STUDY Office Accounting Ch.1-3 Exam
false
A CMA is a Certified Marketing Auditor.
merchandising business
A business that purchases a product from another business to sell to customers is called a
CIA
An internal auditor can achieve professional recognition in internal auditing by receiving which of the following certificates?
A cash payment on a loan affects which of the following accounts?
Cash and Notes Payable
false
Cost accounting is used to develop a financial plan for a company.
analyzing
Examining a transaction or event to determine its fundamental significance to the business so that the relevant information may be properly processed is called
true
Generally accepted accounting principles are procedures and guidelines to be followed in the accounting and reporting process.
true
If owner's equity and liabilities increased during the period, then assets must also have increased.
false
Liabilities represent an "inside" interest in a business.
marketing analysis
Public accountants do NOT offer which of the following services?
false
Reviewing the events that have taken place and determining how this affects the business is called interpreting.
the language of business
Since financial information is communicated in accounting terms, accounting is said to be
true
Since financial information is communicated in accounting terms, accounting is said to be the "language of business."
true
Stockholders have very little influence on business decisions.
corporation
Stockholders own which type of business?
decrease assets and decrease owner's equity.
Sue Lee paid $1,200 for office rent. This transaction would
false
The principal accounting officer of a company is called a public accountant.
decrease assets and decrease liabilities
Tyler paid $3,700 on account to the company from which equipment was purchased on credit. This transaction would
proprietorships
Which of the following does NOT use nonprofit accounting guidelines and procedures?
false
Writing or using one of the latest technological advances to enter a transaction in the accounting records is called summarizing.
A credit represents a decrease in
an asset
Examining a transaction or event to determine its fundamental significance to the business so that the relevant information may be properly processed is called
analyzing
Footings in T accounts
are unnecessary when there is only one entry.
The fact that each transaction has a dual effect on the accounting elements provides the basis for what is called
double-entry accounting.
Payment of a telephone bill represents an increase in a(n)
expense
A trial balance is a formal business report.
false
According to the business entity concept, a proprietor may include nonbusiness assets and liabilities in the business entity's accounting records.
false
Expenses represent a decrease in liabilities.
false
Expenses that are incurred in operating the enterprise increase owner's equity.
false
If the revenue of a period exceeds the expenses, the excess represents a net loss.
false
Liability accounts normally have debit balances.
false
Revenues decrease owner's equity.
false
Reviewing the events that have taken place and determining how this affects the business is called interpreting.
false
Since insurance lasts for several months, it is recorded as owner's equity.
false
The accounting equation shows the relationship among the three basic accounting elements?assets, revenues, and owner's equity.
false
The fact that each transaction has a dual effect on the accounting elements provides the basis for what is called complex-entry accounting.
false
The principal accounting officer of a company is called a public accountant.
false
The purchase of a supply of markers for three months should be recorded as an increase in revenue and a decrease in cash.
false
The statement of owner's equity shows the state of the business on a specific date.
false
The terms "profit and loss statement" or "operating statement" are sometimes used as synonyms for the balance sheet.
false
Withdrawing cash from a business entity will result in an increase in owner's equity.
false
Writing or using one of the latest technological advances to enter a transaction in the accounting records is called summarizing.
false
The financial statement that should be completed first is the
income statement
Meghan started her business by investing $30,000 in cash. This transaction would
increase assets and increase owner's equity
An increase in an asset account may be offset by a(n)
increase in owner's equity
The person who reviews the operating and accounting control procedures adopted by management to make sure the controls are adequate may be referred to as a(n)
internal auditor
accounting
is a system of gathering financial information about a business and reporting this information to users.
recording
is entering financial information about events into the accounting system.
analyzing
is looking at events that have taken place and thinking about how they affect the business.
classifying
is sorting and grouping similar items together rather than merely keeping a simple, diary-like record of numerous events.
Which phase of the accounting process involves recognizing the effect of transactions on assets, liabilities, owner's equity, revenue, and expenses of a business?
processing
The trial balance
shows the current date.
An example of an expense is
supplies consumed
The standard T account includes all of the following EXCEPT
the current date
A business that makes a product to sell is called a manufacturing business.
true
A credit increases liabilities and owner's equity.
true
A trial balance is a list of all accounts showing the title and balance of each account.
true
A trial balance is taken periodically to check the equality of the debits and credits.
true
Accountants design accounting information systems and analyze and interpret information.
true
An accounts payable is an unwritten promise to pay a supplier for assets purchased or services rendered.
true
An increase or decrease in any asset, liability, owner's equity, revenue, or expense is always accompanied by an offsetting change within the basic accounting elements.
true
At least two accounts are affected by every transaction.
true
Certified Public Accountant is a professional designation that a public accountant can earn by passing a written exam and completing a specific amount of work experience.
true
Financial statements commonly prepared by businesses include an income statement, a statement of owner's equity, and a balance sheet.
true
If owner's equity and liabilities increased during the period, then assets must also have increased.
true
If services for the month total $7,000 in cash and $1,500 on account, the revenue account increases $8,500
true
Other terms used for owner's equity include net worth and capital.
true
Payment of rent decreases the Cash account.
true
Prepaid insurance and supplies are assets because they will provide benefits for more than one month.
true
Recognizing the effects of transactions on assets, liabilities, owner's equity, revenue, and expenses of a business is the processing function.
true
Revenues received during an accounting period increase owner's equity.
true
Since supplies last for several months, they are recorded as assets.
true
The Financial Accounting Standards Board develops generally accepted accounting principles to provide some assurance that companies are reporting business activities in a similar manner.
true
The accounting equation must remain in balance.
true
The balance of a T account is on the side with the larger footing.
true
The income statement and statement of owner's equity provide information covering a period of time.
true
The income statement provides information about events over a period of a month, year, or other period of time.
true
The owner's capital account normally has a credit balance.
true
The six major steps of the accounting process are analyzing, recording, classifying, summarizing, reporting, and interpreting.
true
To debit an account is to enter an amount on the left side of the account.
true
When services are performed for which payment will be received later, accounts receivable increases.
true