Chapter 4: Types of Major Accounts Flashcards by Tina A

Q

The basic storage of information in accounting.

A

Account

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Q

This is income that arises in the course of the ordinary activities of a business

A

Revenue

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Q

This is income that may or may not arise in the course of the ordinary activities of a business.

A

Gains

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Q

These are decreases in assets or increases in liabilities resulting in to decrease in equity, other than those relating to transactions with the business owners.

A

Expense

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Q

These are expenses that may, or may not arise in the course of the ordinary activities of the entity.

A

Losses

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Q

It is a list of all the accounts used by a business.

A

Chart of accounts

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Q

This refers to the left side of the account

A

Debit

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Q

This refers to the right side of the account

A

Credit

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Q

It is the financial statement that presents the assets, liabilities, and equity of a business

A

Balance sheet

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Q

It is the financial statement that presentsthe income and expenses and consequently the profit or loss, of a business

A

Income statement

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Q

Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME or EXPENSE

Accounts receivable

A

Asset

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Q

Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME, or EXPENSE

Interest expense

A

Expense

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Q

Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME, or EXPENSE

Cash

A

Asset

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Q

Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME, or EXPENSE

Owner’s Capital

A

Equity

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Q

Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME, or EXPENSE

Equipment

A

Asset

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Q

Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME, or EXPENSE

Freight-out

A

Expense

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Q

Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME, or EXPENSE

Gains

A

Income

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Q

Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME, or EXPENSE

Sales

A

Income

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Q

Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME, or EXPENSE

Inventory

A

Assets

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Q

Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME, or EXPENSE

Unearned income

A

Liabilities

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Q

Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME, or EXPENSE

Notes receivable

A

Asset

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Q

Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME, or EXPENSE

Salaries expense

A

Expense

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Q

Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME, or EXPENSE

Salaries payable

A

Liabilities

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Q

Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME, or EXPENSE

Owner’s drawings

A

Equity

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Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME, or EXPENSE Building

Asset

Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME, or EXPENSE Cost of Sales

Expense

Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME, or EXPENSE Service fees

Income

Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME, or EXPENSE Advances from customers

Equity

Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME, or EXPENSE Prepaid insurance

Asset

Indicate whether each of the accounts listed below is an ASSET, LIABILITY, EQUITY, INCOME, or EXPENSE Depreciation

Expense

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Inventory

Balance sheet

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Accounts receivable

Balance sheet

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Interest expense

Income statement

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Salaries payable

Balance sheet

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Owner's Capital

Balance sheet

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Equipment

Balance sheet

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Freight-out

Income statement

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Gains

Income statement

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Sales

Income statement

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Unearned income

Balance sheet

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Notes receivable

Balance sheet

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Cash

Balance sheet

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Salaries expense

Income statement

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Owner's drawings

Balance sheet

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Building

Balance sheet

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Cost of sales

Income statement

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Service fees

Income statement

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Unearned revenue

Balance sheet

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Prepaid insurance

Balance sheet

Indicate whether each of the accounts listed below is a BALANCE SHEET account or an INCOME STATEMENT account Depreciation

Income statement

True or False | The difference between the total debits and total credits in an account represents the balance of that account

True

True or False | An account has total debits of 100 and total credits of 20. This account has a balance of 120

False

True or False An account has total debits of 100 and total credits of 20. This account has a balance of 120 The balance of the account above is referred to as a debit balance

True

True or False | If the total credits in an account exceed the total debits, the account has a debit balance

False

True or False | Debit refers to the left side of an account while credit refers to the right

True

True or False | An account is usually depicted through a "T-account". A "T-account" is called such because it tastes like tea

False

True or False | Assets, liabilities, and equity are income statement accounts

False

True or False | The "used up" portion of a prepayment (e.g., prepaid rent) is an expense while the "unused" portion is an asset

True

True or False Your business is renting a commercial space. The monthly rent is 100. At the start of Month 1, you paid three-month advanced rent of 300 If you prepare financial statements at the end of Month 1, your balance sheet will show a "prepaid rent" of 100.

False

True or False Your business is renting a commercial space. The monthly rent is 100. At the start of Month 1, you paid three-month advanced rent of 300 If you prepare financial statements at the end of Month 1, your income statement will show a "rent expense" of 100

True

True or false | Accounts receivable represents receivables supported by oral or informal promise to pay.

True

True or False | Money is recorded in the "cash" account

True

True or False | Notes payable refers to obligations supported by oral or informal promise to pay by the debtor.

False

True or False | An entity that borrows money from the bank will most likely present interest income in its income statement

False

True or False Accounts payable and accounts receivable are opposites, meaning if Entity A has an account payable to Entity B, Entity B, in return, has an account receivable from Entity A

True

True or False | There are three major types of accounts used in accounting

False

True or False | Allowance for bad debts represents the aggregate amount of estimated losses from uncollectible accounts receivable

True

True or False Cost of sales (or Cost of Goods Sold) represents the value of inventories that have been sold, and consequently charged as an expense, during the accounting period

