Accounting 1 test 1 conglomerate

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The classification and normal balance of the accounts payable account is

a liability with a credit balance

Which of the following accounts is a stockholders' equity account?

dividends

In which of the following types of accounts are increases recorded by credits?

revenues, liabilities

Revenue should be recognized when

the service is performed

Which group of accounts is comprised of only assets?

Prepaid Expenses, Buildings, Patents

A chart of accounts is

usually a listing of accounts in financial statement order

Which side of the account increases a cash account?

debit

Expenses follow the same debit and credit rules a

dividends

Which of the following types of accounts have a normal credit balance?

revenues and liabilities

Which of the following entries records the acquisition of office supplies on account?

Office Supplies, debit; Accounts Payable, credit

The business entity concept means that

the entity is an individual economic unit for which data are recorded, analyzed, and reported

The asset created by a business when it makes a sale on account is termed

accounts receivable

Select the type of business that is most likely to obtain large amounts of resources by issuing stock.

corporation

Two common areas of accounting that respectively provide information to internal and external users are

managerial accounting and financial accounting

Debts owed by a business are referred to as

liabilities

If stockholders wanted to know how money flowed into and out of the company, what financial statement would they use?

statement of cash flows

Liabilities are reported on the

balance sheet

Most businesses in the United States are

proprietorships

The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a month or year, is called a(n)

income statement

The objectivity concept requires that

amounts recorded in the financial statements must be based on independently verifiable evidence

Which of the following is not a characteristic of a corporation?

A corporation's resources are limited to its individual owners' resources.

Which of the following is a manufacturing business?

Ford Motors.

Which of the following best describes accounting?

is an information system that provides reports to users regarding economic activities and condition of a business.

A financial statement user would determine if a company was profitable or not during a specific period of time by reviewing

the income statement

The debt created by a business when it makes a purchase on account is referred to as an

account payable

Multiple-step income statements show

both gross profit and income from operations

The arrangements between buyer and seller as to when payments for merchandise are to be made are called

credit terms

Office salaries, depreciation of office equipment, and office supplies are examples of what type of expense?

administrative expense

Net income plus operating expenses is equal to

gross profit

The inventory system employing accounting records that continuously disclose the amount of inventory is called

perpetual

The term "inventory" can indicate

merchandise held for sale in the normal course of business

When comparing a retail business to a service business, the financial statement that changes the most is the

income statement

Which of the following accounts usually has a debit balance?

Freight In

If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as

FOB shipping point

Merchandise inventory is classified on the balance sheet as a

current asset

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a

credit memo

Generally, the revenue account for a merchandising business is entitled

sales

Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as

selling expenses

Which of the following accounts will only be found in the chart of accounts of a merchandising company?

merchandise inventory

Which of the following accounts has a normal credit balance?

sales

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