Financial Accounting Midterm (Chapters 1-7)
Match: Balance sheet account Income statement account
BSA: Accounts Receivable BSA: Accounts Payable BSA: Retained Earnings ISA: Income Taxes Expense
Match: Current Assets Property, Plant, and Equipment Current Liabilities Stockholders' Equity
CA: Cash PPE: Land CL: Accounts Payable SE: Retained earnings
Match: Current Assets Property, Plant, and Equipment Current Liabilities Long-Term Liabilities
CA: Computer available for resale. PPE: Computer used within the business. CL: Interest payable LTL: Bonds payable
Match: Current liabilities (balance sheet) Operating revenue (income statement) Operating Expenses (income statement)
CL: Wages payable OR: Services revenues OE: Cost of goods sold
Match: Company management Labor union
CM: The profitability of each division of the company. CM: The exact amount of profit on each product of the company. LU: The company's profitability since the last work force contract was signed.
Match: Deferred expense Deferred revenue Accrued liability Accrued asset
DE: One year's premium on truck insurance was paid in advance. DE: A warehouse building was acquired for cash. DR: Cash was collected from customers for rental of tents for next year. AL: Income taxes are owed to the federal government at year-end. AA: Rent is owed by a tenant but not yet collected.
Match: Deferred expense Deferred revenue Accrued liability Accrued asset
DE: The depreciation on office equipment used during the current year is recorded. DR: Magazine subscriptions are delivered during the current period, although customers paid in a previous period. AL: Interest is incurred on money borrowed from the bank, but not yet paid. AL: The cost of commissions to salesmen that has been earned, but not paid, at the end of the accounting period is recorded. AA: Amounts earned but not received from customers are recorded.
Match: Debit Credit
Debit: Investments Debit: Wages and Salaries Expense Credit: Capital Stock Credit: Advertising Fees Earned
A debit is a negative entry. True False
False
Debits are good and credits are bad in financial terms. True False
False
Every business transaction is recorded by a debit to a balance sheet account and a credit to an income statement account. True False
False
Expense accounts are closed or zeroed out in the closing process. True False
False
Since there is a lack of a profit motive in nonbusiness entities, they do not need information provided by an accounting system. T/F
False
The SEC created the objectives of financial reporting. True False
False
The concept of conservatism is the capacity of information to make a difference in a decision. True False
False
The general journal is often used to record repetitive transactions. True False
False
The purpose of financial reporting is to provide economic information to external decision makers only. T/F
False
The quality of accounting information that makes it comprehensible to those willing to spend the necessary time is consistency. True False
False
Match: Investments Taxes Payable Preferred Stock Accounts Receivable Notes Payable
I: A plot of land held for speculation. TP: Corporate income taxes owed to the state government. PS: Ownership in a company that allows the owner to receive dividends before common shareholders receive any distributions. AR: An amount owed by a customer. NP: A written obligation to repay a fixed amount, with interest, at some time in the future.
Match: Internal event External event Not recorded
IE: The company transfers work in process to finished goods inventory. EE: A customer pays its open account. EE: A vendor for a company's supplies is paid an amount owed on account. NR: The company hired a new secretary.
Match: Nominal account Real account
NA: Sales revenue NA: Depreciation expense RA: Cash RA: Office equipment
Match: Nominal account Real account
NA: Utilities expense RA: Prepaid rent RA: Unearned revenue RA: Interest payable
Match: Operating Activities Investing Activities
OA: Paid income taxes. OA: Received cash from selling goods to customers OA: Paid suppliers cash for inventory purchased. IA: Sold equipment no longer used in the business.
Match: Prepaid Asset Retained Earnings Buildings
PA: Rent paid on an office building in advance of use of the facility. RE: Claims by the owners on the undistributed net income of a business. B: A warehouse used to store equipment.
Match: Recognize revenue over the passage of time. Recognize revenue when the customer takes possession of the product. Recognize revenue when cash is collected. Recognize revenue when service is performed.
POT: Interest Revenue POT: Rent revenue POT: Revenue from a customer's subscription to a magazine POTP: Merchandise revenue SIP: Revenue from providing carpet cleaning services.
Match: Stockholder Internal Revenue Service Securities and Exchange Commission
S: The prospects for future dividend payments IRS: The profitability of the company based upon the Internal Revenue Code. SAEC: The financial status of a company issuing securities to the public for the first time.
Match: Sole proprietorship Partnership Corporation
SP: Single owner P: Need an agreement about contributions to the business. Corp: Must file articles of incorporation with the state. Corp: Easy to raise large sums of money.
