Accounting Exam 1

Created by blmartinez0930 

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The reason that both expenses and dividends are recorded by debit entries is that:

Both expenses and dividends are reduced owners equity.

Unearned revenue is:

A liability.

The principle that states revenue should be recognized at the time goods are sold or services rendered is called:

Revenue realization.

the general purpose financial statements prepared annually by a corporation would not include the:

Income tax return.

Financial statements may be prepared for

One year or less than one year.

Tge sequence of accounting procedures used to record, classify and summarize accounting information is called the:

Accounting cycle.

the agreement of the debit and credit totals of the trial balance gives assurance that:

The total debits equal the total credits.

In accounting, the terms debit and credit indicate, respectively:

Left and right.

The accrued interest should be:

Credited to interest payable.

No adjusting entry should consist of:

A debit to an expense and a credit to revenue.

Under accrual accounting, fees received in advance from customers should be shown as being earned:

When services are performed or goods delivered.

The rules of debit and credit may be summarized as follows:

Accounts on the left side of the balance sheet are increased by debits, whereas accounts on the right side of the balance sheet are increased by credits

The balance of unearned revenue account:

Appears in the liability section of the balance sheet.

Which of the following is considered a contra-asset account?

Accumulated depreciation.

A balance sheet:

Shows the assets, liabilities, and owners equity of a business entity, valued in conformity with generally accepted accounting principles.

Adjusting entries help achieve the goals of accrual accounting by applying the following two accounting principles:

Realization principle and matching principle.

Which of the following activities is not a category into which cash flows are classified?

Marketing activities.

Retained earnings are:

The owners equity that has accumulated as a result of profitable operations.

Which financial statement is primarily concerned with reporting the financial position of a business at a particular time?

The balance sheet.

the set of standard, assumption, and concepts that form the "ground rules" for financial reporting in the United States is termed:

Generally accepted accounting principles.

The principal difference between management accounting and financial accounting is that financial accounting information is:

Intended primarily for use by decision makers outside the business organization.

The matching principle:

Is used in accrual accounting to determine the proper period for recognition of expenses.

Which of the following would not be a proper application of the concept of materiality by Bayview Corporation?

Transactions involving small dollar amounts are not recorded in Bayview's accounting records.

Capital stock represents:

The amount invested in the business by stockholders when shares of stock were initially issued by a corporation.

During the current year, liabilities of Angelinos store increased by $210,000, and owners equity increased by $140,000.

Assets increased during the year by $350,000.

If $8,600 cash and a $30,000 note payable are given in exchange for some office machine used in a business:

Total assets are increased.

The purchase of office equipment at a cost of $5,400 immediate payment of $3,100 and agreement to pay the balance within 60 days is recorded by:

A debit of $5,400 to Office Equipment, a credit of $3,100 to Cash, and a credit of $2,300 to Accounts Payable.

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