Chapter 1

Question 1

asset account

Answer 1

resources of a company
represents a future economic benefit
(ex: cash, inventory, land, building)

Question 2

liability account

Answer 2

obligation in the future
future expense
(student loans)

Question 3

Equity account

Answer 3

owner residual claim on assets (treasury stock)

E=A-L

Question 4

Revenue Account

Answer 4

amount recorded when computer sells product to customers

Question 5

Expense Account

Answer 5

costs of providing products/services

Question 6

Dividends

Answer 6

distributions of the stockholders

Question 7

Financing activities

Answer 7

activities w investors and creditors (lendor and owner)
L+E
cash flow

Question 8

Investing Activities

Answer 8

Transactions involve purchasing resources that are expected to benefit company for several years (equipment) A
cash flow

Question 9

Operating Activities

Answer 9

Transactions that relate to primary operations of company (rent, salaries, tax, utilities)
Revenue/ Expenses
cash flow

Question 10

Net Income

Answer 10

Revenue-Expenses

Question 11

What are the two basic goals of accounting language?

Answer 11

record transactions and communicate what transactions are saying

Question 12

Income Statement

Answer 12

financial statement that reports revenues and expenses over time
NI= Revenue-Expenses

Question 13

Balance Sheet

Answer 13

-Shows money at a specific time
A=L+E
E: common stock + RE

Question 14

Statement of changes in equity (equation)

Answer 14

beginning equity balance+issue stock-purchase treasuring stock+NI-dividends= end equity balance
over time

Question 15

When preparing information on sheet…

Answer 15

Name of company
name of financial statement
period of time at date

Question 16

amount invested by stockholders

Answer 16

common stock

Question 17

$ that has been kept for company use rather than distributed as dividends

Answer 17

retained earnings

Question 18

How do you calculate retained earning at the end of a time period?

Answer 18

beg RE+NI-div

Question 19

What acct are employees? salaries?

Answer 19

expense; espense

Question 20

what acct is service?

Answer 20

revenue

Question 21

what acct is prepaid rent/expense?

Answer 21

asset

Question 22

what acct is accounts recievable?

Answer 22

asset

Question 23

What is the basic question extended?

Answer 23

A=L+E
E=CS+RE
RE=NI (Rev-Exp)- dividends

Question 24

When you’re repaying a loan

Answer 24

loan: accounts payable

repay the loan w notes payable

Question 25

4 types of adjusting entries

Answer 25

deferrals (paid in advance)-
prepaid expense->Pay cash to purchase an asset in the current period that will be recorded as an expense in a future period.
deferred revenue->Receive cash in the current period that will be recorded as a revenue in a future period

accurals (service and then money)
accrued revenue- Record a revenue in the current period that will be collected in cash in a future period
accrued expense- Record an expense in the current period that will be paid in cash in a future period.

Question 26

How do you record a prepaid expense adjusting entry?

Answer 26

Debit an expense account and credit an asset account

Question 27

Adjusting entry for prepaid rent?

Answer 27

d: rent expense

C; prepaid rent

Question 28

Adjusting entry for prepaid supplies?

Answer 28

d: supplies expense
c: supplies

Question 29

adjusted entry for prepaid equip?

Answer 29

d: depretiation expense
c: accumulated depretiation
calc acc dep-cash paid to purchase equp/ # of months

Question 30

How do you record a deferred rev adj entry? (include wht to credit and debit)

Answer 30

Debit a liability account and credit a revenue account

d: deffered revenue
c: service revenue

Question 31

how do you record an accured expense?(include wht to credit and debit)

Answer 31

Debit an expense account and credit a liability account

Question 32

adj entry for salaries?

Answer 32

d: salaries exp
c: salaries payable

Question 33

adj entry for utilities?

Answer 33

d: utilities expense
C: utilities payable

Question 34

adj entry for interest?

Answer 34

d: interest expense
c: interest payable

Question 35

how do you record a accured revenue?

Answer 35

Debit an asset account and credit a revenue account
service revenue
d: accts recievable
c: service revenue

Question 36

what account is not closed during the closing process?

Answer 36

retained earnings; Only temporary accounts are closed. Temporary accounts include all revenues, expenses, and dividends. Balances of temporary accounts are transferred to the balance of Retained Earnings, which is a permanent account that is not closed.

Question 37

Order of accts to follow..

Answer 37

1. recors and post adjusted entries
2. post transactions to T accts in general ledger
3. record transaction
4. prepare fin statements
5. record and post transaction

Question 38

basic format of a closing entry?

Answer 38

debit revenue
credit expenses
credit r/e

Question 39

characteristics of adj entries

Answer 39

-NO cash

rev/exp + asset/liability

Question 40

cash reciepts of company that have not been added to bank record of company balance

Answer 40

deposit outstanding

Question 41

checks from company tht have not been subtracted from bank record of company balance

Answer 41

check outstanding

Question 42

principle states that we record revenue in the period in which we provide goods and services to customers.

Answer 42

revenue recognition principle

Question 43

Companies typically report expenses in the same period as the revenues they help to generate

Answer 43

matching principle

Question 44

Cash has internal controls and its maqin characteristic is

Answer 44

seperation of powers

Question 45

Chas is equivalent to currency, money market, $, bank accounts….

Answer 45

anything that can liquidate in 90 days

Question 46

To reconcile a bank acct, bnk side

Answer 46

+deposit outstanding -check outstanding both error

Question 47

to reconcile bank acct, company/book side

Answer 47

\+notes recieved by bank
\+interest recieved
-NSF checks
-unrecorded debit cards
-bank services
both comp error
**This side gets a journal entry