What is the accounting equation?
Assets + Liabilities = Shareholder's Equity
Assets = Liabilities - Shareholder's Equity
Assets = Liabilities + Shareholder's Equity
Which of these is NOT one of the 5 steps in recording all accounting transactions?
Is it a business transaction? Yes or No?
What board type of accounts are affected?
What specific type of accounts are affected?
Which specific accounts has increased or decreased?
Which accounts are recorded in to journal entries?
Record all transactions in the Journal.
Which of these is NOT one of the 4 basic principles of accounting (GAAP) ?
Income principle
Measurement principle
Revenue recognition
Expense recognition
Full disclosure principle
What are the Rules for debits and credits?
Debit means right, Credit means left
Credit means left, Debit means left
Debit means left, Credit means no change
Debit means left, Credit means right
What are the 4 basic assumptions of accounting (GAAP) ?
Monetary assumption, Integrity assumption, Expense assumption, Business Entity assumption
Monetary assumption, Time period assumption, On going assumption, Business Entity assumption
Money assumption, Time period assumption, On going assumption, Business Enterprise assumption
Monetary assumption, Time travel assumption, On going assumption, Business Entity assumption
What are the 2 basic constraints of accounting?
Materiality Constrains and Cost Benefit Constraints
Materialistic Constraints and Cost Effective Constraints
Material Constraints and Cost Revenue Constraints
Materiality Constraints and Cost Effective Constraints
What is the definition of Assets?
Economic resource that used to have a benefit
Economic resource that has a future benefit
Define Liabilities.
Economic obligation that requires the use of an asset to pay it off.
Economic obligation that requires the shareholders to pay it off.
Define Equity
Is the excess of an asset over liabilities.
Is the expense of an asset over revenue.
What are the 5 types of accounts in all of accounting?
Asses, Liabilities, Shareholder's Equity, Revenue, Expense
Assets, Liabilities, Receivables, Equity, Revenue
Assets, Receivables, Shareholder's Equity, Revenue, Expense
Assets, Liabilities, Shareholder's Equity, Revenue, Expense
Define Revenue.
Is the amount received for selling an asset or the release (i.e. forgiveness) of debt and increases shareholder's dividends.
Is the amount received for selling an asset or the release (i.e. forgiveness) of debt and increases shareholder's equity.
Define expense.
Is an expired asset, which required an asset or another liability to pay it off and decreases shareholder's common stock value.
Is an expired asset, which required an asset or another liability to pay it off and decreases shareholder's equity.
Define accounting.
Is the process of accounting for anything of value or expense that needs to be accounted for in an accounting general ledger.
It is the counting of something that can be accounted for.
Consists of 3 basic activities. It identifies, records and hides the economic events of an organization to interested users.
Consists of 3 basic activities. It identifies, records and communicates the economic events of an organization to interested users.
What are 4 examples of accounting source documents recording all accounting transactions?
Bank statement, Receipt Pay Slip, A check.
Bank statement, Sales Invoice, Pay Slip, A check.
Federal statement, Sales Invoice, Pay Slip, A check.
Federal statement, Sales Invoice, Pay Slip, Money.
What is an account?
An account is an individual accounting record of increases and decreases in a specific asset, liability, shareholder's equity, unearned revenue and expense item.
An account is an individual accounting record of increases and decreases in a specific asset, liability, shareholder's equity, revenue and expense item.
An account is an individual accounting record of increases and decreases in a specific asset, liability, common stock and dividends, revenue and expense item.
An account is an individual accounting record of increases and decreases in a specific asset, liability, common stock, unearned revenue and expense item.
Debit always mean increase and credit always means decrease.
Why are accounting systems called double-entry?
A system that records in appropriate accounts the unique effect of each transaction.
A system that records in appropriate accounts the single effect of each transaction.
A system that records in appropriate accounts the dual effect of each transaction.
Monthly and quarterly time periods are called
calendar periods.
fiscal periods.
interim periods.
quarterly periods.
The time period assumption states that
a transaction can only affect one period of time.
estimates should not be made if a transaction affects more than one time period.
adjustments to the enterprise's accounts can only be made in the time period when the business terminates its operations.
the economic life of a business can be divided into artificial time periods.
An accounting time period that is one year in length, but does not begin on January 1st, is referred to as
a fiscal year.
an interim period.
the time period assumption.
a reporting period.
