Accounting 1 Test 1

Created by tannerjames43 

Upgrade to
remove ads

53 terms

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

Control of inventory should begin as soon as the inventory is received. Which of the following internal control steps is not done to meet this goal?

check the invoice with the person who specifically purchased the item

Under a perpetual inventory system, the amount of each type of merchandise on hand is available in the

inventory ledger

When merchandise sold is assumed to be in the order in which the purchases were made, the company is using

first-in, first-out

If a manufacturer ships merchandise to a retailer on consignment, the unsold merchandise should be included in the inventory of the

manufacturer

Damaged merchandise that can be sold only at prices below cost should be valued at

net realizable value

The method of computing inventory that uses records of the selling prices of the merchandise is called

retail method

Which of the following companies would be more likely to use the specific identification inventory costing method?

Gordon's Jewelers

Which of the following is not an example for safeguarding inventory?

Returning inventory that is defective or broken.

Under the _________ inventory method, accounting records maintain a continuously updated inventory value.

perpetual

Taking a physical count of inventory

should be done near year-end

Under a periodic inventory system

a physical inventory is taken at the end of the period

The two most widely used methods for determining the cost of inventory are

FIFO and LIFO

Ending inventory is made up of the oldest purchases when a company uses

last-in, first-out

Please allow access to your computer’s microphone to use Voice Recording.

Having trouble? Click here for help.

We can’t access your microphone!

Click the icon above to update your browser permissions above and try again

Example:

Reload the page to try again!

Reload

Press Cmd-0 to reset your zoom

Press Ctrl-0 to reset your zoom

It looks like your browser might be zoomed in or out. Your browser needs to be zoomed to a normal size to record audio.

Please upgrade Flash or install Chrome
to use Voice Recording.

For more help, see our troubleshooting page.

Your microphone is muted

For help fixing this issue, see this FAQ.

NEW! Voice Recording

Click the mic to start.

Create Set