ACCT 501-Midterm Flashcards

ACCT 501-midterm Flashcards
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Details Title: ACCT 501-midterm Description: SU- ACCT 501 Midterm study Total Flash Cards: 64 Created: 06/27/2011 13:59:21 Cards in this set:
Term Definition
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Which is NOT a step in the Accounting Process? A. Identification B. Verification C. Recording D. Communication B. Verification
Term
Definition
Which statement about users of accounting information is INCORRECT? a. Management is an internal user b.Taxing authorities are external users c. Present creditors are external users d. Regulatory authorities are internal users D. Regulatory authorities are internal users
Term
Definition
The cost principle states that: a. assets should be initially recorded at cost and adjusted when market value changes. C. assets should be recorded at cost. b. activities of an entity are to be kept separate and distinct from its owner.
c. assets should be recorded at cost.
d. only transaction data capable of being
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expressed in terms of money be included in the accounting records.
Term
Definition
Which of the following statements about basic assumptions is CORRECT?
a. basic assumptions are the same as accounting principles.
B. the economic entity assumption states there should be a particular unit of accountability.
b. the economic entity assumption states there should be a particular unit of accountability.
c.The monetary unit assumption enables accounting to measure employee morale.
d. Partnerships are not economic entities.
Term
Definition
The 3 types of business entities are:
a. proprietorships, small businesses, & partnerships
B. proprietorships, partnerships, & corporations
b. proprietorships, partnerships, & corporations
c. proprietorships, partnerships, &large businesses
d. financial, maunfacturing, & service companies
Term
Definition
Net income will result during a time period when:
a. assets exceed liabilities D. revenues exceed expenses b.assets exceed revenues c.expenses exceed revenues d. revenues exceed expenses
Term
Definition
Performing services on account will have the following effect on the components of the basic accounting equation: b. increase assets and increase owner's equity
a. increase assets and decrease owner's equity
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b. increase assets and increase owner's equity c.increase assets and increase liabilities d. increase liabilities and increase owner's equity
Term
Definition
As of Dec 31,2010 Stoneland Co. has assets of $3,500 and owners equity of $2,000. Wthat are the liabilities for stoneland Co. as of Dec 31,2010? a. $1,500 a. $1,500 b. $1,000 c. $2,500 d. $2,000
Term
Definition
Which event is NOT recorded in the accounting records?
a. Equiptment purchased on account b. An employee is terminated c. a cash investment is made into the business d. The owner draws money for personal use.
b. An employee is terminated
Term
Definition
During 2010, Gibson Co.'s assets decreased $50,000 & liabilities decreased $90,000. Its owners equity therefore: a. increased $40,000 a. increased $40,000 b. decreased $140,000 c. decreased $40,000 d. increased $140,000
Term
Definition
Payment of an account payable affects the components of the accounting equation in the following way: d. decreases assets and decreases liabilities a. decreases owners equity & decreases liabilities b. Increases assets & decreases liabilities c.Decreases assets & increases owner's equity d. decreases assets & decreases liabilities
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Term
Definition
c. An income statement presents the revenues, expenses, changes in owners equity, and a. A statement of cash flows summarizes info about cash inflows resulting net income or loss for a specific period of time. (receipts) and outflows (payments)
for a specific time period.
Which statement is FALSE?
b. A balance sheet reports the assets, liabilities, and owner's equity, and resulting net income or loss for a specific time period.
c. An income statement presents the revenues, expenses, changes in owners equity, and resulting net income or loss for a specific period of time.
d. An owners equity statement summarizes the changes in owners equity for a specific period of time.
Term Definition
On the last day of the period, J. Otto Co. buys a $900 machine on credit. This will affect the:
a. income statement only b. balance sheet only c. income statement & owners equity statement only d. income statement, owners equity statement, & balance sheet.
