acc test 1

Question 1

What accounts belong to temporary accounts?

Answer 1

Includes revenue, expense, and profit and loss accounts

Question 2

What accounts belong to permanent accounts?

Answer 2

Includes asset, liability, and equity accounts

Question 3

What accounts normally have debit balances?

Answer 3

Assets, dividend, and expense

Question 4

What accounts normally have credit balances?

Answer 4

liabilities, common stock, and revenue accounts

Question 5

Do adjusted trial balances report externally or internally?

Answer 5

The trial balance is an internal statement for use within the company

Question 6

What are the steps of accounting cycle?

Answer 6

Identify and analyze transactions.
Record transactions in a journal.
Post transactions to a general ledger.
Determine the unadjusted trial balance.
Analyze the worksheet.
Adjust journal entries and fix any errors.
Create financial statements.
Close the books.

Question 7

What is an adjusting entry and why is it important?

Answer 7

Adjusting entries are necessary to update all account balances before financial statements can be prepared.

Question 8

What is prepaid expense?

Answer 8

A prepaid expense is an expense that has been paid for in advance but not yet incurred, A decrease in prepaid expenses indicates that less cash is being spent today for expenses incurred

Question 9

What is prepaid asset?

Answer 9

A prepaid asset is a financial resource that a business has paid for in full, although the full benefit of that resource will not be used until a future date.

Question 10

What are closing entries? Why are they needed?

Answer 10

Closing entries are journal entries made at the end of the accounting cycle to move temporary (nominal) account balances into permanent accounts.

Question 11

What accounts are zero out as a result of closing entries

Answer 11

Temporary Accounts:
Revenues, expenses, and dividends are temporary accounts.

Question 12

closing entries what accounts are debited

Answer 12

Accounts that are Debited in the Closing Entries
Revenue accounts.

Question 13

closing entries what accounts are credited

Answer 13

All expenses are closed out by crediting the expense accounts

Question 14

four internal controls

Answer 14

1. Safeguard its assets
2. Enhance the reliability of its accounting records. That means that all accounts including assets, revenues, liabilities etc. should be fairly presented)
3. Increase efficiency of operations
4. Ensure compliance with laws and regulations.

Question 15

What are the goals of internal controls

Answer 15

The primary purpose of internal controls is to help safeguard an organization and further its objectives

Question 16

What is a limitation of internal controls in preventing fraud?

Answer 16

Internal controls limitations are due to human error, changes in circumstances, errors in judgment, cost constraints, collusion, and management override.

Question 17

What are the elements of the fraud triangle?

Answer 17

The fraud triangle outlines three components that contribute to increasing the risk of fraud: (1) opportunity, (2) incentive, and (3) rationalization.

Question 18

What are deposit in transit

Answer 18

A deposit in transit occurs when a deposit arrives at the bank too late for it to be recorded that day, or if the entity mails the deposit to the bank (in which case a mail float of several days can cause an additional delay), or the entity has not yet sent the deposit to the bank at all.

Question 19

What are outstanding checks

Answer 19

An outstanding check is a financial instrument that has not yet been deposited or cashed by the recipient. An outstanding check is still a liability for the payor who issued the check.

Question 20

What are non sufficient fund check

Answer 20

Non-sufficient funds, or insufficient funds, is a banking term used to indicate that the checking account does not have sufficient balance to cover a transaction or payment. Colloquially, NSF checks are also called “bounced” or “dishonored” checks.

Question 21

Transactions are first entered into t-accounts

Answer 21

false

Question 22

Financial statements are prepared from adjusted trial balance

Answer 22

true

Question 23

When the client pays for goods just received with a gift card, the business will record revenue

Answer 23

true

Question 24

Company issued stock and borrowed money from the bank by signing a note, as a result

Answer 24

DR cash

Question 25

One of the goals of internal controls is to ensure that assets are reported at the highest value

Answer 25

false

Question 26

Outstanding checks should be added to the balance per bank reconciliation

Answer 26

false

Question 27

The elements of fraud triangle are

Answer 27

pressures, rationalization, and opportunities