Accounting Equations
If equity is $400,000 and liabilities are $188,000, then assets equal?
What is $588,000?
The collection of all accounts and their balances used by a business is called a?
What is Ledger (General Ledger)?
Jose Consulting paid $500 cash for utilities for the current month. Determine the general journal entry that Jose Consulting will make to record this transaction.
What is debit Utilities expense $500 and credit cash $500?
The rule that requires financial statements to reflect the assumption that a business will continue operating instead of being closed or sold is the:
What is the going concern assumption?
A credit is on which side of the T account?
What is the right side?
What is the correct formula for the debt ratio?
What is Total liabilities/Total assets?
Which of the following is not a time period commonly used by companies in reporting accounting information?
Month
Thirteen-month interval
Year
Six- month interval
Quarter
What is 13 month interval?
On January 1, Fashion Forward Magazine received $22,000 from subscribers for annual subscriptions and recorded Unearned Revenue. Four issues are delivered each year. What amount of revenue should the magazine recognize on March 31, after the first issue is delivered?
What is $5,500?
The principle that requires expenses to be reported in the same period as the revenues that were recognized as a result of those expenses is the:
What is the Expense recognition (Matching) Principle?
The group that sets international preferred accounting practices is called the:
What is the Profit margin equation?
What is Net Income/net sales?
A business source document does:
What is Identify and describe transactions and events entering the accounting system?
A company purchased new furniture at a cost of $15,000 on January 1. The furniture is estimated to have a useful life of 8 years and a salvage value of $3,000. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the furniture for the first year ended December 31?
What is $1,500?
Which accounting principle require that all goods and services purchased be recorded at actual cost?
What is the Measurement (Cost) principle?
If a company is considering the purchase of a parcel of land that was originally acquired by the seller for $85,000, is currently offered for sale at $150,000, is considered by the purchaser as easily being worth $140,000, and is finally purchased for $137,000, the land should be recorded in the purchaser’s books at:
What is $137,000?
If a company receives $12,000 from a stockholder, the effect on the accounting equation would be:
What is Assets increase $12,000 and equity increases $12,000?
Financial Statements are typically prepared in what order?
What is income statement, statement of retained earnings, balance sheet, and statement of cash flow?
In its first year of operations, Grace Company reports the following: Revenue of $80,000 ($62,000 cash received from customers); Expenses of $55,000 ($41,000 cash paid toward expenses). Net income under the accrual basis of accounting is:
What is $25,000?
The rule that requires revenue to be recognized (1) when goods or services are provided to customers and (2) at the amount expected to be received from the customer is called the:
What is the Revenue recognition principle?
The system of preparing financial statements based on recording revenues when cash is received and reporting expenses when the cash is paid is called:
What is Cash basis accounting?
A company reported net income of $5,000 for October. Its net sales for October were $25,000. Its profit margin is:
What is 20%?
Profit Margin = Net Income/Net Sales
Profit Margin = $5,000/$25,000 = .20 = 20%
The length of time covered by a set of periodic financial statements, primarily a year for most companies, is referred to as the:
What is the accounting period?
In its first year of operations, James Company reports the following: Revenue of $90,000 ($72,000 cash received from customers); Expenses of $55,000 ($51,000 cash paid toward expenses). Net income under the cash basis of accounting is:
What is $21,000?
The accounting concept that requires every business to be accounted for separately from other business entities, including its owner(s), is known as the:
What is the business entity assumption?
The approach to preparing financial statements based on recording revenues when products and services are delivered and recording expenses when incurred is:
What is Accrual basis accounting?