Match: Sole proprietorship Partnership Corporation
Sp: Usually owned and operated by the same person. P: Owned by two or more individuals Corp: Control most private resources in the U.S. Corp: A share of stock acts as evidence of ownership
A partnership is a business owned by two or more individuals. T/F
True
Assets can be tangible or intangible in nature. T/F
True
Capital stock indicates the owners' contributions to a corporation. T/F
True
The amount of a transaction may be immaterial by company standards but still be considered significant by financial statement users. True False
True
Match: Working capital will increase Working capital will not change
WCWI: Borrowed cash using a long term note WCWNC: Borrowed cash using a six month note. WCWNC: Collected an account receivable.
Gear Shop purchased supplies at a cost of $1,000 during the year. At January 1, the beginning balance in the Supplies account was $300. At December 31, supplies on hand are $100. Determine supplies expense for the year. a. $1,200 b. $1,100 c. $1,300 d. $1,400
a) 1,200
Cobb Company Selected data from the accounting records of Cobb Company are listed below. General and administrative expenses $2,200 Operating revenues $6,000 Selling expenses 1,800 Income taxes 600 Other revenues (expenses) 800 Dividends paid 1,200 Read the information about Cobb Company. What is Cobb's income from operations? a. $2,000 b. $2,200 c. $1,600 d. $2,800
a) 2,000
Marvel Shoes Marvel Shoes reported the following items on its statement of cash flows for the current year: Net cash inflows from operating activities $ 70,000 Net cash outflows from investing activities (20,000) Net cash outflows from financing activities (40,000) Cash balance at the beginning of the year 30,000 Read the information about Marvel Shoes. What was the cash balance for Marvel Shoes at the end of the current year? a. $40,000 b. $70,000 c. $30,000 d. $10,000
a) 40,000
If a company has $152,000 of revenues, declares and pays $55,000 in dividends, and has net income of $89,000, how much were expenses for the year? a) 63,000 b) 8,000 c) 144,000 d) Unable to determine the amount due to incomplete information.
a) 63,000
Which of the following includes only current assets? a) Accounts receivable, cash, inventory, office supplies b) Accounts receivable, cash, furniture, office supplies c) Cash, accounts receivable, inventory, office supplies d) Cash, land, accounts receivable, inventory
a) Accounts receivable, cash, inventory, office supplies
Which one of the following is an economic obligation for a business entity? a) Amounts owed to creditors. b) Payment of rent for the next year. c) Materials used in manufacturing products. d) Salaries paid to employees for services rendered.
a) Amounts owed to creditors.
Lottony, Inc. is concerned about its profitability for the current year, since its profit margin has dropped 10% since last year. Which of the following is the least useful comparison in evaluating the drop in Lottony's profit margin? a. Comparison with its current ratio for the current year b. Comparison with the industry average for the current year c. Comparison with its profit margins for the past five years d. Comparison with the profit margins for its major competitors for the current year
a) Comparison with its current ratio for the current year.
Which one of the following groups is considered an internal user of financial statements? a) Factory managers who supervise production line workers. b) The financial analysts for a brokerage firm who are preparing recommendations for the firm's brokers on companies in a certain industry. c) The labor union representing employees of a company that is involved in labor negotiations. d) A bank reviewing a loan application from a corporation.
a) Factory managers who supervise production line workers.
What are the two subtotals that distinguish the multiple-step income statement from the single-step income statement? a. Income from operations and income before taxes b. Total operating revenues and total operating expenses c. Total revenues and total expenses d. Income before taxes and income taxes
a) Income from operations and income before taxes.
Which of the following items will be found in a corporate annual report? a. Notes to the financial statements b. Selected financial data from competitor companies c. Management's statement that the auditors are responsible for the financial statements d. Company budgets
a) Notes to the financial statements.
When is revenue from the sale of merchandise normally recognized? a. On the date the sale is made b. When the customer pays for the merchandise c. When the merchandise is sold, if sold for cash, or when payment is received, if sold on credit d. Either on the date on which the sale occurs, or the date on which the customer pays
a) On the date the sale is made.
Which one of the following best describes the external auditor's report? a) The external auditor's report is an opinion. b) The external auditor's report is a statement of fact. c) The external auditor's report must comply with both FASB and IASB standards. d) The firms that provide external audit reports are restricted to 20 partners, based on authoritative standards issued by the PCAOB.
a) The external auditor's report is an opinion.