True

True or False | Freight out is an expense account

True

True or False | The building is a liability account

False

Receivables that are supported only by oral or informal promises to pay a. cash b. accounts receivable c. accounts payable d. notes receivable

b. accounts receivable

Salaries earned by employees but not yet paid a. salaries expense b. salaries payable c. employee points d. employee credits

b. salaries payable

Salaries earned by employees, whether paid or not a. salaries expense b. salaries auable c. employee points d. employee credits

a. salaries expense

Revenues earned from the sale of goods a. inventory income b. goods income c. sales d. service fees

c. sales

Entity A sells an asset that is not an inventory for 100 The carrying amount of the asset is 80. The difference represents a a. gain b. loss c. revenue d. interest income

a. gain

Investments or contributions by the business owner and profits and losses of the business are recorded in this account a. owner's capital b. owner's drawing c. sales d. salaries expense

a. owner's capital

Income collected in advance but not yet paid a. unearned income b. early income c. sales d. service fees

a. unearned income

Obligations supported by oral or informal promises to pay by the debtor a. cash b. accounts receivable c. accounts payable d. notes payable

c. accounts payable

The cost of inventories that have been sold during the period a. cost of sales b. cost of inventories c. inventory d. selling expense

a. cost of sales

The amount of estimated losses from uncollectible accounts receivable a. good expense b. bad expense c. ugly expense d. bad debt expense

d. bad debt expense

Goods that are held for sale by a business a. cash b. accounts receivable c. accounts payable d. inventory

d. inventory

The structure owned and being used by a business in its operations a. building b. base c. castle d. kingdom

a. building

The portion of the cost of a building that is already recognized as an expense since the building was acquired and made available for use a. accumulate depreciation - building b. upkeep c. accumulated upkeep d. repairs and maintenance expense

a. accumulate depreciation - building

The cost of unused office and other supplies a. prepaid rent b. prepaid supplies c. cash d. accounts receivable

b. prepaid supplies

Interest incurred by a borrower but not yet paid a. interest payable b. interest expense c. notes payable d. notes receivable

a. interest payable

Interest incurred by a borrower, whether paid or not a. interest payable b. interest expense c. notes payable d. notes receivable

b. interest expense

Obligations supported by written or formal promises to pay by the debtor in the form of promissory notes a. notes receivable b. accounts receivable c. accounts payable d. notes payable

d. notes payable

The seller's cost of delivering goods to customer a. freight-out b. freight-in c. freight-good d. freight-bad

a. freight-out

The cost of promotional or marketing activities during the period a. market expense b. advertising expense c. groceries d. insurance expense

b. advertising expense

The cost of gasoline, hotel accommodation, taxi fare, and similar expenditures a. transportation and travel expense b. interest expense c. taxi expense d. gas expense

a. transportation and travel expense

Receivables that are supported by written or formal promises to pay in the form of promissory notes a. inventory b. accounts receivable c. notes payable d. notes receivable

d. notes receivable

It refers to money held and bank deposits that are available for unrestricted use by the business a. cash b. accounts receivable c. inventory d. notes receivable

a. cash

The unused portion of rent paid in advance a. prepaid rent b. rent expense c. cash d. inventory

a. prepaid rent

The lot on which the building of the business has been constructed a. building b. lot c. land d. earth

c. land

Interest earned by a lender but not yet collected a. interest receivable b. interest income c. notes payable d. notes receivable

a. interest receivable

Interest earned by a lender, whether collected or not a. interest receivable b. interest income c. notes payable d. notes receivable

b. interest income

Temporary withdrawals of the owner from the business during the period are recorded in this account a. owner's capital b. owner's drawing c. withdrawal expense d. salaries expense

b. owner's drawing

Revenues earned used in an accounting period a. unearned income b. rendering income c. sales d. service fees

d. service fees

The cost of supplies in an accounting period a. prepaid supplies b. supplies cost c. supplies expense d. surprise expense

c. supplies expense

The portion of the cost of a building or equipment that has been charged as an expense in the current accounting period a. accumulated deduction b. deduction expense c. accumulated depreciation d. depreciation expense

d. depreciation expense

You are a business owner. You provided 5M cash to your business as the initial capital. Which of the following accounts is increased by this transaction a. owner's payable b. owner's capital c. accounts receivable d. accounts payable

b. owner's capital

You purchased goods that are held for sale in the ordinary course of business activities. Which of the following accounts is increased by this transaction a. cash b. owner's capital c. accounts receivable d. inventory

d. inventory

You obtained a 1M loan from a financing company. The financing company made you sign a contract promising to repay the loan after a year. Which of the following accounts is increased by this transaction a. accounts payable b. notes payable c. accounts receivable d. notes receivable

b. notes payable

You obtained a 1M loan from a financing company. The financing company made you sign a contract promising to repay the loan after a year. From the point of view of the financing company who lent you the loan. which of the following accounts is increased? a. accounts payable b. notes payable c. accounts receivable d. notes receivable

d. notes receivable

A customer bought goods from your business, on credit. The customer orally promised to pay the sale price next week. Which of the following accounts is increased by this transaction? a. accounts payable b. notes payable c. accounts receivable d. notes receivable

c. accounts receivable

A customer bought goods from your business, on credit. The customer orally promised to pay the sale price next week. From the point of view of the customer who bought the goods from your business, which of the following accounts is increased? a. accounts payable b. notes payable c. accounts receivable d. notes receivable

a. accounts payable

You purchased a computer for 50,000. Which of the following accounts is increased by this transaction? a. cash b. owner's capital c. computer equipment d. inventory

c. computer equipment

You purchased a computer for 50,000. You expect to use the computer over the next 5 years. How much is the depreciation expense per year? a. 50,000 b. 10,000 c. 7, 143 d. 5,000

b. 10,000

You purchased a computer for 50,000. You expect to use the computer over the next 5 years. After using the computer for two years, how much is the balance of the Accumulated depreciation - computer equipment account? a. 50,000 b. 30,000 c. 20,000 d. 10,000

c. 20,000

You purchased a computer for 50,000. After the end of Year 2, how much is the carrying amount of the computer equipment? a. 50,000 b. 30,000 c. 20,000 d. 0

b. 30,000