Chapter 2. ACC Learnsmart armoo72

A company beginning Accounts Payable is $1,000 . It had $10,000 of purchases on account and paid $7,000 of the amounts owed. The accounts Payable ending balance equals a _______ balance.

$4,000 credit 1,000+ 10,000 = 11,000 then 11,000-7,000= 4,000 that means you still have 4,000 left to pay (credit)

A company beginning cash is $10,000. it has a $100,000 of cash receipts and $70,000 of cash payments during the period. The cash ending balance equals a ____ balance.

$40,000 debit Cash, and asset, equals a $40,000 debit balance (=$10,000 debit + 100,000 debit - 70,000 credit)

Which of these are current liabilities?

Accounts payable note payable due in 5 months

Which transactions are recorded in the accounting system?

Both external exchanges and internal events

Which of the following are true about notes payable and accounts payable?

Both notes payable and accounts payable are liabilities and Notes payable are interest-bearing, accounts payable are not

List the components of a classified balance sheet in the proper order in accordance with GAAP. List from top to bottom.

Current assets non-current assets current liabilities non-current liabilities stockholders equity

True or False? If one asset increased, it must be the case that either liabilities or stockholders equity increased by the same amount

False One asset may be exchanged for another and this have no effect on liabilities or stockholders equity. The accounting equation remains in balance because an increase in one asset is offset by the decrease in another asset.

True or False: An exchange of a promise to deliver an asset in the future for a promise to pay in the future is a transaction.

False An exchange of a promise to deliver an asset in the future for a promise to pay in the future is not a transaction. To be a transaction, an event must include an exchange of something of value, not just exchanges of promises

Which of these would be captured and reported by an accounting system?

Investing activities Financing activities Purchase of equipment on account

Which of these is a non-current liability

Mortgage payable due in 20 years

Noodlecake signa contract with an independent developer for program code to be delivered and paid for in 2 months. What is the effect on the accounting equation?

No effect

Which of the following are characteristics of Notes Payable and not Accounts Payable?

Notes payable are documented with formal documents called notes Notes payable are amounts borrowed from a bank; Accounts Payable are not Only notes payable have interest charges

Which of these events would not be recorded as transactions in an accounting system?

Ordering supplies to be delivered and paid or in future Hiring an employee

Which of the following accounting cycle steps described the process or recording journal entries?

Transaction are recorded chronologically showing the accounts debited along with the corresponding accounts credited.

Financial information needed to manage a company is provided by a(n) ____ system.

accounting

Which of the following are similarities between notes payable and accounts payable? They both _____.

are amounts owed to creditors and are liabilities

Which of the following are similarities between notes payable and accounts payable? They both ____.

are liabilities and are amounts owed to creditors

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

assets and liabilities

Which of the following is a current asset?

cash

Which of these asset accounts would appear first on a company's balance sheet?

cash

All accounting systems ___.

combine beginning balances with the activity during the accounting cycle to yield the ending balances for each account record and summarize financial effects of transactions follow the accounting cycle

Which of the following have normal credit balances?

common stock Accounts payable Notes payable

Assets that will be used up or converted to cash within 12 months are ____ assets.

current

Liabilities that will be paid or fulfilled within 12 months are _____ liabilities

current

______ assets are to be used up or turned into cash with 12 months or the next operating cycle, whichever is longer, whereas _____ assets are to used over a longer period.

current and noncurrent

Which type of activities are not captured by the accounting system because they are not considered transactions?

exchanges of promises

A company paid $5,000 cash to purchase equipment. The company recorded a debit to Equipment of $5,000 and a credit to Cash of $500. This company's accounting records are ______.

incorrect because debits do not equal credits

Entries are first recorded in the ______ and then summarized in the ledger.

journal

T-accounts represent a simplified version of the ___.

ledger

The effect of journal entries on each account is summarized in the ___.

ledger

Complete the accounting equation: Assets= _____ + Stockholders' equity. (Enter one word per blank).

liabilities

Which of these is a non-current liability?

mortgage payable due in 20 years

What is the effect on total assets when a company purchases a cash register for a cash payment of $1,200?

no effect

Building an equipment owned and used by a company are _____.

non-current assets Buildings and equipment are not current assets because they are not intended to be used up or turned into cash within 12 months

List these liability accounts in the order in which they would appear on a company's balance sheet.

note payable (due in 5 months) Note payable (due in 5 years) mortgage payable (due in 25 years)

In April, Pizza Aroma hired a new employee at a rate of $1,000 per month to start work at the beginning of May. In April, Pizza Aroma should record _____.

nothing, because an exchange of promises is not a transaction

Accounts payable is increased with an entry on the _______ side of the T-account.

right

The common stock accounts is increased with an entry on the _____ side of the T-account.

right

A ledger is used to ____.

show increases and decreases in individual accounts, as well as an ending balance

A company purchased a new cash register in exchange for a cash payment of $1,200. As a result of recording the purchase, ____.

total assets remain the same and one asset is exchanged for another

The internal report that is used to determine that the accounting records are in balance and total debits equals total credits is called the ____.

trial balance