Which one of the following items is correct concerning the time element of financial statements? a) The statement of retained earnings explains changes during a particular period. b) An income statement lists amounts at a specific point in time. c) Both the income statement and the balance sheet cover a period of time. d) The balance sheet covers a period of time.
a) The statement of retained earnings explains changes during a particular period.
Expenses originate from a. using an asset or recognizing liabilities. b. incurring liabilities or providing services to customers. c. paying off liabilities. d. collecting cash from customers.
a) using an asset or recognizing
Vivo Co. received an 8-month, 9% note for $100,000 from its agent on October 1, 2016. The note is due on May 30, 2017. If Vivo accounting period ends on December 31, 2016, how much interest revenue should Vivo recognize during 2016 and 2017? 2016 2017 a. $2,250 $3,750 b. $3,750 $2,250 c. $9,000 $0 d. $3,375 $5,625
a. $2,250 $3,750
Which of the following transactions involves an accrued asset? a. Rent owed by a tenant but not yet collected b. One year's premium on life insurance policy paid in advance c. Rent collected in advance from a tenant d. Wages earned by employees but not yet paid
a. Rent owed by a tenant but not yet collected
Measurement of the economic effects on an entity involves each of the following except a. recording the economic effects in the financial statements. b. quantification of effects. c. selection of an appropriate unit of measure. d. identification of the attribute to be measured.
a. recording the economic effects in the financial statements.
Jenning Co. Jenning Co. adjusts its books each month but closes its books at the end of the year. The trial balance at July 31 before adjustments is as follows: Debit Credit Cash $12,920 Accounts Receivable 9,620 Supplies 1,400 Prepaid Insurance 3,120 Equipment 26,000 Accumulated Depreciation—Equipment $10,400 Unearned Service Revenue 6,500 Capital Stock 7,190 Retained Earnings 23,500 Dividends 1,560 Service Revenue 16,510 Wages and Salaries Expense 7,800 Utilities Expense 380 Rent Expense 1,300 $64,100 $64,100 Refer to the trial balance for Jenning Co. (Round calculations to the nearest dollar.) According to contracts, $4,810 of Unearned Service Revenue has been earned in July. Which of the following is the correct amount of Service Revenue to be reported in the July income statement? a. $11,700 b. $21,320 c. $20,410 d. $16,510
b) $21,320
Rosu Company has total current assets of $150,000 and total current liabilities of $50,000. What is the amount of working capital for Rosu Company? a. $200,000 b. $100,000 c. $179,000 d. $125,000
b) 100,000
Murphy Corporation's end-of-year balance sheet consisted of the following amounts: Cash- $35,000 Property, plant, and equipment- 69,000 Capital Stock- 107,000 Accounts receivable- 46,000 Long -term debt- 41,000 Accounts payable- 22,000 Inventory- 33,000 Retained earnings- ? a) 3,000 b) 120,000 c) 173,000 d) 63,000
b) 120,000
Mobile Power Corp. reported the following information for the ear ended December 31, 2017. Revenue- 40,000 Expenses- 23,000 Dividends- 10,000 Retained earnings at December 31, 2017- 175,000 What was the retained earnings balance for Mobile Power at December 31, 2016? a) 165,000 b) 168,000 c) 192,000 d) 182,000
b) 168,000
If the current ratio is 2.5 to 1, net income is $6,000, and current liabilities are $18,000, how much is working capital? a. $14,000 b. $27,000 c. $45,000 d. $6,000
b) 27,000
Wolfe Inc. Wolfe Inc. reports these account balances at January 1, 2017: Retained Earnings $ 49,000 Accounts Receivable 20,000 Accounts Payable 24,000 Capital Stock 185,000 Land 153,000 Cash 13,000 Equipment 20,000 Notes Payable 28,000 Buildings 80,000 See the account balances for Wolfe Inc. On January 31, Wolfe collected $12,000 of its accounts receivable and paid $11,000 on its note payable. On January 31, 2017, the total liabilities are a. $30,000. b. $41,000. c. $0. d. $56,000.
