Smartbook quiz questions

Which trial balance is prepared immediately after the adjusted entries have been recorded

adjusted

When recording depreciation expense, do you debit or credit it?

debit it

The adjusting entry to record depreciation, includes a debit to______ and a credit to_______

depreciation expense, accumulated depreciation

Which of the following errors cause net income to be understated?

Revenue that has been earned but not yet collected in cash has not been recorded

Net Sales Formula

sales revenue - sales returns and allowances - sales discounts

Is depreciation a contra account?

yes

when reporting utilities payable, do you record utilities being paid in later months?

yes

What is the effect of the December 31 adjusting entry to record $400 of revenue for which the seller has performed for its customers but not yet collected?

Accounts Receivable should be increased by $400 and Sales Revenue should be increased by $400.

The adjusting entry to record revenue for services the seller has performed but not yet collected requires:

a debit to Accounts Receivable and credit to Service Revenue.

The journal entry to record the payment for merchandise previously purchased on account includes a debit to ______ and a credit to ____

accounts payable, cash

The journal entry to record the payment for merchandise previously purchased on account includes a debit to ______ and a credit to _____

accounts payable, cash

Current ratio formula

current assets/current liabilities

Record the entry for $500 interest owed by the company as of December 31, on a bank loan taken out on October 1, 2021. The interest will be paid when the loan is repaid on September 30, 2022. No interest has been recorded yet.

debit interest expense, credit interest payable

The adjusting entry to record depreciation on equipment includes

debit to depreciation expense and a credit to accumulated depreciation

The adjusting entry to record depreciation on equipment includes a ______

debit to depreciation expense, credit to accumulated depreciation

The adjusting entry to record salaries and wages owed to employees at the end of the accounting period includes a debit to "Salaries and Wages____ and a credit to "Salaries and Wages____

expense, payable

A transaction that involves an exchange of assets, liabilities and/or stockholders' equity between the company and someone else is called a(n)

external exchange

A______ income statement shows how much profit is earned from product sales without being clouded by other operating expenses and separates other items that are not core to the operations of the company.

multi-step

Bijoux Company uses a perpetual inventory system. Its bookkeeper properly recorded a $5,000 sale on account, but forgot to record the related cost of the sale of $3,000. As a result of this error, ______

net income and total assets will be too high.

Accrural basis accounting

reporting income when it is earned and expenses when they are incurred

The Mortgage Payable account is increased with an entry on the side of the T-account.

right

The Retained Earnings account is increased with an entry on the

right

The Retained Earnings account is increased with an entry on the____ side of the equation

right

Sales Revenue reports the _____

sales price times the quantity of goods sold

Which of the following are reported on the income statement?

sales revenue, cost of goods sold, and gross profit

A classified balance sheet ______

shows subtotals for current assets and current liabilities

Which financial statement would you find cash paid for supplies

statement of cash flows

what is the other name for balance sheet

statement of financial position

revenues and expenses go under which account

stockholders equity

understated

the amount that is reported on the financial statement is less than it should be.

Which financial statement would you find supplies expense on?

Income statement

What is a contra account?

An account that is an offset to, or deduction from, the primary account

Closing Entry

An entry made to close out a temporary account, transfer the balance to retained earnings, and determine net income

Expense accounts:

Are increased with debit entries

Expanded Accounting Equation

Assets - Liabilities = Common Stock + Retained Earnings

Which of the following are found on the income statement of a merchandiser?

COGS, gross profit, sales revenue

The adjusted trial balance should be prepared ______ the financial statements are prepared to prove the ______ of the debits and credits.

before, equality

Which of the following adjusting entries will cause assets and stockholders' equity to increase? Adjusting for services provided

but not yet collected

A company purchased land in exchange for a $25,000, 10-year note payable. The increase in the Notes Payable account would be recorded with a

credit

A company purchased supplies and promised to pay $200 for them next month. The increase in Accounts Payable would be recorded with a

credit

A closing entry may include a:

credit to Wages Expense

In a perpetual system, the entry to record the sale of merchandise to a customer on account would include a ____

credit to sales revenue, credit to inventory, debit to cost of goods sold, debit to accounts receivable

Accumulated Depreciation has a normal______ balance which indicates that it_____ Total Assets.

credit, reduces

If merchandise costing $500 is sold on account for $620, how is this transaction recorded when using a perpetual inventory system?

. Debit Accounts Receivable, credit Sales Revenue for $620; debit Cost of Goods Sold, and credit Inventory for $500.

What is the order of financial statements?

1. Income Statement 2. Statement of Retained Earnings 3. Balance Sheet 4. Statement of Cash Flows

Monster Music Company provided music lessons to customers for $10,000, receiving $6,000 in cash and the rest on account. What is Monster Music Company's revenue under the accrual basis of accounting?

10,000

perpetual inventory system

A detailed inventory system in which a company maintains the cost of each inventory item, and the records continuously show the inventory that should be on hand.

Accrural basis accounting

Accounting basis in which companies record transactions that change a company's financial statements in the periods in which the events occur.

Which financial statement would you find supplies on?

Balance sheet

retained earnings formula

Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings

Which of the following entries records the adjustment to revenue for which the seller has performed its obligations but has not yet been collected or billed?

Debit Accounts Receivable and credit Sales Revenue

Which of the following entries records the adjustment to revenue for which the seller has performed its obligations but has not yet been collected or billed?

Debit Accounts Receivable and credit sales Revenue

Which items appear on a balance sheet?

Liabilities, stockholder's equity, Assets

Cash Basis Accounting

Reporting income when the cash is received and expenses when the cash is paid.

What account is utilities expense?

Stockholder's equity

Sales Revenue

The amount that a merchandiser earns from selling its inventory.

What are the effects on the financial condition of the business from the adjustment for revenues from the seller fulfilling its obligations that have not yet been collected?

Total assets will increase and total stockholders' equity will increase.

Which line items are found on a multi-step but not on a single-step income statement.

income from operations and gross profit

Events that do not involve exchanges between the company and someone else but affect assets, liabilities and/or stockholders' equity are called

internal events

Accounts Payable ______.

is debited when amounts owed are paid, is credited for purchases made on account

The duality of effects refers to the fact that each transaction _____

it must have 2 effects on the accounting equation

What price is land recorded at?

it's original price

is a building a current asset?

no

Net income formula

revenues-expenses

Business activities that affect the basic accounting equation and are recorded in the accounting system are called

Transactions

normal debit balance meaning

there is a positive balance on the left side