Principles of Accounting II final

the balance column in a ledger account is

A column for showing the balance of the account after each entry is posted.

which of the following are permanent accounts?

A/P

adjusting entries

Affect both income statement and balance sheet accounts

all of the following are asset accounts except A) buildings B)a/r C) supplies expense D) equipment E) prepaid insurance

C

the principles of internal control include

Establish responsibilities

net income

Is the excess of revenues over expenses

a properly designed internal control system

Lowers the company's risk of loss

double entry accounting is an accounting system

That records the effects of transactions and other events in at least two accounts with equal debits and credits

a check involves three parties

The maker, the payee, and the bank.

a business uses a credit to record

a decrease in an asset account

unearned revenue is reported in the financial statements as

a liability on the balance sheet

a ledger is

a record containing all accounts and their balances used by a company

record of increases and decreases in a specific asset, liability, equity, revenue, or expense is an

account

The description of the relation between a company's assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity, is known as the:

accounting equation

assets created by selling good

accounts receivable

A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and their length of time past due is the:

aging of accounts receivable method

When closing entries are made:

all temporary accounts are closed but not the permanent accounts

the accounting process begins wiith

analysis of business transactions and source documents

in reimbursing the petty cash fund

appropriate expense accounts are debited

cash equivalents

are readily convertible to a known cash amount

Resources a company owns or controls that are expected to yield future benefits are:

assets

identify the accounts that would normally have balances in the debit column of a businesses trial balance

assets and expenses

the accounting concept that requires every business to be accounted for separately from other business entities, including its owner or owners is known as the

business entity assumption

an account used to record the owners investments in the business is called a

capital account

an income statement account that is used to record cash overages and shortages arising from petty cash transactions or from errors in making change is titles

cash over and short

journal entries recorded at the end of each accounting period to prepare the revenue, expense, and withdrawals accounts for the upcoming period and to update the owners capital account for the events of the period just finished are referred to as

closing entries

Cash, not including cash equivalents, includes:

coins, currency, and checking accounts

An account linked with another account that has an opposite normal balance and that is subtracted from the balance of the related account is a(n):

contra asset account

The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the

cost principle

normal balance of a liability

credit

normal balance of owners capital

credit

normal balance of revenue

credit

a notification that the sender has credited the recipients account kept by the sender

credit memo

the amount of time allowed before fill payment is due

credit period

the description of the amounts and timing of payments from a buyer to a seller

credit terms

Two common subgroups for liabilities on a classified balance sheet are:

current liabilities and long term liabilities

The time period assumption assumes that an organization's activities may be divided with specific reporting time periods including all the following except

days

normal balance of an asset

debit

normal balance of expnse

debit

normal balance of owner withdrawal

debit

a notification that the sender has debited the recipients account kept by the sender

debit memo

The periodic expense created by allocating the cost of plant and equipment to the periods in which they are used, representing the expense of using the assets, is called:

depreciation expense

the time period in which a cash discount is available and a reduced payment can be made by the buyer

discount period

Failure by a promissory note's maker to pay the amount due at maturity is known as:

dishonoring a note

Reporting the details of notes is consistent with which accounting principle that requires financial statements (including footnotes) to report all relevant information?

full disclosure

net sales less cost of goods sold

gross profit

the financial statement that reports whether the business earned a profit and also lists the revenues and expenses is called the

income statement

the special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to the owners capital account is the

income summary account

a promissory note

is a written promise to pay a specified amount of money at a certain date

a debit

is on the left hand side of a T-chart

prepaid expenses, depreciation, accrued expenses, and unearned revenues are all examples of

items that require adjusting entries

source documents include all of the following except

ledgers

creditors claims on the assets of a company are called

liabilities

which of the following accounting principles prescribes that a company record its expenses incurred to generate the revenue reported?

matching principle

a formal promise to pay (in the form of a promissory note) a future amount is a

note payable

The accounting concept that requires financial statement information to be supported by independent, unbiased evidence is

objectivity principle

which of the following are classified as plant assets

office equipment

a classified balance sheet

organizes each asset and liabilities into important subgroups that provide more information

an accounting method that updates the accounting records for merchandise transactions only at the end of a period

periodic inventory system

an accounting method that continually updates accounting records for merchandise transactions

perpetual inventory system

The process of transferring general journal information to the ledger is

posting

temporary accounts include all of the following except

prepaid rent

which of the following is the usual final step in the accounting cycle

preparing a post closing trial balance

The primary objective for financial accounting is to

provide accounting information that serves external users

a businesses source documents

provide objective evidence that a transaction has taken place

Tehnology

reduces the time,effort, and cost of recordkeeping

The question of when revenue should be recognized on the income statement according to GAAP is addressed on the

revenue recognition principle

the question of when revenue should be recognized on the income statement according to GAAP is addressed by the

revenue recognition principle

increases in equity form a companys sales of products or services are

revenues

identify the accounts that would normally have balances in the credit column of a businesses trial balance

revenues and liabilities

a cash discount granted to customers for paying within the discount period

sales discount

expenses of promoting sales by displaying and advertising merchandise, making sales, and delivering goods to customers

sellling expenses

which of the following assets is not depreciated

store fixtures

interim financial statements refer to financial reports

that cover less than one year, usually spanning one, three, or six month periods

the maturity date of a note receivable is

the day the note is due to be paud

A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the:

time period assumption

sellers allow customers to use credit cards for all the reasons except

to be able to charge more due to fees and interest

A report that lists accounts and their balances, in which the total debit balances should equal the total credit balances, is called a(n):

trial balance

this is classified as a liability in a companys chart of accounts

unearned revenue

which of the following is not a step in the accounting process

verify that revenues and expenses are equal

a resource that the owner tales form a company is a

withdrawal

distributions of cash or other resources by a business to its owners are called

withdrawals

an optional columnar working paper used to prepare a companys unadjusted trial balance, adjusting entries, adjusted trial balance,and financial statements is a

work sheet