extra help of Accounting study guide of ch 1, 2, & 3

On August 1, Harvey Company offered to pay $13,000 for equipment that was advertised as being sold for $19,000 by Carrone Company. The equipment had a retail value of $23,000 on that day. On August 10, Carrone Company offered to sell the equipment for $14,700, and Harvey Company agreed to buy it at that price. At what value will Harvey Company record the equipment on the books?

$14,700

Liabilities and stockholders' equity of a company are $50,000 and $150,000, respectively. Determine assets using the accounting equation.

$200,000

Given the following information, determine the amount of cash on the balance sheet (assume there are only three assets). Liabilities equal $3,050, stockholders' equity equals $25,000, supplies equal $1,500, and land equals $22,500.

$4,050

Cool Taste Company recorded $5,000 in sales on account for the week. What effect does this transaction have on the accounting equation?

$5,000 increase in assets and $5,000 increase in stockholders' equity

Received $45,000 cash from Alex Xu as an additional investment in exchange for common stock. Which of the following is the journal entry the company should record?

Cash 45,000 Common Stock 45,000

Which of the following would be classified as unearned revenue?

Cash received for services not yet rendered

The posting of depreciation expense will be done during which step of the accounting cycle?

Step 6: Journalizing and posting adjusting entries

The paying of an expense reduces

Stockholders' equity.

On March 13, Henson Company purchased supplies on account for $560. Which of the following is the correct journal entry for this transaction?

Supplies 560 Accounts Payable 560

When a transaction is journalized, which account is listed first?

The account to be debited

The balance of the accumulated depreciation account on the adjusted trial balance of the end-of-period spreadsheet would flow into which of the following financial statements?

The balance sheet

If a fee of $2,850 earned from a client was debited to Accounts Receivable for $2,580 and credited to Fees Earned for $2,850, which of the following statements would be true?

The credit total of the trial balance would be higher by $270.

Liabilities are

The rights of creditors.

The balance of the dividends account on the adjusted trial balance of the end-of-period spreadsheet flows into which of the following financial statements?

The statement of stockholders' equity'

The numerator in the calculation of the ratio of liabilities to stockholders' equity is

Total Liabilities.

The denominator in the calculation of the ratio of liabilities to stockholders' equity is

Total Stockholders' Equity.

The adjusting entry for accrued expenses includes

a debit to an expense account.

The adjusting entry to record depreciation includes

a debit to an expense account.

Which of the following statements is not true about vertical analysis?

a. Each line item is expressed as a percent of some total or key amount within the same statement. b. It is useful for analyzing changes in financial statements over time. c. It is useful for analyzing relationships within a financial statement. --------(this one)-----d. The dollar amount of change in each line item is calculated.-------------

Which statement is false about reversing entries?

a. Recording reversing entries simplifies the recording of next period's transactions. b. Reversing entries are required as part of the closing process. c. A reversing entry is the opposite of the adjusting entry to which it relates. ---------(this one)------d. Reversing entries are recorded on the first day of the subsequent accounting period.-------

Which of the following errors would cause the adjusted trial balance to be unequal?

a. The adjustment for prepaid insurance was omitted. b. ----(this one)------.The adjustment for depreciation of $3,545 was journalized as a debit to Depreciation Expense for $3,454 and a credit to Accumulated Depreciation of $3,545.------------- c. The adjustment for unearned revenue was omitted. d. The adjustment for accrued fees of $16,340 was journalized as a debit to Accounts Payable for $16,340 and a credit to Fees Earned of $16,340.

Accrued revenues are revenues that

have been earned but have not been received or recorded in the books.

The statement that reports net income or loss for a certain period in time is the

income statement.

Comparing each line of a financial statement with a total amount from the same financial statement

is referred to as vertical analysis.

The business entity assumption is important because

it limits economic data in the accounting system to data directly related to the activities of the business.

The process of posting is the transfer of debits and credits from the

journal to the ledger.

The balance in the unearned rent account for Jackson Co. as of December 31 is $1,500. If Jackson Co. failed to record the adjusting entry of $500 of rent earned in December, the effect on the balance sheet and income statement for December would be

liabilities overstated $500; net income understated $500.

The chart of accounts is a

list of the accounts in the ledger.

The recording of adjusting entries is supported by the

matching principle.

If the adjustment for accrued revenue is not recorded

net income will be understated.

If the adjustment for unearned revenues is not recorded

net income will be understated.