Adjustments would not be necessary if financial statements were prepared to reflect net income from
monthly operations.
fiscal year operations.
interim operations.
lifetime operations.
Management usually desires________________ financial statements and the IRS requires all businesses to file _______________ tax returns.
annual, annual
monthly, annual
quarterly, monthly
monthly, monthly
The time period assumption is also referred to as the
calendar assumption.
cyclicity assumption.
periodicity assumption.
fiscal assumption.
In general, the shorter the time period, the difficulty of making the proper adjustments to accounts
is increased.
is decreased.
is unaffected.
depends on if there is a profit or loss.
Which of the following is NOT common time period chosen by businesses as their accounting period?
Daily.
Monthly.
Quarterly.
Annually.
Which of the following time periods would NOT be referred to as an interim period?
Monthly
Quarterly
Semi-annually
Annually
The fiscal year of a business is usually determined by
the IRS.
a lottery.
the business.
the SEC.
Which of the following are in accordance with generally accepted accounting principles?
Accrual basis accounting.
Cash basis accounting.
Both accrual basis and cash basis accounting.
Neither accrual basis nor cash basis accounting.
The revenue recognition principle dictates that revenue should be recognized in the accounting period
in which cash is received.
in which the performance obligation is satisfied.
at the end of the month.
in which income taxes are paid.
In a service-type business, revenue is recognized
at the end of the year.
when the service is performed.
when cash is received.
The expense recognition principle matches
customers with businesses.
expenses with revenues.
assets with liabilities.
creditors with businesses.
Which one of the following is not a justification for adjusting entries?
Adjusting entries are necessary to ensure that the revenue recognition principle is followed.
Adjusting entries are necessary to ensure that the expense recognition principle is followed.
Adjusting entries are necessary to enable financial statements to be in conformity with GAAP.
Adjusting entries are necessary to bring the general ledger accounts in line with the budget.
An adjusting entry
affects two balance sheet accounts.
affects two income statement accounts.
affects a balance sheet account and an income statement account.
is always a compound entry.
The preparation of adjusting entries is
straight forward because the accounts that need adjustment will be out of balance.
often an involved process requiring the skills of a professional.
only required for accounts that do not have a normal balance.
optional when financial statements are prepared.
If a resource has been consumed but a bill has not been received at the end of the accounting period, then
an expense should be recorded when the bill is received.
an expense should be recorded when the cash is paid out.
an adjusting entry should be made recognizing the expense.
is is optional whether to record the expense before the bill is received.
Accounts often need to be adjusted because
there are never enough accounts to record all the transactions.
many transactions affect more then one time period.
there are always errors made in recording transactions.
management can' decide what they want to report.
Adjusting entries are
not necessary if the accounting system is operating properly.
usually required before financial statements are prepared.
made whenever management desires to change an account balance.
made to balance sheet accounts only.
All of the following statements are correct except
adjusting entries ensure that the revenue recognition and expense recognition principles are followed.
a company must make adjusting entries every time is prepares financial statements.
adjusting entries are made to balance sheet accounts only.
companies often prepare adjusting entries after the balance sheet date, but date them as of the balance sheet date.
Accountants refer to an economic event as a
purchase.
sale.
transaction.
change in ownership.
The process of recording transactions has become more efficient because
fewer events can be quantified in financial terms.
computers are used in processing business events.
more people have been hired to record business transactions.
business events are recorded only at the end of the year.
Communication of economic events is the part of the accounting process that involves
identifying economic events.
quantifying transactions into dollars and cents.
preparing accounting reports.
recording and classifying information.
The use of computers in recording business events
has made the recording process more efficient.
does not use the same principles as manual accounting systems.
has greatly impacted the identification stage of the accounting process.
is economical only for large businesses.
Which of the following events cannot be quantified into dollars and cents and recorded as an accounting transaction?
The appointment of a new CPA firm to perform an audit.
The purchase of a new computer.
The sale of store equipment.
Payment of income taxes.
The accounting process involves all of the following except
identifying economic transactions that are relevant to the business.
communicating financial information to users by preparing financial reports.
recording non-quantifiable economic events.
analyzing and interpreting financial reports.
The accounting process is correctly sequenced as
identification, communication, recording.
recording, communication, identification.
identification, recording, communication.
communication, recording, identification.
