Accounting in Business
Which of the following is not an external user of accounting information?
a. Shareholders
b. Customers
c. Purchasing Managers
d. Government Regulators
What is c. Purchasing Managers?
The right side of a T-account is a(n):
What is a credit?
The assumption that presumes that an organization's activities can be divided into specific time periods such as a month, a three-month quarter, a six-month interval, or a year is called the:
What is the time period assumption?
Closing entries are necessary at the end of each period to:
Ensure that temporary accounts begin each period with zero balances.
An error in ending inventory causes an error in the next period's
What is Beginning inventory?
The question of when revenue should be recognized on the income statement according to GAAP is addressed by the:
What is the Revenue recognition principle?
A credit is used to record a decrease in which of the following accounts?
a. Unearned Revenue
b. Accounts Payable
c. Service Revenue
d. Accounts Receivable
What is d. Accounts Receivable?
Unearned revenue is reported in the financial statements as:
What is a liability on the balance sheet?
Which of the following accounts are permanent accounts?
Office supplies expense, Salaries expense, Accounts payable, Services revenue, Cash, Accounts receivable.
What are accounts payable, cash and accounts receivable?
The credit terms 2/10, n/30 are interpreted as
What is 2% cash discount if the amount is paid within 10 days, or the full balance due in 30 days.
The 4 financial statements
What are: Balance Sheet, Income Statement, Statement of Owner's Equity, Statement of Cash Flows
A complete record of each transaction in one place from which transaction amounts are posted to the ledger is a(n):
What is a journal?
Financial statements are typically prepared in the following order:
Income statement, statement of owner's equity, balance sheet.
Flo's Flowers' current ratio is 1.3. The industry average for the current ratio is 1.2. This indicates that Flo's Flowers is in a better position to cover its short-term liabilities with its short-term assets than its competitors.
True or False?
What is true?
Quick assets are defined as:
What are cash, short-term investments, and current receivables?
If a company paid $38,000 of its accounts payable in cash, what was the effect on the accounting equation?
Assets would decrease $38,000, liabilities would decrease $38,000, and equity remains unchanged.
Assets = Liabilities + Owner's Equity
Assets will decrease by $38,000 in Cash due to the payment of the debt.
Liabilities will decrease by $38,000 in Accounts payable due to the payment of the debt.
Owner's Equity would not be affected by this transaction.
A $130 credit to Supplies was credited to Revenue by mistake. By what amounts are the accounts under- or overstated as a result of this error?
Supplies, overstated $130; Revenue, overstated $130.
On December 31, Carmack Company received a $215 utility bill for December that it will not pay until January 15. The adjusting entry needed on December 31 to accrue this expense is:
Debit Utilities Expense $215; credit Accounts Payable $215.
Which of the following accounts is not be classified as a current liability?
a. Notes payable (due in 3 months)
b. Notes payable (due in 3 years)
c. Accounts payable
d. Wages payable
e. Unearned revenues
What is b. Notes payable (due in 3 years)?
Expenses that support a company's overall operations and include expenses related to accounting, human resources, and finance are known as:
What are general and administrative expenses?
A company's balance sheet shows: cash $24,000, accounts receivable $30,000, equipment $50,000, and equity $72,000. What is the amount of liabilities?
What is $32,000?
Assets − Equity = Liabilities
Cash + Accounts Receivable + Equipment − Equity = Liabilities
$24,000 + $30,000 + $50,000 − $72,000 = $32,000
Gloria Catering provided $1,000 of catering services and billed its client for the amount owed. Determine the general journal entry that Gloria Catering will make to record this transaction.
What is:
Accounts Receivable debit for $1,000
Catering Revenue credit for $2,000
On January 1, a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:
Debit Insurance Expense, $360; credit Prepaid Insurance, $360.
$1,800 × 1/5 = $360 per year
The F. Mercury, Capital account has a credit balance of $37,000 before closing entries are made. Services revenue for the period is $55,200, wages expense is $39,800, and withdrawals are $9,000. What is the correct closing entry for the revenue accounts?
Debit Services revenue $55,200; credit Income Summary $55,200.
In its first year of business, Borden Corporation had sales of $2,000,000 and cost of goods sold of $1,200,000. Borden expects returns in the following year to equal 8% of sales and 8% of cost of goods sold. The adjusting entry or entries to record the expected sales returns is (are):
Debit Sales Returns and Allowances 160,000
Credit Sales Refund Payable 160,000
Debit Inventory Returns Estimated 96,000
Credit Cost of goods sold 96,000