W03 Study: Chapter 02 Smart Book Part 1

Given the descriptions below, which is (are) true regarding notes receivable? (Check all that apply.)

-A Note receivable is the promise of another entity to pay a specific sum of money on a specified future date. -Another name for a note receivable is a promissory note. -Notes receivable is classified as an asset.

Which of the following statements is (are) correct regarding the definition of a liability? (Check all that apply.)

-A liability is a debt owed by the business. -A liability can be settled by transferring assets or providing products or services to others. -A liability is a claim by creditors against the assets of a business.

Which of the following statements about the Dividends account is (are) correct? (Check all that apply.)

-Dividends decrease equity. -Dividends is used to record distributions of assets to the owners of a business. -Dividends are increased on the left side of the T-account.

Which of the following statements is (are) correct regarding the Notes payable account? (Check all that apply.)

-Notes payable is a formal promise to pay a certain sum of money on a specified future date. -Notes payable is reported on the balance sheet. -Notes payable is a liability account.

Which of the following statements are accurate regarding supplies? (Check all that apply.)

-Supplies are assets until they are used. -Unused supplies can be recorded as Store Supplies, Office Supplies or Supplies. -Unused supplies are treated as assets. -When supplies are purchased, they are added to the Supplies account.

Which of the following statements is accurate about the Land account? (Check all that apply.)

-The Land account is an asset. -The Land account is increased on the left side of its T-account. -The Land account is used to record the costs of land purchased by the business.

Which of the following statements is accurate regarding the Building account?

A Building asset account is used to record the costs of purchasing a store, office, warehouse or factory.

The correct definition of an "account" includes which of the following?

A record of increases and decreases in a specific asset, liability, equity, revenue, or expense item

Which of the following statements is accurate regarding Accounts payable?

Accounts payable refer to promises to pay later, which may arise from the purchase of supplies or services.

Which of the following accounts would be considered an asset? (Check all that apply.)

Accounts receivable Supplies Cash Building

Which of the following formulas is correct in depicting the expanded accounting equation? Multiple choice question.

Assets = Liabilities + Common stock - Dividends + Revenues - Expenses

Which of the following statements is the best definition of an asset?

Assets are resources owned or controlled by a company and that have expected future benefits.

The stockholders of a business received a $1000 dividend. How would this affect the total equity of the business?

Assets would be decreased and total equity would decrease as well.

Notes receivable is considered a(n)_______________ (asset/liability).

Blank 1: asset

The Building account is a(n) (asset/liability/expense) account and is reported on the (left/right) side of the accounting equation.

Blank 1: asset Blank 2: left

Supplies are (assets/expenses/liabilities) until they are used. When they are used up, their costs are reported as (assets/expenses/liabilities).

Blank 1: assets Blank 2: expenses

Enter one word for each blank. The expanded accounting equation is:_____________________ =_____________________ + common stock +__________________ - _____________________- dividends. Do not include the word "account(s)" in your answers. Note: order of the equation is important.

Blank 1: assets or asset Blank 2: liabilities or liability Blank 3: revenues or revenue Blank 4: expenses or expense

Accounts payable refer to obligations owed _____________ (by/to) the business and are classified as a(n) _________________(asset/liability/expense) account.

Blank 1: by Blank 2: liability

Which of the following items would be considered "cash" and reflected in a company's Cash account? (Check all that apply.)

Checks Money orders Coin

Which of the following statements is (are) accurate regarding equipment purchased within a business? (Check all that apply.)

Equipment is an asset. Equipment is reported on the left side of the accounting equation. Equipment cost is initially recorded as an asset and as it is used and gets worn down, the cost is gradually expensed. Equipment purchases are reported on the balance sheet.

Which of the following statements is the correct definition of equity?

Equity is the owner's claim on a company's assets.

True or false: Assets are claims (by creditors) against the company.

False

Which of the following accounts are examples of revenues? (Check all that apply.)

Fees revenue Service revenue Sales

Match the definition on the left with the term/item on the right.

Interest revenue, Professional fees earned, Sales

Which of the following statements is the best definition of the Chart of Accounts?

It is a list of all ledger accounts which exist in a business and includes an identification number assigned to each account.

The general ledger can be used to determine which of the following (select all answers which apply):

common and unique accounts used by a business. which accounts are being used by a company and their balances at any given time. increases and decreases in all accounts in a business.

True or false: The cost of land owned by a business is recorded in the Land account and this account is classified as an expense.

false

Which of the following statements is the correct definition of a liability?