Which of the following techniques are NOT used by accountants to interpret and report financial information?
Graphs.
Special memos for each class of external users.
Charts.
Ratios.
Accounting consists of three basic activities which are related to economic events of an organization. These include
identifying, recording and communicating.
identifying, calculating and responding.
classifying, numbering and reporting.
issuing, reporting and classifying.
Good decision-making depends on good information.
A vital element in communicating economic events is the accountant's ability to analyze and interpret reported information.
The origins of accounting are generally attributed to Socrates, a classical Greek philosopher, who promoted accounting as a social contract.
The information that a user of financial information needs depends upon the kinds of decisions the user makes.
An account consists of
one part.
two parts.
three parts.
four parts.
The left side of an account is
blank.
a description of the account.
the debit side.
the balance of the account.
Which of the following is NOT part of an account?
Credit side.
Trial balance.
Debit side.
Title.
An account is a part of the financial information system and is described by all except which one of the following?
An account has a debit and credit side.
An account is a source document.
An account may be part of a manual or a computerized accounting system.
An account has a title.
The right side of an account
is the correct side.
reflects all transactions for the accounting period.
shows all the balances of the accounts in the system.
is the credit side.
a title, a debit balance and a credit balance.
a title, a left side and a debit balance.
a title, a debit side and a credit side.
a title, a right side and and debit balance.
A T-Account is
a way of depicting the basic form of an account.
what the computer uses to organize bytes of information.
a special account used instead of a trial balance.
used for accounts that have both a debit and credit balance.
Credits
decrease both assets and liabilities.
decrease assets and increase liabilities.
increase both assets and liabilities.
increase assets and decrease liabilities.
A debit to an asset account indicates
an error.
a credit was made to a liability account.
a decrease in the asset.
an increase in the asset.
The normal balance of any account is the
left side.
right side.
side which increases that account.
side which decreases that account.
The double-entry system requires that each transaction must be recorded
in at least two different accounts.
in two sets of books.
in a journal and in a ledger.
first as a revenue and then as an expense.
A credit is not the normal balance for which account listed below?
Common stock account.
Revenue account.
Liability account.
Dividends account.
Which of the following represents the expanded basic accounting equation?
Assets = Liabilities + Common stock + Retained Earnings + Dividends - Revenues - Expenses
Assets + Dividends + Expenses = Liabilities + Common Stock + Retained Earnings + Revenues
Assets - Liabilities - Dividends = Common Stock + Retained Earnings + Revenues - Expenses
Assets = Revenues + Expenses - Liabilities
Preparing a worksheet involves
two steps
three steps
four steps
five steps
The adjustments entered in the adjustments columns of a worksheet are
not journalized.
posted to the ledger but not journalized.
not journalized until after the financial statements are prepared.
journalized before the worksheet is completed.
The information for preparing a trial balance on a worksheet is obtained from
financial statements.
general ledger accounts.
general journal entries.
business documents.
After the adjusting entries are journalized and posted to the accounts in the general ledger, the balance of each account should agree with the balance shown on the
adjusted trial balance.
post-closing trial balance.
the general journal.
adjustments columns of the worksheet.
If the total debit column exceeds the total credit column of the income statement columns on a worksheet, then the company has
earned net income for the period.
an error because debits do not equal credits.
suffered a net loss for the period.
to make and adjusting entry.
A worksheet is a multiple column form that facilitates the
identification of events.
measurement process.
preparation of financial statements.
analysis process.
Which of the following companies would be least likely to use a worksheet to facilitate the adjustment process?
Large company with numerous accounts.
Small company with numerous accounts.
All companies, since worksheets are required under generally accepted accounting principles.
Small company with few accounts.
A worksheet can be thought of as a(n)
permanent accounting record.
optional device used by accountants.
part of the general ledger.
part of the journal.
The account, Supplied, will appear in the following debit columns of the worksheet.
Trial Balance.
Adjusted Trial Balance.
Balance Sheet.
All of these.
When constructing a worksheet, accounts are often needed that are not listed in the trial balance already entered on the worksheet from the ledger. Where should that additional accounts be shown on the worksheet?
They should be inserted in alphabetical order into the trial balance accounts already given.
They should be inserted in chart of account order into the trial balance already given.
They should be inserted on the lines immediately below the trial balance totals.
They should not be inserted on the trial balance until the next accounting period.