B. balance sheet only
Term
Definition
The financial statement that reports assets, liabilities and owners equity is:
a. income statement b. owners equity statement c. balance sheet d. statement of cash flow
c. balance sheet
Term
Definition
Services provided by a public accountant include: a. auditing, taxation, & management consulting
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a. auditing, taxation, & management consulting b. auditing, budgeting, and management consulting c. auditing, budgeting and cost accounting d. internal auditing, budgeting, and management consulting
Term
Definition
Which of the following about an account is TRUE?
a. in its simplest form, an account consists of 2 parts
b. An account is an individual accounting record of increases and decreases in specific asset, liability and owners equity items
b. An account is an individual accounting record of increases and decreases in specific asset, liability and owners equity items
c. there are separate accounts for specific assets & liabilities but only one account for owners equity items
d. The left side of an account is the credit or decrease side.

Term Definition
Debits:
a. increase both assets and liabilities c. increase assets and decrease liabilities b. decrease both assets and liabilities c. increase assets and decrease liabilities d. decrease assets and increase liabilities
Term
Definition
A revenue account:
a. is increased by debits d. is increased by credits b. is decreased by credits c. has a normal balance of a debit d. is increased by credits
Term
Definition
Accounts that normally have debit balances are: d. assets, owners drawings, & expenses
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a. assets, expenses, & revenues b. assets, expenses, & owners capital c. assets, liabilities, and owners drawings d. assets, owners drawings, & expenses
Term
Definition
The expanded accounting equation is:
a. Assets + Liabilites = Owners Capital + Owners Drawing + Revenue + Expenses
d. Assets = Liabilites + Owners Capital - Owners Drawing + Revenue - Expenses
b. Assets = Liabilites + Owners Capital + Owners Drawing + Revenue - Expenses
c. Assets = Liabilites - Owners Capital - Owners Drawing - Revenue - Expenses
d. Assets = Liabilites + Owners Capital - Owners Drawing + Revenue - Expenses

Term Definition
Which of the following is NOT part of the recording process?
a. Analyzing transaction b. Preparing a trial balance c. Entering transactions in a journal d. posting transactions
b. Preparing a trial balance
Term
Definition
Which of the following statements about a journal is FALSE?
a. it is not a book of original entry b. It provides a chronological record of transactions c. It helps to locate errors because the debit and credit amounts for each entry can be readily compared d. it discloses in one place the complete effect of a transaction.
a. it is not a book of original entry
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Term
Definition
The purchase of supplies on account should result in:
a. debt to Supplies Expense & credit to Cash b. Debit to Supplies Expense & credit to Accounts payable c. debit to supples & credit to accounts payable d. debit to supplies & credit to accounts receivable
c. debit to supples credit to accounts payable
Term
Definition
The order of accounts in the ledger is:
a. assets, revenues, expenses, liabilities, owners capital, owners drawings b. assets, liabilities, owners capital, owners drawings, revenues, expenses c. owners capital, assets, revenues, expenses, liabilities, owners drawings d. revenues, assets, expenses, liabilities, owners capital, owners drawings
c. owners capital, assets, revenues, expenses, liabilities, owners drawings
Term
Definition
A ledger:
a. contains only asset and liability accounts b. should show accounts in alphabetical order c. is a collection of the entire group of acounts maintained by a company d. a book of original entry
c. is a collection of the entire group of acounts maintained by a company
Term
Definition
Posting:
a. normally occurs before journalizing d. transfers journal entries to ledger accounts b. transfers legder transaction data to journal c. is an optional step in the recording process d. transfers journal entries to ledger accounts
Term
Definition
Before posting a payment of $5,000 the Accounts Payable of Senator Co. had a normal balance of $16,000. The balance after posting was: c. $11,000 a. $21,000
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b. $5,000 c. $11,000 d. cannot be determined
Term
Definition
A trial balance:
a. is a list of accounts with their balances at a given time b. proves the mathematical accuracy of journalized entries c. will not balance correcctly if a journal entry is posted twice d. proves all transactions have been recorded
a. is a list of accounts with their balances at a given time
Term
Definition
A trial balance will not balance if:
a. a correct journal entry is posted twice b. the purchase of supplies on account is debited to supplies and credited to cash c. a $100 cash drawing by owner is debited to Owners drawings for $1,000 and credited to cash $100 d. a $50 payment on account is debited to accounts payable for $45 and credited to cash for $45.
