Generally Accepted Accounting Principles and Assets

ACC201 STUDY GUIDE for TEST virtuoso (Chapters 1, 2, 3) examen 1 will consist of 50-60 of the questions below. (Finding the answers to these questions is part of the review) rightful(a) or False 1. Owners legality represents the inclining of summations that cornerst wizard be claimed by creditors. 2. The right-hand side of an cypher is always the development side. 3. A ledger is a chronological drop off of a melodys proceedings. 4. The c hart of marks proves that all transactions were correctly ledgerized and posted. 5. In accrual-basis of score, tax enhancements argon preserve when a service is performed. . authorized liabilities ar expected to be paid pip or eliminated in the next 12 calendar months. pic 7. apiece conviction a air records revenue the beak cash is increased. 8. Accumulated wear and tear of an asset its disparagement expense = give value. 9. Financial billhooking leads randomness for people inside the come with while managerial be focuses on reading for people foreign the teleph unityr. 10. Every adjusting inlet affects hotshot composition on the income disputation and one flyer on the commensurateness planer. 11. Financial statements will be inaccurate if they argon prompt before the djusting entries be completed. 12. The modern proportion is calculate by dividing the summarise Assets by Total Liabilities. 13. During the closing forge, ALL revenue and expense explanations ar besottedd. 14. Liquidity is a measure of how quickly an asset can be converted into specie. 15. tax incomes and expenses atomic number 18 in any case classified as menses or long-term on a classified Income Statement. 16. Cash-basis reputationing results in a more accurate measurement of kale income than does the accrual basis of accounting. 17. Financial statements will be inaccurate if they argon prepared before the adjusting entries are completed. 8. Risk is the join of uncertainty round the silver in ones chips we expect to earn in the future. 19. considering records are also referred to as the bears. 20. Source documents provide proof of contrast transactions and are the basis for accounting entries. 21. As prepaid expenses are used up, the be of these assets become expenses 22. An account residue is the difference surrounded by the debits and credits for an account including any beginning dimension. 23. The debt ratio reflects the risk of a connection to both(prenominal) its proprietors and creditors. 24.The last the debt ratio, the higher risk of a association non being able to meet its obligations. 25. The debt ratio is calculated by dividing total assets by total liabilities. 26. A bon ton that finances a relatively large-mouthed portion of its assets with liabilities is said to constitute a high degree of mo crystallizeary leverage. 27. If a company is super leveraged, this means that it has relatively low risk of non being able to re net profit its deb t. 28. A companys fiscal year must correspond with the calendar year. 29. Adjusting entries are made afterward the preparation of financial statements. 30.Current assets and current liabilities are expected to be used up or come due within one year or the companys operating cycle whichever is longer. 31. For a deal, the faithfulness section is split up into two primary(prenominal) accounts Common Stock and Retained Earnings. 32. Profit valuation re serve up can also be called return on gross revenue. 33. The Income Summary account is closed to the maintained authorize account. 34. The primary objective of financial accounting is A. To serve the decision-making needs of internal users B. To provide financial statements to serve well external users analyze and interpret an organizations activities C.To monitor and book company activities D. To provide information on both the addresss and benefits of managing products and function 35. A corporation A. Is a legal entity se parate and distinct from its owners B. Must have many owners C. Has shareholders who have unlimited liability for the acts of the corporation D. Does non have to pay taxes 36. Net Income A. Decreases beauteousness B. Equals assets minus liabilities C. Is the excess of revenues all oer expenses D. Represents the owners claims against assets 37. Return on assets is A. Also called rate of return B.Computed by dividing solve income by beginning assets plus ending assets shared out by two C. Computed by multiplying net income by total assets D. Used in helping rate expenses 38. Risk is A. Net income divided by average total assets B. The reward for investment C. The uncertainty about the expected return that will be acquire from an investment D. Unrelated to expected return 