Ch 2 Smartbook Flashcards
When services are provided on account, what happens to stockholders equity?
It increases
Lassiter industries purchased equipment for $140,000. Lassiter expects to use the equipment over the next 10 years. Recording this transaction would include
Debit to equipment, $140,000
Rory purchases supplies for cash. Which of the following occurs?
Total assets remain the same
Indicate which situations would require the company to record revenue in the current period
Company performs services for cash
Company performs services on account
Klicks journal shows a debit to cash and a credit to common stock. This normal entry indicates that klick
Issued shares to stockholders
Roland corporation borrows $10,000 from the bank by signing a promissory note. Recording this transaction will include
Debit to cash
Credit to notes payable
Which of the following is an external transaction?
Purchasing supplies from a vendor
On May 1, Ace electronics ordered office equipment. The equipment was delivered to ace on may 15, and ace agreed to pay for it by the end of the month. Ace paid for the equipment on May 31. When will ace make the first entry in its accounting system for this purchase?
May 15 , date it was delivered
Roslyn corp. provides services to customers on account for $5000. Recording this transaction will include a
Debit to accounts receivable
Credit to revenues
Crane purchases equipment by signing a note payable with the equipment dealer for $10,000. The accounts affected for crane are
Equipment and notes payable
Tabor company issues $20,000 of common stock to investors. Recording this transaction will include a credit to
Common stock
DiAngelo Company’s journal shows a debit to a cash and a credit to service revenue. This journal entry indicates that the company:
Performed a service for a customer for cash
Beloit company receives $40,000 from customers for services to be performed in the following year. Recording this transaction will include a credit to
Differed revenue
What are the 6 steps in the measurement process of external transactions ?
- Use course documents to identify accounts affected by an external transaction
- Analyze the impact of the transaction on the accounting equation
- Assess whether the transaction results in a debit or credit
- Record the transaction in a journal using debits and credits
- Post transactions to the general ledger
- Prepare a trail balance
The adjusted trial balance is used
To prepare the financial statements
Adjusted entries for accruals are
Required to record revenues for services performed and expenses incurred in the current accounting period that have not been recognized though daily entries and thus are not yet reflected in the accounts
Accumulated depreciation is a
Contra asset account
Depreciation is
The process of allocating the cost of an asset to expense over its useful life
In order for revenue to be recorded in the period in which the services are performed, AND for expenses to be recognized in the period in which they are incurred
Adjusting entries are made
What are the effects of providing services on account to customers
Increase assets
Increase retained earnings
What are asset accounts?
Cash, equipment, supplies
What is NOT an asset account ?
Accounts payable
What are liabilities?
Accounts payable
Salaries payable
Income taxes payable
Notes payable
Which account will have a zero balance after a company has journalized and posted closing entries?
Service revenue