c. a $100 cash drawing by owner is debited to Owners drawings for $1,000 and credited to cash $100
Term
Definition
The trial balance of Clooney Co. had accounts with the following normal balances: Cash $5,000, Revenue $85,000, Salaries Payable $4,000, Salaries Expense $40,000, Rent Expense $10,000, Clooney Capital $42,000, Clooney Drawings $15,000, Equiptment $61,000. In preparing a trial balance the total in the debit column is: a. $131,000 b. $216, 000 c. $91,000 d. $116,000
a. $131,000
Term
Definition
The time period assumption states that:
a. revenue should be recognized in the accounting period it is earned b. expenses should be matched with revenues
c. the economic life of a business can be divided into artificial time periods
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c. the economic life of a business can be divided into artificial time periods d. the fiscal year should correspond with the calendar year
Term
Definition
The time period assumption states that:
a. companies must wait until the calendar year is complete to prepare financial statements b. companies use the fiscal year to report financial information c. the economic life of a business can be divided into artificial time periods d. companies record information in the time period in which the events occur
c. the economic life of a business can be divided into artificial time periods
Term
Definition
One of the following statements about the accrual basis of accounting is FALSE:
a. events that change a company's financial statements are recorded in the periods in which the events occur b. revenue is recognized in the period in which its earned c. This basis is in accord with GAAP's d. revenue is recorded only when cash is received and expense is recorded only when cash is paid.
d. revenue is recorded only when cash is received and expense is recorded only when cash is paid.
Term
Definition
The principle or assumption dictating that efforts (expenses) be matched with accomplishments (revenues) is: a. matching principle a. matching principle b. cost assumption c. periodicity principle d. revenue recognition principle
Term
Definition
Adjusting entries are made to ensure that:
a. expenses are recognized in the period in which they are earned b. revenues are recorded in the period in which they are earned
d. all of the above
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c. balance sheet and income statement accounts have correct balances at the end of an accounting period d. all of the above
Term
Definition
Each of the following is a major type (or category) of adjusting entries EXCEPT:
a. prepaid expenses b. accrued revenues c. accrused expenses d. earned revenues
d. earned revenues
Term
Definition
The trial balance show Supplies $1,350 & SuppliesExpense $0. If $600 of supplies are on hand at the end of the period, the adjusting entry is: c. Supplies expense cr. 750, supplies 750 a. Supplies cr. 600, supplies expense 600 b. Supplies cr. 750, supplies expense 750 c. Supplies expense cr. 750, supplies 750 d. Supplies expense cr. 600, supplies 600
Term
Definition
Adjustments for prepaid expenses:
a. decrease assets & increase revenues c. decrease assets & increase expenses b. decrease revenues & increase assets c. decrease assets & increase expenses d. decrease revenues & increase assets
Term
Definition
Accumulated Depreciation is:
a. a contra asset account a. a contra asset account b. an expense account c. an owners equity account d. a liability account
Term
Definition
Queenan Co. computes depreciation on delivery equiptment at $1,000 for the month of June. The adjusting entry to record this depreciation as
c. Depreciation expense cr. 1,000; accumulated depreciation- Delivery Equipt. dbt. 1,000
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follows:
a. Depreciation expense cr. 1,000; accumulated depreciation- Queenan Co dbt. 1,000 b. Depreciation expense cr. 1,000; delivery equiptment dbt. 1,000 c. Depreciation expense cr. 1,000; accumulated depreciation- Delivery Equipt. dbt. 1,000 d. Delivery Equipt. expense cr. 1,000; accumulated depreciation- Delivery Equipt. dbt. 1,000
Term
Definition
Adjustments for unearned revenues:
a. decrease liabilities & increase reenues b. have an assets & revenues account relationships c. increase assets & increase revenues d. decrease revenues & decrease assets a. decrease liabilities & increase reenues
Term
Definition
Adjustments for accrued revenues:
a. have a liabilities & revenues account relationship b. have an assets & revenues account relationship c. decreases assets & v revenues d.decreases liabilities & increases revenues
b. have an assets & revenues account relationship
Term
Definition
Kthy Siska earned $400 salary the last week of Sept. She will be paid Oct 1st. The adjusting entry for Kathy's employer at Sept 30 is: b.Salaries Expense cr. 400; Salaries payable debit 400
a. none required b.Salaries Expense cr. 400; Salaries payable debit 400 c. Salaries Expense cr. 400; Cash 400 d. Salaries Payable cr. 400; Cash 400
Term
Definition
Which is INCORRECT concerning the adjusted trial
c. The adjusted trial balance lists the account
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balance:
a. An adjusted trial balance proves the equality of the total debit balances & total credit balances in the ledger after all adjustments are made b. The adjusted trial balance provides the primary basis for the preparation of financial statements c. The adjusted trial balance lists the account balances segregated by assets and liabilities d. the adjusted trial balance is prepared after adjusting entries have been journalized and posted
Term
balances segregated by assets and liabilities
Definition
The trial balance shows Supplies $0 & Supplies Expense $1,500. If $800 of supplies are on hand at the end of the period the adjusting entry is: debit supplies $800, credit Supplies Expense $800 a. debit supplies $800, credit Supplies Expense $800 b. debit supplies Expense $800, credit Supplies $800 c. debit supplies $700, credit Supplies Expense $700 d. debit supplies Expense $700, credit Supplies $700
Term
Definition
Term
Definition
Which of the following statements is INCORRECT concerning the worksheet?
a. The worksheet is essentially a working tool for the accountant b. The worksheet is distributed to management & other interested parties c. The worksheet cannot be used as a basis for
b. The worksheet is distributed to management & other interested parties
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posting to ledger accounts d. Financial statements can be prepared directly from the worksheet before journalizing & posting adjusting entries
Term
Definition
In a worksheet, net income is entered in the following columns:
a. income statement (Dr) & balance sheet (Dr) b. income statement (Cr) & balance sheet (Dr) c. income statement (Dr) & balance sheet (Cr) d. income statement (Cr) & balance sheet (Cr)
c. income statement (Dr) & balance sheet (Cr)
Term
Definition
In the unadjusted trial balance of its worksheet for the year end Dec 31, 2010 Taitum Co. reported office equiptment of $120,000. The year end adjusting entries require an adjustment of $15,000 for office equiptment depreciation expense. After the adjustment what should be recorded?
c. Debit of $120,000 for Office Equiptment in the balance sheet column
a. Debit $105,000 for Office Equiptment in the balance sheet column b. Credit $15,000 for Depreciation Expense-Office Equiptment in the income statement column c. Debit of $120,000 for Office Equiptment in the balance sheet column d. Debit $15,000 for Accumulated Depreciation- Office Equiptment in the balance sheet column
Term Definition
An account that will have a zero balance after closing entries have been journalized and posted is: a. service revenue a. service revenue b. Advertising Supplies c. Prepaid Insurance d. Accumulated depreciation
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Term
Definition
When Net Loss has occurred, Income Summary is:
a. debited & owners capital is credited b. credited and owners capital is debited b. credited and owners capital is debited c. debited & owners drawings is credited d. credited and owners drawings is debited
Term
Definition
The closing process involves separate entries to close (1) expenses, (2) drawings, (3) revenues, (4) income summary. The correct sequencing of the entries is: c. 3, 1, 4, 2 a. 4, 3, 2, 1 b. 1, 2, 3, 4 c. 3, 1, 4, 2 d. 3, 2, 1, 4
Term
Definition
Which types of accounts will appear in the post-closing trial balance?
