ch 2 quiz questions Flashcards
In general, debits refer to increases in account balances, and credits refer to decreases. True Or False
False
The book value of any depreciable asset is?
the original cost minus the accumulated depreciation
A general journal chronologically lists transactions and other events, expressed in terms of debits and credits to accounts. True Or False
True
An adjustment for wages expense, earned but unpaid at year end, is an example of an accrued expense. True Or False
True
Adjusting entries for prepayments record the portion of the prepayment that represents the expense incurred or the revenue earned in the current accounting period. True Or False
True
It is not necessary to post the closing entries to the ledger accounts because new revenue and expense accounts will be opened in the subsequent accounting period. True Or False
False
If a company fails to post one of its journal entries to its general ledger, will the trial balance show an equal or an unequal amount of debit and credit balance accounts.
equal
When does the accrual basis recognize revenue?
when it is earned, regardless of when cash is received
The post-closing trial balance included which accounts?
owners’s equity, revenue and expense
all liability and stockholders’ equity accounts are increased on the credit side and decreased on the debit side. True or False?
False
All revenues, expenses, and the dividends account are closed through the income summary account. True or False?
False. Divdeds is closed through retained earnings.
Nominal (temporary) accounts are revenue, expense, and the dividend accounts and are periodically closed. True or False?
True
A ledger is where the company initially records transactions and selects other events. True or Flase?
False. A ledger provides the balance in each of the accounts as well as keeps track of changes in these balances
Recording the adjusting entry for depreciation has the same effect on the accounting equation as recording the adjusting entry for?
a prepaid expense
an unearned revenue
an accrued expense
an accrued revenue
a prepaid expense
Which of the following is a recordable event in the accounting system?
changes in personnel
none of the answers are correct.
the value of human resources
changes in managerial policy
none of the answers are correct
The failure to properly record an adjusting entry to accrue an expense will result in an:
understatement of expenses and an understatement of liabilities
overstatement of expenses and an understatement of assets
understatement of expenses and an overstatement of assets
understatement of expenses and an overstatement of liabiltiies
understatement of expenses and an understatement of liabilities
Stockholder’s equity is not affected by all
revenues
cash receipts
dividends
expenses
cash receipts
When a corporation pays a note payable and interest
they will debit notes payable and interest expense
the account interest expense will be decreased
the account notes payable will be increased
they will debit cash
they will debit notes payable and interest expense
Which of the following statements is associated with the accrual basis of accounting?
this method is used less frequently by businesses than the cash method of accounting.
the timing of cash receipts and disbursements is emphasized
a minimum amount of record keeping is required
Revenues are recognized in the period they are earned, regardless of the time period the cash is received.
Revenues are recognized in the period they are earned, regardless of the time period the cash is received
The trial balance may prove that debits and credits are equal, but
a transaction could have been omitted
an amount could be entered in the wrong account
a transaction could have been entered twice
all of the answers are correct
all of the answers are correct
An accounting record into which the essential facts and figures in connection with all transactions are initially recorded is called the
trial balance
ledger
account
none of the answers are correct
none of the answers are correct
A trial balance
supplies a listing of open accounts and their balances that are used in preparing financial statements
is normally prepared three times in the accounting cycle
all of these answers are correct.
proves that debits and credits are equal in the ledger
all of these answers are correct.
Why are certain costs of doing business capitalized when incurred and then depreciated or amortized over subsequent accounting cycles?
to match the costs of the capitalized asset with revenues as they are earned
to adhere to the accounting constraint of conservatism
to aid management in cash-flow analysis
to reduce the federal income tax liability
to match the costs of the capitalized asset with revenues as they are earned