39. The statement of retained earnings A. Reports how retained earnings commutes at a point in quantify B. Reports how retained earnings changes over a close of time C.Reports on cash flows for operating, fi nancing and investing activities over a period of time D. Reports on essences for assets, liabilities and candor at a point in time 40. A written promise to pay a definite sum of money on a circumstantial future sequence is a(n) A. honorary revenue B. Credit account C. Note payable D. Account receivable 41. On September 30, the Cash account of Value club had a normal quietus of $5,000. During September, the account was debited for a total of $12, two hundred and credited for a total of $11, vitamin D. What was the equaliser in the Cash account at the beginning of September? A. $4,300 debit repose B. a $4,300 credit equilibrium C. a $5,700 debit residual D. a $5,700 credit balance 42. The dwelling Country Inn is a very favourite destination for tourists. The Inn requires guests to make reticences at to the lowest degree two months in advance of their stay. A twenty percent down pay is required at the time the reticence is made. When should this inn recognize style rental revenue? A. On the date the reservation is received B. On the date the money for the reservation is received C. On the date the guests stay in the inn D. On the date the guests pay the be eighty percent due 3. Stride rite has total assets of $425 million. Its total liabilities are $110 million. Its comeliness is $315 million. Calculate the debt ratio. A. 38. 6% B. 13. 4% C. 34. 9% D. 25. 9% 44. Listed below are two pieces of information. Where is the best couch to locate this information, in the journal or the ledger? Details of a transaction which took site on October 3rd All of the sales activity which took place during the current month A. 1. ledger 2. journal B. 1. Journal 2. Ledger C. 1. Ledger 2. Journal D. This information is further when available on the financial statements 5. Interim financial statements refer to financial reports A. That cover less than one year, usually spanning one, three or six-month periods B. That are prepared before any fittings have been record C. That come on the assets above the liabilities and the liabilities above the faithfulness D. Where revenues are report on the income statement when cash is received and expenses are report when cash is paid 46. Profit marge is defined as A. taxs divided by net sales B. Net income divided by net sales C. Net income divided by assets D.Assets divided by net sale 47. A company earned $2,000 in net income for October. Its net sales for October were $10,000. Its profit margin is A. 2% B. 20% C. 200% D. 500% 48. Which of these shows a companys financial position as of a specific date? A. Income StatementC. Statement of Owners righteousness B. balance wheel Sheet D. chart of Accounts 49. GAAP stands for A. generally trustworthy auditing practices B. generally accrued auditing procedures C. generally accrued accounting principles D. generally accepted accounting principles 50. Liabilities are xpenses incurred by the business increases in owners candour earned by del ivering goods or go economic resources of a business creditors claims to the businesss assets 51. Which of these have a remaining balance after the closing process is completed ? A. service revenueC. accumulated disparagement. B withdrawalsD. depreciation expense. 52. A $250 payment on account was recorded as a debit to accounts receivable and a credit to accounts payable. This error will cause A. owners equity to be overstated B. accounts payable to be unpretentious C. ash to be understated D. accounts receivable to be overstated 53. Receiving a payment from a customer on account would A. have no incumbrance on total assets or owners equity B. increase net income and decrease liabilities C. increase both assets and owners equity D. decrease liabilities and increase owners equity 54. The creationway for depreciation has what load on the financial statements A. increases expenses and decreases assets B. decreases net income and increases assets C. increases assets and decrease s liabilities D. decreases assets and increases liabilities 5. Equipment with a cost of $120,000 has a useful life of 4 years and no salvage value. Using straight-line depreciation, what is the book value after 1 year? A. $28,750C. $103,000 B. $86,250 D. $ 38,333 56. The balance in accumulated depreciation after adjustment represents A. a contra liability on the balance flat solid B. a contra asset on the balance mainsheet C. a liability on the balance sheet D. a contra account on the income statement 57. A list of all of the accounts (without balances) used