Exam 1

Created by pharper 

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22 terms

Which statement below best describes the accounting equation?

Resources of the company equal creditors and owners claims to those resources.

Transactions related to the primary business activities of the company, such as selling goods and services to customers, are referred to as.

Operating Activities

Which business form has the advantage of limited liability?

Corporation

The costs of providing goods and services to customers are referred to as

Expenses

The owners interest in a corporation is called

Stockholders equity

Liabilities are best defined as

Debts or obligations the company owes resulting from past transactions

Which of the following accounts appears in the statement of stockholders equity?

Retained earnings

Which of the following is the correct order for preparing the financial statements?

Income statement, statement of stockholders equity and balance sheet

the major underlying assumptions of accounting include all of the following except

Legal liability

When a company incurs workers salaries but does not pay them, how will the basic accounting equation be affected?

Stockholders equity decreases

Pumpkin Inc. sold $500 in pumpkins to a customer on account on January 1. On January 11 pumpkin collected the cash from the customer. What is the impact on Pumpkin's accounting equation from the collection of cash?

No net effect to the accounting equation

A company receives a $50,000 cash deposit from a customer on October 15 but will not provide services until November 20. Which of the following statements is true?

The company records an unearned revenue on October 15

An expense has what effect on the accounting equation?

Decrease stockholders equity

Providing services and receiving cash will:

Increase assets and increase stockholders equity

Dividends normally carry a _______ balance and are shown in the __________.

Debit; Statement of stockholders equity

Which of the following accounts would normally have a credit balance?

Accounts payable, service revenue, common stock

Xenon Corporation borrows $75,000 from First Bank. Xenon Corporation records this transaction with a

Credit to liabilities

A company received a bill for newspaper advertising services received, $400. The bill will be paid in 10 days. How would the transaction be recorded today?

Debit advertising expense $400, credit accounts payable $400

Assume that cash is paid for rent to cover the next year. The appropriate debit and credit are:

Debit prepaid rent, credit cash

Styleson Inc. performed cleaning services for their customers for cash. These transactions would be recorded as:

Debit cash, credit service revenue

On December 1, 2010, Bears Inc. signed a contract with a retailer to supply stuffed animal toys for the next calender year. How should this transaction be recorded on December 1, 2010?

No transaction should be recorded on December 1,2010.

The body primarily responsible for establishing a single set of global accounting standards is the:

IASB

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