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20 terms

Exam 1

Acounting EXAM
STUDY
PLAY
What is the accounting equation
Assets = Liabilities + Owner's Equity
GAAP
Generally Accepted Accounting Practices
Cost Concept
Amounts are initially recorded as their cost or purchase price
The asset created by a business when it makes a sale on account is termed
accounts receivable
Clifford Moore is starting his computer programming business and has deposited in initial investment of $15,000 into the business cash account. Identify how the accounting equation will be affected.
Increase Assets (Cash) and increase Owner's Equity (Clifford Moore, Capital)
A debit may signify a(n)
decrease in liability accounts
Which of the following groups of accounts have a normal debit balance?
assets, expenses
A debit balance in which of the following accounts would indicate a likely error?
Notes Payable
Which of the following entries records the receipt of a utility bill from the water company?
debit Utilities Expense; credit Accounts Payable
Which of the following entries records the collection of cash from cash customers?
Debit Cash; Credit Fees Earned
Using accrual accounting, revenue is recorded and reported only
when the services are rendered without regard to when cash is received
Which of the following is considered to be unearned revenue?
A magazine publisher receiving a year's subscription in advance
The balance in the prepaid rent account before adjustment at the end of the year is $24,000, which represents four months' rent paid on December 1. The adjusting entry required on December 31 is
debit Rent Expense, $6,000; credit Prepaid Rent, $6,000
The adjusting entry to record the depreciation of equipment for the fiscal period is
debit Depreciation Expense; credit Accumulated Depreciation
A company purchases a one-year insurance policy on June 1 for $1,260. The adjusting entry on December 31 is
debit Insurance Expense, $525 and credit Prepaid Insurance, $525.

(1260/12 = 105 105*7 = 735 )
Cash is reported on the balance sheet as a
current asset
Accumulated Depreciation appears on the
balance sheet in the property, plant and equipment section
There are four closing entries. The first one is to close ____, the second one is to close ____, the third one is to close ____, and the last one is to close ____.
Revenues, expenses, income summary, drawing account
The Statement of Owner's Equity begins with the beginning balance followed by
plus investments plus Net Income (loss) less withdrawals
Which of the accounts below would be closed by posting a debit to the account?
Fees Earned