Accounting 1

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Roger Moore ASU Beebe

THE ACCOUNTING EQUATION CAN BE STATED AS:

ASSETS - LIABILITIES = OWNER'S EQUITY

LIABILITIES ARE

OUTSIDER CLAIMS TO THE BUSINESS'S ASSETS

IF OWNER'S EQUITY IS $150,000 AND TOTAL LIABILITES ARE $90,000, THEN TOTAL ASSETS WOULD BE

$240,000

OWNER'S EQUITY AND TOTAL ASSETS WERE $32,000 AND $79,000 AT THE BEGINNING OF THE PERIOD. ASSETS INCREASED 50% AND LIABILITIES DECREASED 60% DURING THE PERIOD. WHAT IS OWNER'S EQUITY AT THE END OF THE PERIOD?

$99,700

A BUSINESS PAID $15,500 TO A CREDITOR. THE EFFECT OF THIS TRANSACTION IS TO:

DECREASE ASSETS AND DECREASE LIABILITIES

IF TOTAL LIABILITIES ARE $98,000 AND OWNER'S EQUITY IS $150,000 TOTAL ASSETS WOULD BE:

$248,000

EARNING REVENUE ON ACCOUNT

INCREASES ASSETS

ON DECEMBER 31, THE ASSETS OF A BUSINESS INCLUDE: CASH- $4500, AR-$14,000, AND SUPPLIES-$1050. THE LIABILITIES ON DEC. 31 TOTAL $7600. THE OWNER'S EQUITY ON DEC. 31 IS:

$11,950

PURCHASING OFFICE SUPPLIES FOR CASH WOULD

HAVE NO EFFECT ON OWNER'S EQUITY

PURCHASING A TRACT OF LAND FOR 100K BY PAYING 20K IN CASH AND SIGNING A PROMISSORY NOTE FOR THE REMAINDER WOULD

INCREASE TOTAL ASSETS BY 80K

COLLECTION OF AN ACCOUNT RECEIVABLE WOULD

HAVE NO EFFECT ON TOTAL ASSETS OR OWNER'S EQUITY

THE PAYMENT OF AN ACCOUNT PAYABLE WOULD

DECREASE ASSETS AND DECREASE LIABILITIES

TRANSACTIONS AFFECTING OWNER'S EQUITY INCLUDE:

OWNER WITHDRAWALS AND OWNER INVESTMENTS

A CASH INVESTMENT INTO THE BUSINESS BY THE OWNER WOULD

INCREASE ASSETS AND INCREASE OWNER'S EQUITY

AN OWNER INVESTMENT OFFICE EQUIPMENT INTO THE BUSINESS WOULD

INCREASE TOTAL ASSETS AND INCREASE OWNER'S EQUITY

IF BEGINNING CAPITAL WAS 25K, ENDING CAPITAL IS 37K AND THE OWNER'S WITHDRAWALS WERE 23K, THE AMOUNT OF NET INCOME OR NET LOSS OF THE PERIOD WAS

NET INCOME OF 35K

ASSETS ARE REPORTED ON THE

BALANCE SHEET

NET INCOME APPEARS ON WHAT STATEMENTS

INCOME STATEMENT AND STATEMENT OF OWNER'S EQUITY

THE FINANCIAL STATEMENT THAT PRESENTS A SUMMARY OF THE ASSETS, LIABILITIES, AND OWNER'S EQUITY AS OF A SPECIFIC DATE IS THE

BALANCE SHEET

A BUSINESS MAKES A CASH PAYMENT OF 12K TO A CREDITOR. WHICH OF THE FOLLOWING OCCURS?

CASH IS CREDITED FOR 12K

THE FIRST STEP OF JOURNALIZING AN ENTRY IS TO

IDENTIFY EACH ACCOUNT AFFECTED AND ITS TYPE

TRUE OR FALSE:
THE PROCESS OF POSTING TRANSFERS THE JOURNALIZED ENTRIES TO THEIR RESPECTIVE ACCOUNTS IN THE LEDGER

TRUE

DOES THE CAPITAL ACCOUNT INCREASE WITH A CREDIT

YES

THE PURPOSE OF A TRIAL BALANCE IS TO

MAKE SURE THAT DEBITS EQUAL CREDITS

TRUE OR FALSE:
EXPENSES DECREASE OWNER'S EQUITY, SO AN EXPENSE ACCOUNT'S NORMAL BALANCE IS A DEBIT BALANCE.