a. permanent (real) accounts b. temporary (nominal) accounts c. accounts shown in the income statements column of a work sheet d. none of the above
a. permanent (real) accounts
Term
Definition
All of the following are required steps in the accounting process except:
a. journalizing & posting closing entries b. preparing financial statements c. journalizing transactions d. preparing a worksheet
d. preparing a worksheet
Term
Definition
The proper order of the following steps in the accounting cycle is:
a. prepare unadjusted trial balance, journalize transactions, post to ledger accounts, journalize and post
c. journalize transactions, post to ledger accounts, prepare unadjusted trial balance, journalize and post adjusting entries
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adjusting entries b. journalize transactions, prepare unadjusted trial balance, post to ledger accounts, journalize and post adjusting entries c. journalize transactions, post to ledger accounts, prepare unadjusted trial balance, journalize and post adjusting entries d. prepare unadjusted trial balance, journalize and post adjusting entries, journalize transactions, post to ledger accounts,
Term Definition
Term
Definition
When Alexander Co. purchased supplies worth $500, it incorrectly recorded a credit to Supplies for $5,000 and a debit to cash for $5,000. Before correcting this error: d. Cash is overstated and Supplies are overstated a. Cash is overstated and Supplies are understated b. Cash is understated and Supplies are understated c. Cash is understated and Supplies are overstated d. Cash is overstated and Supplies are overstated
Term
Definition
Cash of $100 was received at the time of service and was journalized & posted as a debit to Cash $100 credit to Accounts Receivable $100. Assuming the incorrect entry is not reversed: b. debit Accounts Receivable & credit Service Revenue $100 a. debit service revenue & credit Accounts Receivable $100 b. debit Accounts Receivable & credit Service Revenue $100 c. debit Cash & credit Service Revenue $100 d. debit Accounts Receivable & credit Cash $100
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Term
Definition
The correct order of presentation in a classified balance cheet for the following current assets is:
a. accounts receivable, cash, prepaid insurance, inventories b. cash, inventories, accounts receivable, prepaid insurance c. cash, accounts receivable, inventories, prepaid insurance d. inventories, cash, accounts receivable, prepaid insurance
c. cash, accounts receivable, inventories, prepaid insurance
Term
Definition
A company has a tract of land. It expectsto build a production plant on the land in about 5 years. During the 5 years before construction the land will be idle. The land should be reported as: c. long term investment a. property, plant, & equiptment b. land expense c. long term investment d. intangible asset
Term
Definition
In a classified balance sheet, assets are usually classified using the following categories:
a. current assets; long-term assets; property, plant & equiptment; intangible assets b. current assets; long-term investments; property, plant & equiptment; tangible assets c. current assets; long-term assets; tangible assets; intangible assets d. current assets; long-term investments; property, plant & equiptment; intangible assets
d. current assets; long-term investments; property, plant & equiptment; intangible assets
Term
Definition
Current assets are listed:
a. by expected conversion to cash a. by expected conversion to cash b. by importance c. by longevity d. alphabetically
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Term
Definition
Dec 31, Frank Voris Co. correctly made an adjusting entry to recognize $2,000 of accrued salaries payable. On Jan 8th, total salaries of $3,400 were paid. Assuming the correct reversing entry was made on Jan 1, the Jan 8th entry credits Cash $3,400 and debit(s):
c. Salaries expense $3,400
a. Salaries Payable $1,400, Salaries Expense $2,000 b. Salaries Payable $2,000, Salaries Expense 1,400 c. Salaries expense $3,400 d. Salaries Payable $3,400
Term
Definition
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ACCT 501-Midterm Flashcards

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c. assets should be recorded at cost.

d. only transaction data capable of being