In the service industry, revenue is recognized when...
the service has been provided.
100
Something purchased in cash for future use is called a...
pre-paid
100
An asset's book value is calculated as:
Cost minus accumulated depreciation
200
A revenue account is closed with a debit to ___________ and a credit to _________.
Revenue, Income Summary
200
During the accounting cycle, which trial balance is used to prepare the financial statements?
The Adjusted Trial Balance
200
The matching principle states...
Expenses should be matched with revenues in the period when efforts are expended to generate the revenue?
200
Every adjusting entry includes at least one ___________ and one __________ account.
Balance Sheet and Income Statement
200
Revenue and Expenses are temporary accounts closed at the end of the accounting period to what account?
Income Summary
300
When an accounts receivable is collected, what is the impact on assets?
Total assets would not be impacted
300
At what point in the accounting cycle are account balance actually updated to reflect the transactions
When the journal entries are posted
300
For a merchandising company, COGS expense is recognized when...
The inventory is sold.
300
ByrdCo takes our a loan on March 1st. Principal and Interest are due in six months on September 1st. On March 31st what accounts would be debited and credited to record interest due.
Dr. Interest Expense, Cr. Interest Payable
300
A post-closing trial balance includes what kind of accounts?
Only Permanent (Balance Sheet) accounts
400
At January 31, 2010, the balance in Goebel Inc.'s supplies account was $250. During February. Goebel purchased supplies of $300 and used supplies of $400. At the end of February, the balance in the Supplies account should be a $_____ credit/debit...
$150 Debit
400
Revenue is recognized when ________ and ________.
goods or services are provided and you are reasonably assured that the any related receivable will be collected.
400
Dante orders an iPad from apple.com on September 1st for $550 including tax and shipping. The iPad is shipped on September 8th and arrives at Dante's house on September 15th. When does apple recognize the revenue for the sale of the iPad?
When the iPad is shipped on September 8.
400
If the unearned revenue account is not updated when the revenue is earned (service or goods provided), how is the balance sheet impacted?
Liabilities are overstated
400
At January 1, 2010, Troyer Industries reported Retained Earnings of $130,000. During 2010, Troyer had a net loss of $30,000 and paid dividends to the stockholders of $20,000. At December 31, 2010, the balance in Retained Earnings is
$80,000
500
Why is it necessary for revenues to have a natural credit balance?
Because INCOME increases retained earnings and retained earnings has a credit balance.
500
How many trial balances are created during the accounting cycle?
3, the initial trial balance generated after the transaction journal entries have been posted, the adjusted trial balance and the post-closing trial balance.
500
In April, Ron receives $800 in cash from a customer who asks Ron to order a specialty wine for a party she is having in June. Ron has a meeting in May with that customer and provides all the wine for all but $200 of the order. Under the revenue recognition principle, what account is credited in April and for how much? What account is credited in May and for how much?
Unearned revenue of $800 in April. Revenue of $600 in May.
500
How does management know when to record adjusting entries?
Management has to determine internally when adjusting entries need to be recorded. Adjusting entries are NOT triggered by outside events.
500
Name the two primary purposes for closing temporary accounts.
1) Updating retained earnings and 2) clearing out revenue and expense accounts