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Financial Accounting and Reporting Theories > Chapter 4: Types of Major Accounts > Flashcards

Chapter 4: Types of Major Accounts Flashcards

1
Q

The basic storage of information in accounting.

A

Account

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2
Q

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

A

Revenue

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3
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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4
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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5
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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6
Q

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

A

Chart of accounts

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7
Q

This refers to the left side of the account

A

Debit

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8
Q

This refers to the right side of the account

A

Credit

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9
Q

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

A

Balance sheet

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10
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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11
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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12
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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13
Q

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

Cash

A

Asset

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14
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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15
Q

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

Equipment

A

Asset

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16
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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17
Q

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

Gains

A

Income

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18
Q

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

Sales

A

Income

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19
Q

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

Inventory

A

Assets

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20
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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21
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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22
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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23
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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24
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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25
Q

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

Building

A

Asset

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26
Q

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

Cost of Sales

A

Expense

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27
Q

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

Service fees

A

Income

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28
Q

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

Advances from customers

A

Equity

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29
Q

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

Prepaid insurance

A

Asset

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30
Q

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

Depreciation

A

Expense

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31
Q

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

Inventory

A

Balance sheet

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32
Q

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

Accounts receivable

A

Balance sheet

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33
Q

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

Interest expense

A

Income statement

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34
Q

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

Salaries payable

A

Balance sheet

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35
Q

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

Owner’s Capital

A

Balance sheet

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36
Q

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

Equipment

A

Balance sheet

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37
Q

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

Freight-out

A

Income statement

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38
Q

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

Gains

A

Income statement

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39
Q

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

Sales

A

Income statement

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40
Q

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

Unearned income

A

Balance sheet

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41
Q

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

Notes receivable

A

Balance sheet

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42
Q

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

Cash

A

Balance sheet

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43
Q

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

Salaries expense

A

Income statement

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44
Q

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

Owner’s drawings

A

Balance sheet

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45
Q

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

Building

A

Balance sheet

46
Q

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

Cost of sales

A

Income statement

47
Q

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

Service fees

A

Income statement

48
Q

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

Unearned revenue

A

Balance sheet

49
Q

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

Prepaid insurance

A

Balance sheet

50
Q

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

Depreciation

A

Income statement

51
Q

True or False

The difference between the total debits and total credits in an account represents the balance of that account

A

True

52
Q

True or False

An account has total debits of 100 and total credits of 20. This account has a balance of 120

A

False

53
Q

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

A

True

54
Q

True or False

If the total credits in an account exceed the total debits, the account has a debit balance

A

False

55
Q

True or False

Debit refers to the left side of an account while credit refers to the right

A

True

56
Q

True or False

An account is usually depicted through a “T-account”. A “T-account” is called such because it tastes like tea

A

False

57
Q

True or False

Assets, liabilities, and equity are income statement accounts

A

False

58
Q

True or False

The “used up” portion of a prepayment (e.g., prepaid rent) is an expense while the “unused” portion is an asset

A

True

59
Q

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.

A

False

60
Q

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

A

True

61
Q

True or false

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

A

True

62
Q

True or False

Money is recorded in the “cash” account

A

True

63
Q

True or False

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

A

False

64
Q

True or False

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

A

False

65
Q

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

A

True

66
Q

True or False

There are three major types of accounts used in accounting

A

False

67
Q

True or False

Allowance for bad debts represents the aggregate amount of estimated losses from uncollectible accounts receivable

A

True

68
Q

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

A

True

69
Q

True or False

Freight out is an expense account

A

True

70
Q

True or False

The building is a liability account

A

False

71
Q

Receivables that are supported only by oral or informal promises to pay

a. cash
b. accounts receivable
c. accounts payable
d. notes receivable

A

b. accounts receivable

72
Q

Salaries earned by employees but not yet paid

a. salaries expense
b. salaries payable
c. employee points
d. employee credits

A

b. salaries payable

73
Q

Salaries earned by employees, whether paid or not

a. salaries expense
b. salaries auable
c. employee points
d. employee credits

A

a. salaries expense

74
Q

Revenues earned from the sale of goods

a. inventory income
b. goods income
c. sales
d. service fees

A

c. sales

75
Q

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

a. gain

76
Q

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

a. owner’s capital

77
Q

Income collected in advance but not yet paid

a. unearned income
b. early income
c. sales
d. service fees

A

a. unearned income

78
Q

Obligations supported by oral or informal promises to pay by the debtor

a. cash
b. accounts receivable
c. accounts payable
d. notes payable

A

c. accounts payable

79
Q

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

a. cost of sales

80
Q

The amount of estimated losses from uncollectible accounts receivable

a. good expense
b. bad expense
c. ugly expense
d. bad debt expense

A

d. bad debt expense

81
Q

Goods that are held for sale by a business

a. cash
b. accounts receivable
c. accounts payable
d. inventory

A

d. inventory

82
Q

The structure owned and being used by a business in its operations

a. building
b. base
c. castle
d. kingdom

A

a. building

83
Q

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

a. accumulate depreciation - building

84
Q

The cost of unused office and other supplies

a. prepaid rent
b. prepaid supplies
c. cash
d. accounts receivable

A

b. prepaid supplies

85
Q

Interest incurred by a borrower but not yet paid

a. interest payable
b. interest expense
c. notes payable
d. notes receivable

A

a. interest payable

86
Q

Interest incurred by a borrower, whether paid or not

a. interest payable
b. interest expense
c. notes payable
d. notes receivable

A

b. interest expense

87
Q

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

A

d. notes payable

88
Q

The seller’s cost of delivering goods to customer

a. freight-out
b. freight-in
c. freight-good
d. freight-bad

A

a. freight-out

89
Q

The cost of promotional or marketing activities during the period

a. market expense
b. advertising expense
c. groceries
d. insurance expense

A

b. advertising expense

90
Q

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

a. transportation and travel expense

91
Q

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

A

d. notes receivable

92
Q

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

a. cash

93
Q

The unused portion of rent paid in advance

a. prepaid rent
b. rent expense
c. cash
d. inventory

A

a. prepaid rent

94
Q

The lot on which the building of the business has been constructed

a. building
b. lot
c. land
d. earth

A

c. land

95
Q

Interest earned by a lender but not yet collected

a. interest receivable
b. interest income
c. notes payable
d. notes receivable

A

a. interest receivable

96
Q

Interest earned by a lender, whether collected or not

a. interest receivable
b. interest income
c. notes payable
d. notes receivable

A

b. interest income

97
Q

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

A

b. owner’s drawing

98
Q

Revenues earned used in an accounting period

a. unearned income
b. rendering income
c. sales
d. service fees

A

d. service fees

99
Q

The cost of supplies in an accounting period

a. prepaid supplies
b. supplies cost
c. supplies expense
d. surprise expense

A

c. supplies expense

100
Q

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

A

d. depreciation expense

101
Q

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

A

b. owner’s capital

102
Q

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

A

d. inventory

103
Q

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

A

b. notes payable

104
Q

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

A

d. notes receivable

105
Q

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

A

c. accounts receivable

106
Q

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

a. accounts payable

107
Q

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

A

c. computer equipment

108
Q

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

A

b. 10,000

109
Q

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

A

c. 20,000

110
Q

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

A

b. 30,000

Financial Accounting and Reporting Theories (8 decks)

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