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121 terms

Accounting lebron

Test 1-3
STUDY
PLAY
A trial balance proves
The mathematical equality of debits and credits after the posting process
Borrowing money is an example of a(n)
Financing expense
In recording accounting transactions, evidence that a transaction has taken place is obtained from
Source documents
A practical decision to expense small capital expenditures than record them as property, plant and equipment and depreciate them probably is made on the basis of the characteristic of
Materiality
A business organized as a corporation
Is owned by its stockholders
Which statement account is true
There are separate accounts for specific assets and liabilities but only one account for s.e items
Which accounting assumption assumes that an enterprise will continue in operation long enough to carry out its existing operations
Going operation assumption
Which is not an external user of accounting data
Management
A small neighborhood barber shop that is operated by its owner would likely be organized as a
Proprietorship
Buying and selling products are examples of
Operating activities
Which of the following is not a current liability
Bonds payable
Debt and obligations of a boss can be referred to as
Liabilities
The ability of a boss to pay obligations that are expected to become due within the next year of the operating cycle is
Liquidity
A credit is not the normal balance for which account listed below
Dividends
A ledger
Is a collection of the entire group of accounts maintained by a company
The right to receive money in the future is called an
Accounts receivable
Dividends can be recorded on
Retained earnings statement
Retained earnings at the end of the period is equal to
Retained earnings beginning of period + net income - dividends
An annual report includes all of the following except
Salary info for all executives
Which of the following is NOT an advantage of the corporate form of business organization?
Favorable tax treatment
A current asset is
Expected to be converted to cash or used in the business within a relatively short period of time
The financial statement that summarizes the changes in retained earnings for a specific period of time is:
Retained earnings sheet
Management could determine the amount due from customers by examining which ledger account?
Account Receivable
A chart of accounts for a business firm?
Lists the accounts in a ledger
Assets normally show
Debit Balances
A company that receives money in advance of performing a service:
Debits cash and credits unearned fees
Transactions in journal are initially recorded in
Chronological order
Which of the following financial statements is concerned with the company in a point of time?
Balance sheet
Generally accepted accounting principles
Are accounting rules that are recognized as a general guide for financial reporting
Which of the following clarifies information presented in the financial statements as well as expanding upon where detail is needed?
Notes to financial statements
The primary purpose of the statement of cash flows is to report
The information about money receipts and cash pay of a company
The usual sequence of step in the recording process is to
Analyze each enter in journal, transfer info into ledger
Which of the following describes the classification and normal balance of the retain earnings account?
Stockholders equity, credit
On March 1st, 2007, Dillon Company hires a new employee who will start to work on March 6th. The employee will be paid on the last day of each month. Should a journal entry be made on March 6th? Why or why not?
No, hiring is important, however, it is not an event that should be recorded
Which financial statement is used to determine cash generated from operator?
Statement of Cash Flows
All are characteristics of accounting information EXCEPT
Flexibility
When a company receives a utility bill but will NOT pay it right away, it should
debit utilities expense and credit accounts payable
An investment by the stockholders in a business increases
Assets and Stockholders equity
The name given to entering transaction data in the journal is
journalizing
The cost principle requires that when assets are acquired, they be recorded at
the amount paid for them
Debits
increase assets and decrease liabilities
Intangible Assets are
listed after property, plant and equipment
A company spends $20 million dollars for an office building. Over what period should the cost be written off?
Over the useful life of the building
A law firm received $2,000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause...
Revenues to be understated
Accumulated Depreciation is an...
Contra Asset Account
Adjusting entries are made to ensure
All the above
Advantage of the single - step income statement over the multiple - step form is...
It's simplicity
As prepaid expenses expire with the passage of time, the correct adjusting entry will be a...
Debit to an expense account and a credit to an asset account
Barnes Company is taking a physical inventory on March 31st, the last day of its fiscal year. Which of the following must be included in the inventory count?
Goods that Barnes is holding in inventory on March 31st for which the related accounts payable is 15 days past due
Closing Entries
Cause the revenues and expense accounts to have zero balances
Expenses sometimes make their contribution to revenues in a different period than when the expense is paid. When wages are incurred in one period and paid in the next period, this often leads to which account appearing on the balance sheet at the end of the first period?
Wages Payable
Failure to prepare an adjusting entry at the end of period to record accrued revenue would cause
An understatement of assets and an understatement of revenues
Failure to prepare an adjusting entry at the end of the period to record an accrual expense would cause...
An understatement of expenses and an understatement of liabilities
Goods purchased for future use in the business, such as supplies, are called...
Prepaid Expenses
If a company fails to adjust for accrued revenues...
Assets will be understated and revenues will be understated
If a resource has been consumed but a bill has NOT been received at the end of the accounting period then
An adjusting entry should be made recognizing the expense
If goods in transit are shipped FOB destination...
The seller has legal title to the goods until they are delivered
In a period of declining prices which of the following methods generally result in lowest balance sheet figure for inventory?
FIFO Method
In a period of rising prices, which of the following inventory methods generally results in the lowest net income figure?
