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Century 21 Accounting Chapter 22

Key Concepts:

Terms in this set (24)

True
The unadjusted trial balance and other financial data are used to plan and record adjustments.
True
Financial statements are prepared using an adjusted trial balance.
True
All accounts that need to be brought up to date are adjusted before financial statements are prepared.
True
To bring Supplies account up to date, the balance of supplies needs to be decreased by the cost of supplies used during the year.
True
The tax rate for federal income tax varies depending on the amount of net income earned.
True
After all adjusting entries are journalized and posted, an adjusted trial balance is prepared.
True
Gains and losses from the sale of plant assets are listed after income from operations on the income statement
True
On an income statement, the difference between other revenues and other expenses is reported as a net addition or net deduction
False
If a company has issued both common and preferred stock, its statement of stockholders' equity will contain only two major sections: capital stock and retained earnings.
True
Bonds Payable is an example of a long-term liability account
True
The statement of cash flows is prepared on a cash basis rather than an accrual basis
False
The purchase of office equipment for cash would be listed as a financing activity on the statement of cash flows.
True
The payment of interest would be listed as a cash outflow in the operating activities section on the statement of cash flows.
False
The sale of office equipment would be listed as a cash inflow in the operating activities section on the statement of cashflows
False
The payment of cash dividends would be listed as an investing activity on the statement of cashflows.
True
Closing entries for a corporation are made from information in an adjusted trial balance.
True
A reversing entry is desirable if an adjusting entry creates a balance in an asset or a liability account.
cash flow
The cash receipts and cash payments of a company.
Statement of cash flows
A financial statement that summarizes the cash receipts and cash payments resulting from business activities during a fiscal period.
Operating activities
The cash receipts and payments necessary to operate a business on a day-to-day basis.
Investing activities
Cash receipts and cash payments involving the sale or purchase of assets used to earn revenue over a period of time.
Financing Activities
cash receipts and payments involving debt or equity transactions
Working Capital
current assets - current liabilities
Current Ratio
current assets divided by current liabilities
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