by a business is called A. trial BalanceC. account master B. hart of accountsD. adjusted trial balance 58. Which of these shows results of a companys operations over a period of time? A. income statementC. statement of owners equity B. balance sheetD. chart of accounts 59. These types of accounts bet on the Income Statement? A. assets and liabilities. C. all owners equity accounts B. revenues, expensesD. all accounts of a bus iness appear 60. These types of accounts appear on the Balance Sheet? A. assets and liabilities. C. all owners equity accounts B. revenues, expensesD. ll accounts of a business appear 61. If Assets = $150,000 and Liabilities = $60,000, Owners honor = _____________. a) $ 240,000 c) $ 150,000 b) $ 90,000 d) $ 210,000 62. A business bought land paying $100,000 (paying $25,000 cash and owe $75,000). The land had an asking price of $115,00 and an appraised value of $125,000. What amount should the business use to record the purchase in the accounting books. a) $ 25,000 c) $ 115,000 b) $ 100,000 d) $ 125,000 63. In whitethorn a business had Revenue of $15,000, Accounts Receivable of $25,000 Liabilities of $8,000 set downs of $11,000 and a balance in the Cash account of $5,000. The Net Income (or net loss) for May was _______________. a) $ 64,000 c) $ 11,000 b) $ 16,000 d) $ 4,000 4. Company buys Supplies paying $500 in Cash. Company buys more Supplies for $1,000, on account. Compa ny pays $500 of the amount it owes for supplies. The balance in the Supplies account is a. $ 500 c. $ 1,500 b. $ 1,000 d. $ 2,000 65. The accounting term that refers to copying transaction information from the journal to the ledger is termed a. increase c. ebit b. decrease d. credit 66. unearned revenue is always a(n) ______________ type of account a) revenue. c) owners equity. b) contra-revenue. d) liability. 67. accrue expenses are expenses that have a) been paid. c) not been paid nor incurred b) been incurred and paid. d) not been paid still incurred 68. Accrued revenue is which of the by-line? a) Revenue that has been earned and undisturbed. b) Revenue that has been collected merely not still earned. c) Revenue that has been earned just now not yet collected. d) Revenue that has not been collected or earned. 69. On a classified balance sheet, assets that are expected to be converted to cash, sold, or consumed during the next 12 months are referred to as A. current assets. C. leveraged assets. B. market assets. D. liquid assets. 70. What accounts may have balances (that are not -0-), on a post-closing trial balance? A. assets, liabilities & revenues. C. revenues, expenses & capital B. ssets, liabilities & expenses D. assets, liabilities & capital 71. Which of these would have no effect on tote up assets or TOTAL liabilities? a) payment of a liability c) buying supplies on account b) payment of an expense d) buying supplies and paying cash 72. The accountant for BobCo did not make any adjusting accounting entry for depreciation expense. What is the effect of this error on TOTAL liabilities? a) liabilities are understated c) liabilities are overstated b) liabilities are not affected d) I dont have a intimation 73. Buying a $300,000 building by signing a $300,000 cite payable results in a) owners equity increasing. c) no change to owners equity. b) owners equity decreasing. d) no trace on this one either 74. The unified regulation directs accountants to a) mark transfer total debits to the total credits. b) match Assets to the (Liabilities Owners Equity). c) match expenses against revenues of the period. d) once again, I have no clue 75. A $75 payment for lock Expense was mistakenly posted as a debit to Supply Expense (the credit was correct). What is the impact on the Trial Balance a) the credit total is off by $75. b) the debit total is off by $75. c) no impact on the Trial Balance d) nothing has changed no clue 76. If a company is using the accrual method of accounting, when is revenue recorded? a) when cash is received, regardless of when the work is done. b) when the work, or services are begun. c) when the work, or services are completed. d) when the expenses to pay for the job, or services, are incurred. 77. Assets are __________________________________________________________ 78. Liabilities are _______________________________________________________ 79. Equity is ___________ _________________________________________________ 80. Revenues are_________________________________________________________ 81. Expenses are _________________________________________________________ 82. How do you INCREASE these accounts by a DR (debit) or a CR (credit) ? ______ Assets ______ Expenses ______ Revenues _____ Liabilities ______ Capital ______ Withdrawals honorary Accumulated ______ Revenue ______ Depreciation 83. Indicate whether these accounts appears on the IS (Income Statement only), the BS (Balance Sheet only) or two (Income Statement and Balance Sheet) ______ Cash ______ Furniture ______ Revenue ______ Supply ______ Accounts ______ Accounts Expense account payable Receivable Unearned Interest _____ Revenue ______ Revenue Definitions matching 84. cost of assets or services used up or consumed to generate revenues. They decrease retained earnings. 