LIFO Method
In a service type, revenues is considered earned
When the service is preformed
In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the
FIFO Method
Indicate which of the following will NOT appear on both a single - step income statement and a multiple - step income statement...
statement and a multiple - step income statement...
Multiple - step income statements show...
Both income from operation and gross profit
Net income will result if gross profit exceeds
Operating Expenses
One of the accounting concepts upon which adjustments for prepayments and accruals are based is...
Matching
Prepaid expenses are...
Paid and recorded in an asset account before they are used or consumed
Sales Revenue...
May be recorded before cash is collected
Sales revenues less cost of goods sold is called...
Gross Profit
The accounting principle that requires that the cost flow assumption be consistent with the physical movement of goods is
Non-existent; that is no such accounting requirement
The factor, which determines whether or not good should be included in a physical count of inventory, is
Legal Title
The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit..
Merchandise Inventory
The operating expenses section of an income statement for a merchandising company would NOT include
Cost of Goods Sold
The revenue principle dictates that revenues should be recognized in the accounting records...
When it is earned
The Sales Returns and Allowances account is classified as an
Contra revenue account
Unearned revenue is classified as an...
Liability
Using accrual accounting, expenses are recorded and reported only
When they are incurred whether or not cash is paid
When sales of merchandise are made for cash, the transition may be recorded by the following entry
Debit Cash, Credit Sales
Which of the following terms best describes the assumption made in the applying the four inventory methods
Cost Flow Method
Which of the following accounts would not likely need to be adjusted at year-end?
Land
Which of the following is NOT a common cost flow assumption used in costing inventory?
Middle in, First Out
Which of the following items will increase inventorial costs for the buy of goods?
Freight charges paid by the purchaser
Which of the following should NOT be included in the physical inventory of a company?
Goods held on consignment from another company
Which of the following would NOT be considered a merchandising operation
Service Firm
Which of the following is not one of the main factors that contribute to fraudulent activity?
Incompatible Duties
Which of the following is not an accounting issue associated with accounts receivable?
Depreciating account receivable
Which of the following is not a basic principle of cash management?
Keep inventory levels high
Recording depreciation each period is necessary in accordance with the
Matching principle
Which of the following is not an internal control procedure for cash?
Payments should be made with cash
Under the allowance method of accounting for bad debts, why must uncollectible accounts receivable be estimated at the end of the accounting period?
To match bad debt expense to the period in which revenues were earned
Which of the following is not a suggested procedure to establish internal control over cash disbursements?
Anyone can sign checks
Two key parties to a promissory note are the
Maker and the Payee
Which of the following would be deducted from the balance per books on bank reconciliation?
Service Charges
Which of the following is not an objective of system of internal controls?
Overstate liabilities in order to be conservative
The balance in accumulated depreciation account represents the
Amount charged to expense since the acquisition of the plant assets
Deposits in transit
have been recorded on the company's books but not yet bank
Which of the following is considered an intangible asset
An oil well
The sales receivables by a business
Can be a quick way to generate cash for operating needs
A change in the estimated useful life of equipment requires
That the amount of periodic depreciation be changed in the current year, and in future years
The book value of an asset is equal to the
Assets cost less accumulated depreciation
A characteristic of a plant asset is that it is
Used in the operations of a business
Land improvements should be depreciated over the useful life of
The land improvements
Under allowance method, bad debt expense is recorded
For an amount that the company estimates it will not collect
Goodwill can be recorded
Only when there is an exchange transaction involving the purchase of an entire business
Which of the following methods of computing depreciation is production based
Units of activity
Which of the following is not properly classified as property, plant and equipment
A truck held for resale by an automobile dealership
Which of the following assets does not decline in service potential over the course of its useful life
Land
Which of the following items is not considered part of the cost of a truck purchased for business use
Truck license
Which of the following items is not a consideration when recording periodic depreciation expense of plant assets
Cash needed to replace plant assets
Which one of the following is not an objective of a system of internal control?
fairness of financial statements
In computing depreciation, salvage value is
an estimate of a plant's assets value at the end of its useful life
The deprecation method that applies a constant percentage to depreciable costs in calculating depreciation is
straight line
If disposal of a plant asset occurs during the year, depreciation is
recorded for the fraction of the year to the date of the disposal
A gain or loss on disposal of a plant asset is determined by comparing the
book value of the asset with the proceeds received from its sale
Which of the following methods will result in the highest depreciation in the first year?
Declining- balance
When as asset is sold, a gain occurs when the
sale price exceeds the book value of the asset sold
When a company receives an interest- bearing note receivable, it will
debit Notes Receivable for the face value of the note
Of the following employees, who should prepare the bank reconciliation?
Frank, the purchasing agent, because he does not work in the accounting department
Allowance for Doubtful Accounts on the balance sheet
is deducted from accounts receivable
The face value of a note refers to the amount
at which the note receivable is recorded
The cost of land does not include
annual property taxes
Intangible Assets
should be reported as a separate classification on the balance sheet