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Paying an account payable increases liabilities and decreases assets.

false

Transactions affecting owner's equity include

owner's investments and owner's withdrawals, revenues, and expenses

The financial statements of a proprietorship should include the owner's personal assets and liabilities.

false

Revenue is earned only when money is received.

false

The two most common specialized fields of accounting in practice are

managerial accounting and financial accounting

Manufacturing and merchandising companies are similar because they purchase products from other companies to sell to their customers.

false

Primary users of accounting information are accountants.

false

Only large companies such as Wal-Mart, JCP, General Motors, and the Bank of America can be organized as corporations.

false

How does receiving a bill to be paid next month for services rendered affect the accounting equation?

liabilities increase; owner's equity decreases

A balance sheet is a list of the assets, liabilities, and owner's equity of a business for a period of time.

false

Proprietorships are owned by one owner and provide only services to their customers.

false

Most businesses in the United States are

sole proprietorships

Rivers Computer Makeover Company purchased various computer supplies on account to be used for repairing their customers' computers. How will this business transaction affect the accounting equation?

Increase Assets (Supplies) and Increase Liabilities (Accounts Payable)

Four financial statements are usually prepared for a business. The statement of cash flows is usually prepared last. The statement of owner's equity (OE), the balance sheet (B), and the income statement (I) are prepared in a certain order to obtain information needed for the next statement. In what order are these three statements prepared?

I,OE, B

The process of transferring the journal entries to the accounts is known as

posting

Journalizing transactions using the double-entry bookkeeping system will eliminate fraud.

false

The recording of cash receipts to the cash account will be done by debiting the account.

true

Which of the following entries records the acquisition of equipment on account?

Equipment, debit; Accounts Payable, credit

A proof of the equality of debits and credits in the ledger at the end of an accounting period is called a balance sheet.

false

The order of the flow of accounting data is (1) record in the ledger, (2) record in the journal, (3) prepare the financial statements.

false

When a transposition error is made on the trial balance, the difference between the debit and credit totals on the trial balance will be

divisible by 9

The classification and normal balance of the drawing account is

owner's equity with a debit balance

Joe Able invested $6,000 in his company, Able Co. on June23. The journal entry will:

Increase Cash and increase Capital

All except one of the following accounts will be increased with a debit:

unearned revenues

A debit may signify a

decrease in liability accounts

Drawings are an example of an expense.

false

Prior to the adjusting process, accrued revenue has

been earned and not recorded as revenue

Adjusting entries are made at the end of an accounting period to adjust accounts on the balance sheet.

false

The matching concept requires expenses be recorded in the same period that the related revenue is recorded.

true

The following adjusting journal entry was found on page 4 of the journal. Select the best explanation for the entry. Debit: Wages Expense 2,555 Credit Wages Payable 2,555

Record wages expense incurred and to be paid next month

A contra asset account for Land will normally appear in the balance sheet.

false

If the adjustment for depreciation for the year is inadvertently omitted, the assets on the balance sheet at the end of the period will be understated.

false

All adjusting entries always involve

at least one income statement account and one balance sheet account.

The revenue recognition concept

determines when revenue is credited to a revenue account

Entries required to close the balances of the temporary accounts at the end of the period are called final entries.

false

On which financial statement will Income Summary be shown?

No financial statement

Accumulated Depreciation appears on the

balance sheet in the property, plant and equipment section

Which of the accounts below would be closed by posting a debit to the account?

fees earned

The phase of accounting system installation in which the information needs of people in the organization are taken into account is

analysis

Purchase journals will have an Other Accounts Cr. column.

false

The customers ledger is controlled by the general ledger account entitled Accounts Payable.

false

Accounting systems evolve through a three-step process: analysis, design and feedback.

false

A purchase of supplies on account is recorded in the

purchases journal

A purchase of supplies for cash is recorded in the

cash payments journal

Multiple-step income statements show

both gross profit and income from operations

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

administrative expense

The seller records the sales tax as part of the sales amount.

false

Sales to customers who use bank credit cards, such as MasterCard and VISA, are generally treated as credit sales.

false

Generally, the revenue account for a merchandising business is entitled

sales

A retailer purchases merchandise with a catalog list price of $10,000. The retailer receives a 25% trade discount and credit terms of 2/10, n/30. How much cash will be needed to pay this invoice within the discount period?

7,350

Apple Co sells merchandise on credit to Zea Co in the amount of $8,000. The invoice is dated on September 15 with terms of 1/15, net 45. If Zea Co. chooses not to take the discount, by when should the payment be made?

october 30

When merchandise sold is assumed to be in the order in which the expenditures were made, the inventory method is called

first-in, first-out

KoKo Company uses the retail method of inventory costing. They started the year with an inventory that had a retail cost of $35,000. During the year they purchased an inventory with a retail cost of $300,000. After performing a physical inventory, they calculated their inventory at $60,000. The mark up is 100% of cost. Determine the ending inventory at its estimated cost.

$30,000

Inventory costing methods place primary emphasis on assumptions about

flow of costs

Most large companies will use only one inventory costing methods for all of its different segments.

false

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