A liability is a claim by a creditor against the assets of a business.

Which of the following is the best definition of a source document in the accounting process?

A source document identifies and describes transactions and is the basis for entering an event into the accounting system.

When the stockholders receive a dividend, how would this affect the equity of a business?

Assets are decreased and equity is decreased.

The Building account is a(n) ____________________(asset/liability/expense) account and is reported on the ___________________(left/right) side of the accounting equation.

Blank 1: asset Blank 2: left

Equipment is a(n) _______________ (asset/liability/expense) account. It is reported on the ___________________(left/right) side of the accounting equation and is _____________________ (increased/decreased) when equipment is purchased.

Blank 1: asset Blank 2: left Blank 3: increased

Prepaid accounts are _______________ (assets/liabilities) that represent prepayments of future expenses.

Blank 1: assets

Accrued liabilities are amounts owed that are not ___________.

Blank 1: paid or yet paid

Which of the following describes a general ledger? Multiple choice question.

The general ledger is a record containing all accounts used by a company.

Which of the following are accurate statements regarding how to report or treat prepaid accounts? (Check all that apply.)

-The unexpired portion of prepaid accounts are treated as assets. -The expired portion of prepaid accounts is reported on the income statement as an expense. -Over time, the expired portion of prepaid accounts is removed from the account and reported as an expense.

Which of the following statements is (are) correct regarding unearned revenues? (Check all that apply.)

-Unearned revenue is a liability account which is set up when a customer pays in advance for a product or service. -Unearned revenues refer to a liability that is settled when a company delivers a product or performs a service.

Which of the following statements is the correct definition of a creditor?

A creditor is an individual or organization that has a right to receive payments from a business.

When financial statements are prepared, unexpired prepaid accounts are recorded as (expenses/assets/liabilities) and the expired portion of the prepaid account is reported as a(n) (expense/asset/liability).

Blank 1: assets Blank 2: expense

Since expenses are the costs of doing business and cause equity to ____________(increase/decrease), expenses are increased on the _______________(right/left) side of their T-account.

Blank 1: decrease Blank 2: left

An account is a record of increases and _______________________ in a specific asset, liability, equity, revenue or expense.

Blank 1: decreases

The Dividends account is used to record ______________________(investments/dividends/expenses/revenues) by the owner and has a_______________ (positive/negative) impact on equity.

Blank 1: dividends Blank 2: negative

Revenues cause equity to _______________(decrease/increase) and they are increased on the _______________- (left/right) side of the T-account.

Blank 1: increase Blank 2: right

The Notes payable account is a(n) _____________________(asset/liability/expense) account and is increased on the ______________________(left/right) side of the T-account.

Blank 1: liability Blank 2: right

Accrued liabilities are amounts owed that are not ___________________.

Blank 1: paid or yet paid

Identify which of the following lists include only examples of assets.

Building, cash, accounts receivable

Cash can take many forms. From the lists of items below, choose the one which includes only items that would be defined as cash.

Coins, checks, money orders

There are several types of accounts that impact equity. Which of the accounts below cause equity to increase?

Common stock and revenues

Which of the following statements is correct regarding expenses.

Expenses are increased on the left side of their T-account because they decrease equity.

Which of the following statements is correct about prepaid accounts

Prepaid accounts are also called prepaid expenses and are considered assets.

Which of the following are examples of prepaid (expense) accounts? (Check all that apply.)

Prepaid rent Prepaid insurance

Which of the following lists of items contain only examples of prepaid (expense) accounts?

Prepaid rent, prepaid insurance

Which of the following would be considered a source document in an accounting system? (Check all that apply.)

Purchase order Sales receipt Payroll records Checks

Which of the following accounts are examples of expenses? (Check all that apply.)

Rent expense Supplies expense

From the following lists of accounts, choose the list(s) which contains only expense accounts.

Rent expense, wages expense, insurance expense

When the product or service related to an unearned revenue is delivered, the earned portion of the unearned revenue is transferred to a _____ account.

Revenue

Which of the following accounts impact equity? (Check all that apply.)

Revenue Dividends Expenses Common Stock

Which of the following statements about revenues is correct?

Revenues cause equity to increase, and they are increased on the right side of the T-account.

All of the following are examples of accrued liabilities:

interest payable wages payable taxes payable

The ability to meet short-term obligations and generate revenues is called:

liquidity

The ability to meet long-term obligations and generate revenues is called:

solvency