ACCT 3122- Overview of Acct

Question 1

how does a company create value?

Answer 1

comp transforms resources into goods and services that it sells to customer

Question 2

The acct system ensures a company is creatin

Answer 2

value

Question 3

acct system used to:

Answer 3

1) measure, record, categorize, and summarize the daily operating activities of the business in monetary terms
2) provide accountability of all levels of management for their delegated responsibilities
3) protect businesses from unauthorized use or consumption

Question 4

Accounting system 9 steps

Answer 4

1) transactions occur
2) prepare documents
3) record in journals
4) post to ledgers
5) prepare unadjusted general ledger trail balance
6) prepare and post adjusting entries
7) prepare adjusted trial balance
8) prepare financial statements
9) prepare closing entries

Question 5

transactions:

Answer 5

exchanges of goods and services

Question 6

value chain:

Answer 6

illustrates the enterprise’s internal business processes and the resource flows between them

Question 7

2 characteristics of the value chain

Answer 7

duality and stockflow

Question 8

duality

Answer 8

for each event the company gives something, we expect a related event in which the company receives something

Question 9

stock flow

Answer 9

each event has at least one inflow and one outflow of a resource

Question 10

sale event (sales and cash receipts cycle):

Answer 10

company gives goods/ services to the customers

Question 11

cash receipt event (sales and cash receipts cycle):

Answer 11

company receives cash from the customer

Question 12

purchase event (purchases and cash disbursements cycle):

Answer 12

company receives the fixed asset, raw materials, inventory etc. from supplier

Question 13

cash disbursement event (purchases and cash disbursements cycle):

Answer 13

the company gives cash to the supplier

Question 14

labor acquisition eventb (payroll cycle):

Answer 14

company receives labor (effort from the employees)

Question 15

cash disbursement event (payroll cycle):

Answer 15

company gives cash to employee

Question 16

cash receipt event (financing cycle):

Answer 16

company receives cash from lender/ stockholder

Question 17

cash disbursement event (financing cycle):

Answer 17

company pays cash to the lender (invest plus principle) or stockholder (dividends)

Question 18

what are time cards used for?

Answer 18

to determine gross pay owed to employees

Question 19

what are customer purchase orders used for?

Answer 19

used to determine quantities to ship to customers and amount to bill

Question 20

what are sales invoices used?

Answer 20

provide information for recording

Question 21

internally prepared documents are prepared by:

Answer 21

your company

Question 22

externally prepared documents are prepared by:

Answer 22

prepared by a person or organization doing business with your company

Question 23

chart of accounts:

Answer 23

set of general ledger accounts defined for a particular accounting company; not simply a list of accounts but a model of the organization

Question 24

blocking (as related to the chart of accounts):

Answer 24

blocking is the process of assigning numbers to similar accounts so that they are in a group

Question 25

2 reasons why people use schema when setting up their chart of accounts

Answer 25

1) makes it easier to recall the account number based on the nature of the acct number rather than through memorization
2) structured classifications can facilitate the the selection of accts from management reporting

Question 26

at the end of the month the bookkeeper does what to the journals

Answer 26

foots and cross foots the journals

Question 27

for specialized journals (ex: sales journal, purchase jounral etc.) only the ______ are transferred from the journal to the general ledger

Answer 27

totals

Question 28

for the general journal, ______________ transactions are posted to the general ledger

Answer 28

individual

Question 29

at the end of the period, the accountant reconciles the amount in the __________ ledger to the amount in the _________ ledger

Answer 29

subsidiary; general

Question 30

total of the trail balance must equal the ___________ ___________ balance

Answer 30

generak ledger

Question 31

general ledger trial balance:

Answer 31

listing of general ledger account balances at a specific point in time (usually end of month, quarter or year)

Question 32

unadjusted trail balance

Answer 32

before journal entries to correct errors and to record accruals and prepayments

Question 33

adjusted trail balance

Answer 33

after journal entries to correct errors and to record accruals and prepayments

Question 34

trial balance is prepared after ___________ for the period have been recorded

Answer 34

all transactions

Question 35

adjusting entries

Answer 35

journal entries usually made at the end of the acct period to allocate income and expenditures to the period in which they actually occurred

Question 36

adjusting entries are made in the ____________ and posted to the _________________

Answer 36

general journal; general ledger

Question 37

adjusting entries are added to the _____________ to produce the ________________

Answer 37

unadjusted; adjusted

Question 38

year-end adjustments are:

Answer 38

1: recorded in the general journal
2: posted to the general ledger
3: recorded as adjustments in the trial balance

Question 39

closing entries:

Answer 39

set income statement accounts to zero for the start of a new reporting period

Question 40

closing out entry categories

Answer 40

1) close out the revenue accounts (to income summary)
2) close out the expense accounts (to income summary)
3) transfer the profit or loss to retained earnings

Question 41

closing entries occur

Answer 41

after period end and after the financial statements are prepared

Question 42

closing entries are recorded in the _______________ and posted to the _________________

Answer 42

general journal; posted to the general ledger