b) 41,000
Sawaddee Enterprises began the year with total assets of $450,000 and total liabilities of $230,000. If Sawaddee's total assets doubled to $900,000 and its owners' equity remained the same during the year, what was the amount of its total liabilities at the end of the year? a) 900,000 b) 680,000 c) 780,000 d) 220,000
b) 680,000
All of the following are examples of manufacturers except: a) Boeing b) Amazon.com c) Whirlpool d) Ford
b) Amazon.com
Jogg Corp.'s plant operates five days per week with a daily payroll of $50,000. Employees are paid every Tuesday for the prior week's work (Monday through Friday). The last day of the month is Tuesday, April 30. What effect does the accrual at April 30 have on Jogg's net income? a. Decrease by $150,000 b. Decrease by $100,000 c. Increase by $150,000 d. Increase by $250,000
b) Decrease by $100,000
A pool cleaning service signs a contract with a new customer on May 1. The pool is vacuumed and "shocked" for the customer on June 1, and the bill for the services is paid on July 1. Under the accrual basis, the business should recognize revenue on a. July 1. b. June 1. c. December 31. d. May 1.
b) June 1
Which of the following transactions affects the liabilities for Gravette, Inc.? a. Supplies are purchased for cash by Gravette. b. Payment is made on a bank loan which Gravette had obtained six months ago. c. Gravette places an order for merchandise with a supplier; the merchandise will be shipped to Gravette in 60 days. d. The owners of Gravette invest $100,000 in the company.
b) Payment is made on a bank loan which Gravette had obtained six months ago.
The term "chronological order" is best associated with a. a trial balance. b. a journal. c. credit entries. d. capital stock.
b) a journal
One effect on the accounting equation when a firm borrows money is that a. stockholders' equity decreases. b. assets increase. c. assets decrease. d. liabilities decrease.
b) assets increase
The purchase of office equipment at a cost of $3,600 with an immediate down payment of $1,000 and agreement to pay the balance within 60 days is recorded by a. a debit of $3,600 to Office Equipment, a credit of $1,000 to Cash, and a credit of $2,600 to Accounts Receivable. b. a debit of $3,600 to Office Equipment, a credit of $1,000 to Cash, and a credit of $2,600 to Accounts Payable. c. a debit of $2,600 to Accounts Receivable, a debit of $1,000 to Cash, and a credit of $3,600 to Office Equipment. d. None of these choices are correct.
b. a debit of $3,600 to Office Equipment, a credit of $1,000 to Cash, and a credit of $2,600 to Accounts Payable.
If a work sheet is used, it is prepared a. after recording and posting adjustments. b. before preparing financial statements. c. before journalizing transactions. d. after closing the accounts.
b. before preparing financial statements.
At December 31, 2017, the accounting records of Tasty Foods Corporation contain the following: Accounts payable- 16,000 Land- 240,000 Capital stock- ? Building- 180,000 Retained earnings- 160,000 Accounts receivable- 40,000 Cash- ? Equipment- 120,000 Notes payable- 190,000 If capital stock is $260,000, what is the December 31, 2017 cash balance? a) 506,000 b) 86,000 c) 46,000 d) 94,000
c) $46,000
Jobston, Inc. The balance sheet of Jobston, Inc. includes the following items: Cash $22,400 Accounts receivable 11,700 Inventory 23,300 Prepaid insurance 1,040 Land 80,000 Accounts payable 47,500 Salaries payable 1,200 Capital stock 84,040 Retained earnings 5,700 Read the information about Jobston, Inc. What is Jobston's working capital? a. $58,440 b. $84,040 c. $9,740 d. $89,740
c) 9,740
Hennigan Company Use the five transactions below for Hennigan Rentals to answer the questions that follow. Dec. 1 Hennigan purchases two new saws on credit at $375 each. The saws are added to Hennigan's rental inventory. Payment is due in 30 days. 8 Hennigan accepts advance deposits for tool rentals of $75. 15 Hennigan receives a bill from Farmer's Electric Company for $150. Payment is due in 30 days. 20 Customers are charged $750 by Hennigan for tool rentals. Payment is due from the customers in 30 days. 31 Hennigan receives $500 in payments from the customers that were billed for rentals on December 20. Refer to the transactions for Hennigan Rentals. Based on the December 15 transaction, Farmer's Electric will record which of the following in its accounting records? a. A credit in Accounts Payable for $150 b. A debit in Accounts Payable for $150 c. A debit in Accounts Receivable for $150 d. A credit in Accounts Receivable for $150
c) A debit in Accounts Receivable for $150
Monaco & Associates Use the following five transactions for Monaco & Associates to answer the following question. Oct. 1 Bills are sent to clients for services provided in September in the amount of $800. 9 Dravo Co. delivers office furniture ($1,060) and office supplies ($160) to Monaco leaving an invoice for $1,220. 15 Payment is made to Dravo Co. for the furniture and office supplies delivered on October 9. 23 A bill for $430 for electricity for the month of September is received and will be paid on its due date in November. 31 Salaries of $850 are paid to employees. See the transactions for Monaco & Associates. The journal entry to record the October 1 transaction will include a debit of $800 to a. Sales Revenue. b. Retained Earnings. c. Accounts Receivable. d. Cash.
c) Accounts Receivable
Why is the time assumption required? a) Inflation exists b) The dollar is the monetary unit in the United States. c) External users of financial statements want statements that accurately reflect net income or earnings for a specific time period. d) The federal government requires it.
c) External users of financial statements that accurately reflect net income or earnings for a specific time period.
