ACC 112 - Chapters 1 - 4 Exam Flashcards
The initials GAAP stand for
Generally Accepted Accounting Principles
On April 25, Gregg’s Repair Service extended an offer of $115,000 for land that had been priced for sale at $140,000. On May 3, GRS accepted the seller’s counteroffer of $127,000. On June 20, the land was assessed at a value of $88,000 for property tax purposes. On August 4, GRS was offered $150,000 for the land by a national retail chain. At what value should the land be recorded in GRS’s records?
$127,000
Equipment with an estimated market value of $55,000 is offered for sale at $75,000. The equipment is acquired for $20,000 in cash and a note payable of $40,000. The amount used in the buyer’s accounting records to record the acquisition is
$60,000
Donner company is selling a piece of land adjacent to their business. An appraisal reported the market value of the land to be $120,000. The Focus Company initially offered to buy the land for $107,000. The companies settled on a purchase price of $115,000. On the same day, another piece of land on the same block sold for $122,000. Under the cost concept, what is the amount that will be used to record this transaction in the accounting records?
$115,000
The unit of measure concept
Requires that accounting data be reported in yen in Japan or dollars in the US
Debts owed by a business are referred to as
Liabilities
The accounting equation may be expressed as
Assets - Liabilities = Owner’s Equity
The assets and liabilities of the company are $175,000 and $40,000, respectively. Stockholders’ Equity should equal
$135,000
Declaring and paying cash dividends
Decreases stockholders’ equity
The chart of accounts classifies the accounts to make edification of the accounts easier. This is done by was of assigning a number to each account. The first number identifies the classification of the type of account. Which of the following indicates the use of this classification?
1-Assets, 2-Liabilities, 3-Stockholders’ Equity, 4-Revenues, 5-Expenses
Cash was paid by Ari’s Alarm Service to creditors on account. Which of the following entries for AAS records this transaction?
Accounts Payable, Debit; Cash, Credit
Which of the following entries records the acquisition of office supplies on account?
Office Supplies, Debit; Accounts Payable, Credit
Which of the following records records the receipt of cash from patients on account?
Cash, Debit; Accounts Receivable, Credit
Which of the following entries records the collection of cash from cash customers?
Cash, Debit; Fees Earned, Credit
The payment for the monthly rent will require which of the following entries?
Debit Rent Expense and Credit Cash
Which of the following accounts increase with a credit?
Liabilities, Capital Stock, Revenues
The accounts in the ledger of Monroe Entertainment Co are listed below. All accounts have normal balances. What is the balance for the trial balance? Accounts Payable...1,500 Accounts Receivable...1,800 Investment...2,000 Fees Earned...3,000 Insurance Expense...1,300 Land...3,000 Cash...2,600 Capital Stock...2,500 Dividends...1,200 Wages Expense...1,400 Retained Earnings...6,300
$13,300
Of the following, which will determine if the accounting equation is in balance?
Trial balance
The balance in the prepaid rent account before adjustment at the end of the year is $24,000, which represents four months’ rent paid on December 1. The adjusting entry required on December 31 is
Debit Ret Expense, $6,000; Credit Prepaid Rent, $6,000
The balances in the office supplies account on June 1 was $6,300, supplies purchased during June were $3,100, and the supplies on hand at June 30 were $2,500. The amount to be used for the appropriate adjusting entry is
$6,900
What is the proper adjusting entry at April 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $16,000, and unexpired amounts per analysis of policies, $6,000?
Debit Insurance Expense, $10,000; Credit Prepaid Insurance, $10,000
A business pays weekly salaries of $20,000 on Friday for a five day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending Tuesday is
Debit Salaries Expense, $8,000; Credit Salaries Payable, $8,000
The difference between the balance of a fixed asset account and the related accumulated depreciation account is termed
Book Value
As time passes, fixed assets other than land lose their capacity to provide useful services. To account for this decrease in usefulness, the cost of fixed assets is systematically allocated to expense through a process called
Depreciation