All of the following are types of adjustments except

prepaid expenses. accrued revenues. accrued expenses ----except cash expenses.-----

The trial balance will include

the ending balance of each account.

Once the adjusted trial balance is balanced, it can be used to prepare

the income statement, the statement of stockholders' equity, and the classified balance sheet.

The spreadsheet is

used to determine amounts recorded in the unadjusted trial balance.

Horizontal analysis of income statements

uses the earlier income statement as the base for computing percentage changes.

The following are some of the steps in the accounting cycle. Which of the following reflects the steps in the correct order?

1. Journalized business transactions are posted to the ledger. 2. An unadjusted trial balance is prepared. 3. Financial statements are prepared. 4. Closing entries are journalized and posted to the ledger. 5. A post-closing trial balance is prepared.

On the end-of-period spreadsheet, Prepaid Insurance has a balance of $2,400 in the Unadjusted Trial Balance Debit column and an adjustment of $200 in the Adjustments Credit column. What amount should appear for Prepaid Insurance in the Adjusted Trial Balance column and ultimately in the balance sheet?

A debit of $2,200

Which of the following steps is optional during the closing process?

An end-of-period spreadsheet is prepared.

The numerator in the current ratio calculation is

Current Assets.

Which of the following accounts will be closed with a credit?

Depreciation expense

Which of the following is the last step of the posting process?

Enter the ledger account number in the Post. Ref. column of the journal.

Which of the following statements is not true?

Expenses increase stockholders' equity.

Accounting principles within the United States are primarily developed by the

FASB

If an adjustment for salaries earned but not recorded or paid in the amount of $85,000 were to be omitted, how would this affect the financial statements?

Liabilities would be understated on the balance sheet for $85,000.

The area of accounting concerned with providing internal users with information is called

Managerial accounting.

If an adjustment for $7,500 in accrued revenues is omitted, how will this affect the financial statements?

Net income will be understated by $7,500.

The ratio of liabilities to stockholders' equity is a tool used to assess a company's ability to

Pay its creditors.

Which of the following is not accurate when it pertains to managerial accounting?

Provides economic data reports on the operations and condition of the business that are useful for banks and other creditors in deciding whether to lend money to the business

In the closing process which account balances will be transferred to retained earnings?

Revenues, expenses, dividends

Which of the following is not correct about cross-referencing adjustments in the spreadsheet?

a. The cross-referencing process is sometimes referred to as keying the adjustments. ----------(this one)---------b. Cross-referencing adjustments uses account numbers for each debit and credit.--------- c. Cross-referencing the debit and credit of each adjustment is useful in reviewing the spreadsheet. d. Cross-referencing is helpful for identifying the adjusting entries that need to be recorded in the journal.

All of the following statements are true regarding retained earnings except

a. the amount of dividends is added to net loss to arrive at the retained earnings ending balance. b. the retained earnings beginning balance is usually the retained earnings ending balance from the previous period. -------(this one)-----c. the first item normally presented on the statement of stockholders' equity is the balance of retained earnings at the end of the period.---------- d. the amount of dividends is deducted from net income to arrive at the retained earnings ending balance.

The adjusted trial balance is prepared

after adjusting entries are posted but before financial statements are prepared.

The unadjusted trial balance is prepared

after the journal entries are posted.

Using horizontal analysis, the increases and decreases are shown as

amounts and percentages for each line item.

Included on the balance sheet are

assets, liabilities, and stockholders' equity.

The difference between the cost of a fixed asset and its accumulated depreciation is known as its

book value.

The listing of expenses on the income statement is ordered

by size, beginning with the largest item and putting miscellaneous expense as the last item.

Assets of a company may include

cash, inventory, buildings, and equipment.

The journal entry to record $4,500 cash received from clients on account would include a

credit to Accounts Receivable for $4,500.

Brown Co. pays weekly salaries of $10,500 on Friday for a five-day workweek ending on that day. Assuming the end of the accounting period ends on Wednesday, the adjusting journal entry will include a

credit to Wages Payable for $6,300.

If the estimated amount of depreciation on equipment for a period is $3,500, the adjusting entry to record depreciation would be

debit Depreciation Expense $3,500; credit Accumulated Depreciation $3,500.

The left side of the T account is called the

debit side.

Because collecting the adjustment data requires time, the adjusting entries are often

entered later but dated as of the last day of the period.