Questions and Answers
If total liabilities decreased by 15000 and stockholders equity increased by 10000 during a period of time, how much must total assets change?
5000 decrease
The basic accounting equation cannot be restated as:
Stockholders equity is increased by?
revenues
If services are rendered for credit, then?
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Net income results when?
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Another name for a journal is?
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A complete journal entry does not show?
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When journalizing, the reference column is?
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The entire group of accounts maintained by a company is called the?
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The ledger accounts should be arranged in?
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The difference between the cost of a depreciable asset and its related accumulated depreciation is referred to as?
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If a business pays rent in advance and debits a prepaid rent account, the company receiving the rent payment will credit?
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Dreamtime Laundry purchased 7000 worth of supplies, and on June 30, an inventory indicated only 2000 on hand. What is the adjusting entry?
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The balance in Unearned Ticket Revenue at Oct 31, after selling tickets for 200000, is?
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Double Nickles Company purchased a computer system for 4500. What is the monthly depreciation expense?
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A current asset is defined as?
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Which of the following liabilities are not related to the operating cycle?
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On a classified balance sheet, current assets are customarily listed?
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Kern Company sells merchandise on account for 6000. After a return of 1200, what is the amount of the check?
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When a seller grants credit for returned goods, which account is credited?
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In preparing closing entries for a merchandising company, the income summary account will be credited for the balance of?
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Indicate which one of the following would appear on the income statement of both a merchandising company and a service company?
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In periods of inflation, phantom or paper profits may be reported as a result of using the?
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The manager of Brick Company is given a bonus of?
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The lower of cost or market basis of valuing inventories is an example of?
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Which of the following is not necessarily a party to a check?
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A deposit made by a company will appear on the bank statement as a:
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The cash account shows a balance of 45000 before reconciliation. What is the reconciled balance?
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In preparing its Aug 31, 2013 bank reconciliation, Annie Corp. has available the following information. What is the amount?
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A bank reconciliation should be prepared to?
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Study Notes
Accounting Concepts
- Total liabilities decreased by 15,000 while stockholders' equity increased by 10,000, indicating total assets decreased by 5,000.
- Basic accounting equation can be represented as: Assets = Liabilities + Stockholders' Equity.
- Stockholders' equity is increased primarily through revenues generated from operations.
- Rendering services on credit will result in an increase in stockholders' equity.
Net Income and Journal Entries
- Net income occurs when revenues exceed expenses.
- A journal is also referred to as the book of original entry.
- A complete journal entry does not display updated balances of affected accounts.
- The reference column in journalizing entries is typically left blank.
Ledger and Assets
- The group of accounts maintained by a company is known as the general ledger.
- Ledger accounts should be organized in a financial statement order for clarity.
- The difference between an asset’s cost and its accumulated depreciation is termed as the book value of the asset.
Accounting Adjustments
- Prepaid rent payments require a credit to the unearned rent revenue account by the recipient.
- An adjustment for supplies used includes a debit to supplies expense and a credit to supplies.
Ticket Revenue and Depreciation
- Unearned ticket revenue for Fugazi City College, after selling 200,000 in season tickets, totals 75,000 by October 31.
- A computer system costing 4,500 with a three-year lifespan results in a monthly depreciation expense of 125.
Current Assets and Liabilities
- Current assets are defined as assets expected to be converted into cash or used within one year.
- Bonds payable are considered long-term liabilities and are not part of the operating cycle.
Classified Balance Sheet
- On a classified balance sheet, current assets are listed in the order of liquidity for ease of analysis.
Sales and Returns
- For a sale of 6,000 with a return of 1,200, the check settlement amount, considering a 2% discount, totals 4,704.
- When goods are returned, the account credited is accounts receivable.
Closing Entries and Financial Statements
- Closing entries involve crediting the income summary account with total sales revenue.
- Operating expenses appear on the income statement of both merchandising and service companies.
Inventory Costing Methods
- Companies using FIFO during price increases will report the highest ending inventory value.
- In inflationary periods, FIFO may result in phantom profits due to the timing of cost recognition.
Bank Reconciliation
- A bank reconciliation is essential to clarify discrepancies between a depositor's book balance and the bank balance.
- Deposits made by a company are reflected as credits on bank statements.
Cash Account
- The cash account indicates a balance of 45,000 prior to reconciliation, adjusting to 45,817 after the reconciliation process.
Financial Information Snapshot
- Arquette Company's financial snapshot indicates figures of 470,000 and 180,000, which could represent various financial measures.
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Test your knowledge of accounting concepts with these flashcards. Covering key topics such as the accounting equation and changes in stockholders' equity, this quiz will help you reinforce your understanding of essential principles in accounting.
