.

Expenses are accounts that begin with with number _____?

5

A(n) _____ is an unwritten promise to pay a supplier for assets purchased or a service rendered.

Account payable

In the _____ basis of accounting, revenues are recorded when earned and expenses are recorded when incurred, regardless of when cash is received or paid.

Accrual

The depreciation adjusting entry consists of a debit to Depreciation Expense and a credit to _____.

Accumulated depreciation

An item owned by a business that will provide future benefits is a(n) _____.

Asset

The amount of difference between the debits and credits recorded in a T account is called the___________.

Balance

The financial statement that reports the assets, liabilities, and owner's equity on a specific date is the _____.

Balance sheet

To which columns of the work sheet are asset and liability accounts extended? _____

Balance sheet

To which columns of the work sheet are the capital and drawing accounts extended? _____

Balance sheet

A journal is commonly referred to as a(n) _____ because it is here that the first formal accounting record is made.

Book of orignial entry

The difference between the original cost of a plant asset and its accumulated depreciation is called _____.

Book value

According to the _____ concept, non business assets and liabilities are not included in the business entity's records.

Business entity

An individual, association, or organization that engages in business activities is called a(n) _____.

Business entity

In the _____ basis of accounting, revenues are recorded only when cash is received and expenses are recorded only when cash is paid.

Cash

A list of all the accounts used by a business enterprise is called a(n) _____.

Chart of accounts

Transaction affecting more than two accounts are called _____.

Compound entries

A _____ has a credit balance and is deducted from the related asset account on the balance sheet.

Contra-asset account

The normal balance of a liability account is on the____________side.

Credit

The normal balance of a revenue account is on the________________side.

Credit

The information in the Posting Reference columns of the journal and the ledger accounts provides a link known as a(n) _____.

Cross-reference

Posting from the journal to the ledger is done _____ or at frequent intervals.

Daily

A decrease in the liability Accounts Payable is recorded by a_______.

Debit

An increase in the asset Cash is recorded by an_______.

Debit

The purpose of _____ is to spread the cost of a plant asset over its useful life.

Depreciation

A plant asset's original cost less salvage value is called _____.

Depreciation cost

The fact that each transaction has a dual effect on the accounting elements provides the basis for what is called__________.

Double-entry accounting

Withdrawals, or _____, represent a reduction in owner's equity because the owner takes cash or other assets for personal use.

Drawing

The revenue recognition principle requires revenues to be recognized when _____.

Earned

The decrease in assets (or increase in liabilities) as a result of efforts to produce revenues.

Expense

Any accounting period of 12 months' duration is called a(n) _____.

Fiscal year

The process of entering totals in the debit and credit sides of a T account is referred to as_____________.

Footing

Notes Payable

Formal written promises to pay suppliers or lenders specified sums of money at definite future times.

A complete set of all accounts used by a business is known as the _____.

General ledger

A(n) _____ account allows the accountant to keep a running balance.

General ledger

The financial statement the reports the profitability of the business for a period of time is the _____.

Income statement

To which columns of the work sheet are revenue and expense accounts extended? _____

Income statement

The asset account Prepaid Insurance is adjusted to the income statement account entitled _____.

Insurance Expense

A document that provides a day-by-day listing of transactions of a business is called a(n) _____.

Journal (general journal)

The act of entering transactions into a journal is called _____.

Journalizing

On the balance sheet, assets are listed in order of _____, or the ease with which they can be converted to cash.

Liquidity

The _____ basis of accounting uses the cash basis for revenues and most expenses.

Modified cash

If the total of the Income Statement Credit column exceeds the total of the Debit column, the business has earned _____.

Net income

When total revenues exceed total expenses, the difference is called _____.

Net income

When expenses are greater than revenues, the difference is called _____.

Net loss

In a journal, debits are entered first; then credits are entered and indented _____ (how much space).

One-half inch

The amount by which assets exceed the liabilities of a business is called _____.

Owner's equity

Accounts that begin with the number "3" are _____.

Owner's equity accounts

The process of copying debits and credits from the journal to the ledger accounts is called _____.

Posting

Revenues

Represent the amount a business charges customers for products sold or services performed

Expenses

Represent the decrease in assets (or increase in liabilities) as a result of a company's efforts to produce revenues.

The matching principle in accounting requires the matching of _____ and _____.

Revenues and expenses

Drawing a line through the incorrect amount or account title and writing correct information above it is an example of the _____ method.

Ruling

Many small professional _____ businesses use the modified cash basis for accounting.

Service

A(n) _____ occurs when you move a digit or two to the left or right when entered.

Slide

A document that provides information about a business transaction is called a(n) _____.

Source document

The financial statement that shows investments and withdrawals by the owner, as well as profit or loss generated by the business, is the _____.

Statement of owner's equity

The asset account Supplies is adjusted to the income statement account entitled _____.

Supplies Expense

A form or record used to keep track of the increases and decreases in each type of asset, liability, owner's equity, revenue, and expense is known as a ___________.

T account

A(n) _____ error occurs when you use the right numbers but in the wrong order.

Transposition

A list of all of the account showing the title and balance of each account is called the___________.

Trial balance

A(n) _____ is taken after transactions are posted to the general ledger accounts to be sure that debit and credit balances in the ledger are equal.

Trial balance

The first two monetary columns of a work sheet are called the _____ columns.

Trial balance

The period of time a plant asset is expected to help produce revenues is called its _____.

Useful life

The adjustment to Wages Expense will also affect a liability account called _____.

Wages Payable

A _____ is helpful in preparing end-of-period adjustments and financial statements.

Work sheet