TRUE

AFTER INITIALLY RECORDING A TRANSACTION, THE DATA IS THEN COPIED, OR POSTED, TO THE:

LEDGER.

A CHART OF ACCOUNTS IS A

LIST OF ALL THE ACCOUNTS WITH THEIR ACCOUNT NUMBERS

ACCOUNTANTS FIRST RECORD TRANSACTIONS IN THE:

JOURNAL

NAME THE ORDER OF THE STEPS TO JOURNALIZE AN ENTRY.

IDENTIFY EACH ACCOUNT AFFECTED, DETERMINE INCREASE OR DECREASE IN EACH ACCOUNT, AND RECORD THE TRANSACTION.

WHICH OF THE FOLLOWING GROUPS OF ACCOUNTS NORMALLY HAVE A DEBIT BALANCE?

ASSETS AND EXPENSES

A BUSINESS MAKES A PAYMENT OF $1,200 ON A NOTE PAYABLE, CONSISTING OF A $200 INTEREST PAYMENT AND A $1000 PRINCIPAL PAYMENT. WHICH OF THE FOLLOWING JOURNAL ENTRIES WOULD BE RECORDED?

CASH IS CREDITED FOR $1,200; NOTES PAYABLE IS DEBITED FOR $1,000; AND INTEREST EXPENSE IS DEBITED FOR $200.

TRUE OR FALSE:
NOTES PAYABLES ARE ASSETS

FALSE

A BUSINESS RECEIVES CASH IN PAYMENT OF ACCOUNTS RECEIVABLE. WHAT OCCURS

AN ASSET IS DEBITED AND AN ASSET IS CREDITED.

TRUE OR FALSE:
CASE IS AN EXAMPLE OF OWNER'S EQUITY

FALSE

DOES AN INTEREST PAYABLE DECREASE WITH A DEBIT?

YES

A BUSINESS PURCHASES EQUIPMENT BY PAYING CASH OF 8K AND ISSUING A NOTE PAYABLE OF 12K. HOW WOULD IT BE JOURNALIZED?

CASH IS CREDITED FOR 8K; EQUIPMENT IS DEBITED FOR 20K; AND NOTES PAYABLE IS CREDITED FOR 12K

TRUE OR FALSE:
REVENUES INCREASE OWNER'S EQUITY SO A REVENUE ACCOUNT'S NORMAL BALANCE IS A CREDIT BALANCE.

TRUE

WHAT IS A LIST OF ALL THE ACCOUNTS WITH THEIR BALANCES?

TRIAL BALANCE

A BUSINESS PAYS $500 CASH FOR SUPPLIES. HOW IS IT RECORDED?

SUPPLIES IS DEBITED FOR $500

A DEBIT TO A(N)______ ACCOUNT IS REQUIRED IN HE ADJUSTING PROCESS FOR DEPRECIATION.

EXPENSE

ON AUGUST 1, 2011, XCEL AUTO REPAIR PAID 6K IN ADVANCE FOR 6 MONTHS RENT. AFTER ADJUSTING ENTRIES ARE MADE, WHAT IS THE BALANCE OF PREPAID RENT ON DECEMBER 31, 2011?

$1,000

THE PRINCIPLE THAT DETERMINES WHEN TO RECORD EXPENSES

THE MATCHING PRINCIPLE

WHAT REPORTS A COMPANY'S RESULTS OF OPERATIONS?

INCOME STATEMENT

ACCRUED REVENUE IS REVENUE THAT:

THE BUSINESS HAS EARNED, BUT NOT COLLECTED

THE PURPOSES OF THE ADJUSTING PROCESS ARE:

TO MEASURE NET INCOME OR LOSS AND TO UPDATE THE BALANCE SHEET

UNDER THE ACCRUAL METHOD OF ACCOUNTING, SERVICE REVENUE IS RECORDED WHEN?

THE SERVICES ARE COMPLETED

WHAT TYPE OF ACCOUNTING IS UNEARNED REVENUE AND WHAT IS ITS NORMAL BALANCE?

LIABILITY, CREDIT

A PREPAID EXPENSE IS AN EXPENSE THAT:

THE BUSINESS HAS PAID, BUT NOT YET INCURRED

UNDER WHAT METHOD OF ACCOUNTING IS AN EXPENSE RECORDED WHEN IT IS INCURRED, REGARDLESS OF WHEN CASH IS PAID?