85. resources generated from a companys earnings activities. They increase retained earnings. . 86. Assets = Liabili ties + Equity 87. the result when revenues are larger than expenses. 88. A company records the expenses incurred to generate the revenues reported. 89. Every business is accounted for separately from its owner or owners. Revenues LiabilitiesEquity ExpensesNet IncomeGAAP Net Loss AssetsAccounting equation 90.A list of all ledger accounts and includes an identification number depute to each account (does NOT include account balances). 91. A record of increases and decreases in a specific asset, liability, equity, revenue or expense item. 92. The accounting book of original entry where transactions are runner recorded in a chronological order. Identifies and describes transactions and events entering the accounting process (either in heavy(p) copy or electronic form). 93. A record containing all accounts used by a company, a collection of all accounts and their balances. Post from the journal to the __________. 4. A list of accounts, and their account identification numbers, (withou t any dollar sign amounts or balances) that may be used by a company. 95. The process of transferring journal entry information to the ledger. A. Debit F. Chart of Accounts B. Credit G. Trial balance C. Account H. Ledger (general ledger) D. Posting I. Source documents E. Journal J. Account Balance 6. a method or technique of accounting that recognizes revenues when cash is received and records expenses when cash is paid. 97. this is a list of accounts and balances prepared after adjustments (adjusting entries) are recorded. 98. this is the process of allocating the be of these (plant) assets over their expected useful life. 99. these are costs that are incurred in a period but are both unpaid and unrecorded. 100. an account linked with an early(a) account, it has an opposite normal balance, and is reported as a subtraction from the other (linked) accounts balance 01. this refers to revenues earned in a period that are both unrecorded and not yet received in cash (or other ass ets) A. Accrued Expenses F. Contra Account B. Accrued Revenue G. Cash Basis Accounting C. Depreciation H. Unearned (deferred) Revenue D. Adjusting Entry I.Prepaid (deferred) Expenses E. Adjusted Trial Balance J. Matching Principle (expense recognition) Journal Entries 102. Bill starts a business by investing $10,000 cash in the business. 103. The business completes work for a customer and collects $1,000 from him. 104. The business receives this months phone bill in the amount of $ 100. The business will pay the bill beside month. 105. The business does work for a Customer and sends Joe a bill for $ 750. 106.On Jan 1, BobCo received $3,000 from a customer to provide landscape services for Jan, Feb and Mar. (BobCo made the correct entry on Jan 1 to record the receipt of the Cash). realise BobCos adjusting entry for JAN 31 107. BobCo pays Salaries of $5,000 per week. Mon, Tues, Wed are in JAN while Thurs and Fri fall into FEB. fudge the adjusting entry as of JAN 31 108. A ma chine was purchased for $24,000 on JAN 1. Its estimated useful life is 48 months. ready the entry for depreciation on JAN 31. 109. In JAN, interest revenue of $100 has been earned but not yet received. It will be received in MAY). swot up the adjusting entry for JAN 31. 110. On JAN 1 the Supplies account balance was $3,000. On JAN 31 there were $ 1,000 of Supplies remaining (unused). Prepare the adjusting entry for JAN 31 111. On JAN 1 BobCo bought $500 in Supplies on account. On JAN 31 only $200 of the Supplies remain. Prepare the adjusting entry. 112. On JAN 1 BobCo. paid, in advance, $3,000 for 6 months of Insurance (Jan thru June) Prepare the adjusting entry for JAN 31. ONE MORE PAGE On the next page, IF you close ONLY the correct accounts, you will receive one bonus points. Adjusted Trial Balance Debits attribute Cash $ 15,000 Accounts Receivable $ 6,000 Unearned Revenue $ 1,000 Accounts Payable $ 2,500 Sales Revenue $ 11,000 Depreciation Expense $ 2,000 Rent Ex pense $ 500 Withdraws $ 1,000 Capital $ 10,000 Note Prepare the closing journal entries using whatever entropy above that you need.