Which one of the following is a financing activity of a business? a. Paying for purchases of inventory b. Purchasing a manufacturing plant c. Issuing stock for cash d. Paying salaries
c) Issuing stock for cash
Failure to record depreciation expense for the period results in which of the following? a. No effect on total assets b. Stockholders' equity being overstated c. Net income and stockholders' equity being overstated d. Net income being overstated
c) Net income and stockholders' equity being overstated
What is the effect on the accounting equation when a company recognizes rent as earned that had previously been received in advance from customers? a. Liabilities increase b. Revenues decrease c. Net income increases d. Expenses increase
c) Net income increases
An accountant describes the effects of an economic event on an entity by recording the transaction and reporting the amount on the financial statements. What is this called? a. Measurement b. Disclosure c. Recognition d. Matching
c) Recognition
Payment is received from customers who were billed earlier for services provided for them. For this transaction, identify the effect on the accounting equation. a. Liabilities increase and stockholders' equity decreases. b. Assets increase and stockholders' equity increases. c. There is no effect on the accounting equation as one asset account increases while another asset account decreases. d. Assets increase and liabilities increase.
c) There is no effect on the accounting equation as one asset account increases while another asset account decreases.
Your bookkeeper is off for the day and you are trying to figure out what her last entry in the journal could be for. Unfortunately, she only recorded the debit side of the transaction as $4,400 to Accounts Payable. It is possible that this debit could correspond to a. a $4,400 sale to a customer. b. a $4,400 issuance of the company's capital stock. c. a payment of $4,400 to a supplier to settle a balance due. d. a purchase of equipment costing $4,400 on credit.
c) a purchase of equipment costing $4,400 on credit.
The correct term for an entry made to the left side of an account is a. double-entry system. b. journalizing. c. debit. d. credit.
c) debit
A list of all accounts and their balances that is used to prove the equality of debits and credits as of a specific date is a(n) a. account. b. chart of accounts. c. trial balance. d. general journal.
c) trail balance
Mitchell Company prepares monthly financial statements and will record a prepaid expense account for each of the following except a. Mitchell paid for three months of window washing services in advance. b. Mitchell purchases office supplies to last for several months. c. a tenant that pays Mitchell for six months of rent in advance. d. Mitchell purchases a four-year casualty insurance policy.
c. a tenant that pays Mitchell for six months of rent in advance.
Lucky Company purchased a truck at a cost of $12,000 in 2012. As of January 1, 2017, depreciation of $10,000 had been recorded on this asset. Depreciation expense for 2017 is $2,000. After the adjustments are recorded and posted at December 31, 2017, what is the carrying value of the truck? a. $2,000 b. $12,000 c. $5,500 d. $0
d) 0
Longitude Company borrowed on a two-year, 10%, $150,000 note on May 1, with interest and principal to be paid at maturity. How much interest will Longitude report on its income statement for the year ending December 31? a. $15,000 b. $30,000 c. $5,000 d. $10,000
d) 10,000
Moore Industries Moore Industries began operations on January 2, 2017, with an investment of $50,000 by each of its two stockholders. Net income for its first year of business was $240,000. Moore Industries paid a total of $100,000 in dividends to its stockholders during the year. Read the information about Moore Industries. What is the company's retained earnings balance at December 31, 2017? a. $240,000 b. $190,000 c. $340,000 d. $140,000
d) 140,000
The payment of employee salaries has what effect on the accounting equation? a. Liabilities decrease and stockholders' equity decreases. b. Assets increase and liabilities decrease. c. Assets decrease and liabilities increase. d. Assets decrease and stockholders' equity decreases.
d) Assets decrease and stockholders' equity decreases.
