Chapter 1
What is the certification for accountants called?
CPA
IF Equity is 25,000 and liabilities are 15,000 then assets must equal what?
$40,000
If a credit balance in unearned revenue is incorrectly listed as a credit balance in the sales revenue account, is the trial balance still in balance?
Yes
In what order do you prepare financial statements?
1. Income statement
2. Statement of owners equity
3. Balance sheet
On which financial statement does consulting revenue belong?
Income statement
What are the big 4 accounting firms?
Deloitte
PricewaterhouseCoopers
Ernst & Young
KPMG
What side of an account is a credit always on?
Right
What is the process of recording transactions in a journal called?
Journalizing
Prepaid expenses reflect transactions when cash is paid:
Before the related expense in recognized
On which financial statement does Owner, withdrawals belong?
Statement of owners equity.
In a fraud triangle, a person feeling incentive to commit fraud is called what?
Fraud
What three items belong on an income statement?
Revenue
Expenses
Net income
Why are posting references entered in the journal when entries are posted to the ledger accounts?
So we know that the entry has been posted.
Equity Financing and Debt Financing are ways to finance the purchase of what?
Assets
Unearned revenue are considered what on a financial statement?
Liability.
What is the organization primarily responsible for developing GAAP for use by all U.S companies?
FASB
What are the four basic financial statements?
Income statement
Statement of owners equity
Balance sheet
Statement of cash flows
What are steps 3 and 4 of the accounting process?
Step 3: Record transactions into the journal
Step 4: Post entries into the ledger.
Adjusting entries affect what?
One or more balance sheet accounts and one or more income statement accounts
If a company's net income increased while its net sales remained constant, would the company's profit margin increase, decrease, or not be impacted?
Increase
What are the three steps of ethical decision making?
Identify Ethical concerns
Analyze options
Make ethical decision
Are increases in cash or accounts receivable a credit or debit?
Debit
Why is the trial balance completed?
To ensure that debits and credits are equal in the general ledger.
Before the adjusting entry for a deferral of an expense, the expenses will be ______ and the assets will be _____.
1. Understated
2. Overstated
An adjusted trial balance includes what accounts?
All accounts and their balances.