ACCRUAL

ADJUSTING ENTRIES NEVER INVOLVE WHAT

CASH

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES REQUIRE THE USE OF WHAT METHOD OF ACCOUNTING

ACCRUAL

EMPLOYEES OF ROBERT ROGERS, CPA, PC WORKED DURING THE LAST TWO WEEKS OF DECEMBER. THEY RECEIVED THEIR PAYCHECKS ON JANUARY 2. THE MATCHING PRINCIPLE WOULD REQUIRE THAT WHAT APPEAR ON THE BALANCE SHEET FOR DECEMBER 31?

SALARIES PAYABLE

EVERY ADJUSTMENT AFFECTS WHICH OF THE FOLLOWING ACCOUNTS ON THE BALANCE SHEET?

ASSET OR LIABILITY ACCOUNTS

THE ADJUSTING ENTRY TO RECORD SUPPLIES EXPENSE ACCOMPLISHES WHAT?

DECREASES AN ASSET AND INCREASES AN EXPENSE

UNDER THE ACCRUAL METHOD OF ACCOUNTING, AN EXPENSE IS RECORDED WHEN?

WHEN THE EXPENSE IS INCURRED

AN ACCRUED EXPENSE IS AN EXPENSE THAT

THE BUSINESS HAS INCURRED, BUT NOT YET PAID.

IN WHICH OF THE COLUMNS OF THE WORK SHEET WOULD THE ACCUMULATED DEPRECIATION ACCOUNT BE FOUND?

IN THE TRIAL BALANCE CREDIT COLUMN, THE ADJUSTED TRIAL BALANCE CREDIT COLUMN AND THE BALANCE SHEET CREDIT COLUMN

REVENUES TOTAL $10200. EXPENSES TOTAL $300. WITHDRAWALS TOTAL $2600. WHAT IS THE BALANCE IN THE INCOME SUMMARY ACCOUNT PRIOR TO CLOSING NET INCOME OR LOSS TO THE CAPITAL ACCOUNT

CREDIT BALANCE OF $2900

TO WHAT ACCOUNT IS THE BALANCE IN THE OWNERS WITHDRAWALS ACCOUNT CLOSED?

THE CAPITAL ACCOUNT

PREPAID RENT IN THE WORK SHEET'S TRIAL BALANCE COLUMN IS $4000. PREPAID RENT IN THE BALANCE SHEET COLUMN IS $2000. WHAT ENTRY WOULD HAVE CAUSED THIS DIFFERENCE?

A $2000 ENTRY TO PREPAID RENT IN THE WORK SHEET'S ADJUSTMENTS CREDIT COLUMN

STEPS THAT BEGIN WITH ANALYZING SOURCE DOCUMENTS AND CONCLUDE WITH THE POST-CLOSING TRIAL BALANCES ARE CALLED THE

ACCOUNTING CYCLE

A NET LOSS WOULD BE CLOSED AS

DEBIT TO OWNER'S CAPITAL

WHAT ACCOUNTS WILL BE CLOSED BY CREDITING THE INCOME SUMMARY?

SERVICE REVENUE

WHERE DOES NET INCOME APPEAR ON A WORK SHEET?

NET INCOME APPEARS IN THE BALANCE SHEET CREDIT COLUMN AND IN THE INCOME STATEMENT DEBIT COLUMN.

THE WORKSHEET HELPS ACCOUNTANTS DO WHAT 3 THINGS?

(1) CLOSE ACCOUNTS
(2) PREPARE THE FINANCIAL STATEMENTS
(3) MAKE THE ADJUSTING ENTRIES

THE POST-CLOSING TRIAL BALANCE LISTS THE ACCOUNTS FROM THE GENERAL LEDGER IN:

ASSETS ARE LISTED IN ORDER OF LIQUIDITY.

WHAT DOES IT MEAN WHEN THE INCOME STATEMENT CREDIT COLUMN EXCEEDS THE INCOME STATEMENT DEBIT COLUMN ON A WORK SHEET

THE COMPANY HAS NET INCOME

WHAT WILL BE NECESSARY TO CLOSE THE APPROPRIATE DEPRECIATION ACCOUNT AT THE END OF THE YEAR?

DEBIT INCOME SUMMARY AND CREDIT DEPRECIATION EXPENSE.