Copper Corp. Use the selected accounts for Copper Corp. presented below to answer the following question(s). CASH ACCOUNTS RECEIVABLE 8/1 Balance 6,000 8/2 1,800 8/7 900 8/3 500 8/5 400 8/7 900 DEPOSITS RECEIVED IN ADVANCE (A Liability Account) SALES 8/3 500 8/2 1,800 8/5 400 Read the information for Copper Corp. On which date did the company make a credit sale to a customer? a. August 7 b. August 5 c. August 3 d. August 2
d) August 2
Which set of items below includes current assets? a) Accounts receivable, net income, inventory, and dividends b) net income, cash, office supplies, and inventory c) cash, accounts receivable, capital stock, and sales d) Cash, accounts receivable, inventory, and office supplies
d) Cash, accounts receivable, inventory, and office supplies
Which one of the following is not an external user of financial information? a) IRS b) Stockholders c) Creditors d) Company management
d) Company management
You are comparing three companies that use different depreciation methods. Which of the following would help you the most in making a comparison of the companies? a) The average earnings per share for the quarter. b) Claims to resources. c) Prospective cash receipts. d) Disclosure of accounting policies.
d) Disclosure of accounting policies.
Which of the following statements is true concerning external users of financial information? a) External users need detailed records of the business to make informed decisions. b) External users are primarily responsible for the preparation of financial statements. c) External users rely on management to tell them whether the company is a good investment. d) External users rely on the financial statements to help make informed decisions.
d) External users rely on the financial statements to help make informed decisions.
A bank loaned $62 million to Apex Corporation to finance the construction of a new distribution warehouse. In which section of Apex's statement of cash flows would you be able to determine whether the company repaid any portion of the debt during the year? a. Operating Activities b. Profit Activities c. Investing Activities d. Financing Activities
d) Financing Activities
Which of the following accounts is increased by a credit entry? a. Accounts Receivable b. Salary Expense c. Dividends d. Interest Revenue
d) Interest Revenue
Income statement accounts are also known as which of the following? a. Closing accounts b. Real accounts c. Final accounts d. Nominal accounts
d) Nominal accounts
Which the following organizations is primarily responsible for establishing GAAP today? a) IASB b) SEC c) IRS d) None of these choices are correct.
d) None of these choices are correct.
Which of the following accounts are normally reported as long-term liabilities on a classified balance sheet? a) Interest payable and mortgage payable. b) Income taxes payable and salaries payable. c) Capital stock and accounts payable. d) Notes payable due in five years and bonds payable.
d) Notes payable due in five years and bonds payable.
Which of the following events (transactions) is an internal event for a business entity? a. An accountant provides services for clients. b. An accountant receives cash payments from clients for services performed. c. An accountant purchases computer equipment to maintain business records and prepare legal documents. d. Periodically, the historical cost of the computer equipment used by an accountant is recorded as depreciation expenses.
d) Periodically, the historical cost of the computer equipment used by an accountant is recorded as depreciation expenses.
Which of the following statements best describes the term "revenues"? a) Revenues represent an outflow of assets resulting from the sale of goods or services. b) Revenues represent the dollar amount of bonds sold to the public. c) Revenues represent assets used or consumed in the sale of products or services. d) Revenues represent assets received from the sale of products or services.
d) Revenues represent assets received from the sale of products or services.
Which statement summarizes the income earned and the dividends paid? a) Income statement b) Statement of cash flows c) Balance Sheet d) Statement of retained earnings
d) Statement of retained earnings
Which of the following is an organization that lends funds to a business entity and expects repayment of the funds? a) a stockholder b) a partner c) an owner d) a creditor
d) a creditor
The system of accounting in which there are at least two accounts affected in every transaction so that the accounting equation stays in balance is a(n) a. debit. b. journalizing. c. credit. d. double-entry system.
d) double-entry system
Which one of the following is an example of a deferred revenue? a. Sales are made to customers on credit. b. Cash sales are made to customers. c. Interest has been earned by a bank deposit, but it has not been recorded. d. Cash is received prior to providing the services to customers.
d. Cash is received prior to providing the services to customers.
Fox Auto sold merchandise to a customer for $3,000 on credit on March 10. The customer paid Fox Auto the amount due on March 31. Under the accrual basis of accounting, which of the following statements is true? a. Fox Auto will recognize the revenue on March 31. b. Revenue is recognized after the cost of the merchandise sold has been paid by Fox Auto. c. The March 10 transaction increases revenue, but has no effect on assets because cash has not been received. d. The March 31 transaction has no effect on total assets under the accrual basis.
d. The March 31 transaction has no effect on total assets under the accrual basis.