THE ADJUSTING ENTRY FOR DEPRECIATION WOULD INCLUDE A:

DEBIT TO DEPRECIATION EXPENSE AND CREDIT TO ACCUMULATED DEPRECIATION.

WHERE CAN CLOSING ENTRIES BE FOUND?

IN A COMPANY'S GENERAL JOURNAL

THE PURPOSE OF THE DEPRECIATION ADJUSTMENT IS TO:

SPREAD THE COST INVESTED IN AN ASSET OVER ITS USEFUL LIFE

IS ACCUMULATED DEPRECIATION A TEMPORARY ACCOUNT

NO

WHAT ACCOUNTS ARE TEMPORARY ACCOUNTS THAT MUST BE CLOSED AT THE END OF THE YEAR?

REVENUES, EXPENSES, AND WITHDRAWALS.

WHAT DOES IT MEAN WHEN THE INCOME STATEMENT DEBIT COLUMN EXCEEDS THE INCOME STATEMENT CREDIT COLUMN ON A WORKSHEET?

THE COMPANY HAS A NET LOSS

MERCHANDISE INVENTORY AND THE COST OF GOODS SOLD FOR THE CURRENT PERIOD USING PERIODIC INVENTORY IS DETERMINED:

WHEN A PHYSICAL INVENTORY IS TAKEN

WHAT IS FREIGHT IN:

TRANSPORTATION COSTS TO SHIP GOODS INTO THE WAREHOUSE.

IN THE CREDIT TERMS OF " 3/10 n/EOM" WHAT DOES THE "3/10" MEAN?

THE VENDOR WILL GIVE A 3% DISCOUNT IF THE INVOICE IS PAID IN 10 DAYS.

TRUE OR FALSE:
INVENTORY IS AN ASSET UNTIL IT IS SOLD

TRUE

A COMPANY USES THE PERPETUAL INVENTORY METHOD. WHAT ENTRY WOULD BE MADE TO RECORD A $1000 PURCHASE OF INVENTORY ON ACCOUNT?

THE ACCOUNTING ENTRY WOULD BE A $1000 DEBIT TO INVENTORY AND A $1000 CREDIT TO ACCOUNTS PAYABLE.

A COMPANY THAT USES THE PERPETUAL INVENTORY METHOD PURCHASES INVENTORY OF $1000 ON ACCOUNT WITH TERMS OF 2/10 NET/30. WHAT ENTRY WOULD BE MADE TO RECORD PAYMENT FOR THE INVENTORY IF THE PAYMENT IS MADE WITHING 10 DAYS:

THE ACCOUNTING ENTRY WOULD BE A $1000 DEIT TO ACCOUNTS PAYABLE, A $20 CREDIT TO INVENTORY AND A $980 CREDIT TO CASH

AN INVOICE IN THE AMOUNT OF $600 FOR MERCHANDISE PURCHASED IS SHOWN WITH A 3/10, N30 DISCOUNT.. THE AMOUNT TO PAY ON OR BEFORE THE TENTH DAY IS:

$582.00

DESCRIBE A SALES DISCOUNT.

A DISCOUNT GIVE TO CUSTOMERS IF THE CUSTOMER PAYS WITHIN A CERTAIN PERIOD OF TIME

WHAT IS FREIGHT IN?

PART OF MERCHANDISE INVENTORY

"FOB SHIPPIN POINT" MEANS THAT

THE BUYER NORMALLY PAYS THE TRANSPORTATION COSTS.

"FOB DESTINATION" MEANS THAT

THE SELLER NORMALLY PAYS THE TRANSPORTATION COSTS.

A COMPANY SOLD MERCHANDISE FOR $350 THAT COST $221. THE ENTRY TO RECORD THE RETAIL VALUE OF THE MERCHANDISE SOLD WOULD BE A

DEBIT TO CASH AND CREDIT TO SALES FOR $350

A COMPANY USES THE PERPETUAL INVENTORY METHOD. WHAT ENTRIES WOULD BE MADE TO RECORD A SALE OF MERCHANDISE ON ACCOUNT?

THE ACCOUNTING ENTRY WOULD BE A DEBIT TO ACCOUNTS RECEIVABLE AND A CREDIT TO SALES REVENUE.

ALSO THE ACCOUNTING ENTRY WOULD BE A DEBIT TO COST OF GOODS SOLD AND A CREDIT TO INVENTORY.

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