Exam 1

Question 1

Non current assets

Answer 1

Equipment, Land, Buildings, investments

Question 2

Bonds payable

Answer 2

Current/non current asset

Question 3

Notes Payable

Answer 3

Non current liability

Question 4

Taxes payable

Answer 4

Liability

Question 5

Unearned revenue

Answer 5

Current liability

Question 6

Interest expense

Answer 6

Peripheral Activity

Question 7

A primary purpose of of adjusting entries is to record events that

Answer 7

have occurred but haven’t been recorded yet

Question 8

the adjusting entry for a deferred revenue includes a debit and a credit to which accounts?

Answer 8

DEBIT liability account
CREDIT revenue account

Question 9

What are the effects on the accounting equation from the adjustments for salaries incurred but not yet paid during the accounting period?

Answer 9

total liabilities will increase and total stockholders equity will decrease

Question 10

After adjustments have been completed, the balance in the salaries expense account represents

Answer 10

total salaries, paid & unpaid, that have been incurred during the accounting period

Question 11

What happens when a company debits accounts receivable and credits service revenue ?

Answer 11

assets increase and equity decreases

Question 12

Adjusting entries never effect which account?

Answer 12

CASH

Question 13

After posting adjusting entries to the general ledger, a company typically prepares

Answer 13

adjusted trial balance

Question 14

Liquidity

Answer 14

how fast an asset can turn into cash

Question 15

If an adjusting entries credit is to a liability account, then the debit must be

Answer 15

an expense

Question 16

Which step in the process of measuring external transactions involves assessing the equality of total debits and total credits?

Answer 16

prepare a trial balance

Question 17

What Transaction decreases total assets?

Answer 17

pay dividends to stockholders

Question 18

Purchasing land with CASH would have what effect on the accounting equation?

Answer 18

No Effect

Question 19

Service revenue is increased with a credit or debit?

Answer 19

credit

Question 20

Utilities Expense is increased with a credit or debit?

Answer 20

debit

Question 21

What is the normal balance for all asset accounts?

Answer 21

Normal Debit Balance

Question 22

What is the normal balance for all liabilities accounts?

Answer 22

Normal credit balance

Question 23

What is the normal balance for stockholders equity ?

Answer 23

Normal credit balance

Question 24

What is the normal balance for dividends and expenses?

Answer 24

Normal Debit balance

Question 25

What is the normal balance for revenues ?

Answer 25

Normal credit balance

Question 26

What is the normal balance for common stock and retained earnings?

Answer 26

Normal Credit Balance

Question 27

What are temporary accounts?

Answer 27

Revenue.
Expenses.
Income summary
dividends account

Question 28

What are permanent accounts?

Answer 28

Assets, liabilities, equity accounts

Question 29

What causes the accounting equation not to balance?

Answer 29

Increase assets, increase dividends

Question 30

Which financial statement shows that a company resources equal claims to those resources?

Answer 30

Balance sheet

Question 31

What financial statement conveys a company ability to generate profits in the current period>

Answer 31

income statement

Question 32

What transaction causes an increase in stockholders equity?

Answer 32

provide services to customers on account

Question 33

What is an external transaction?

Answer 33

payment of utility bill

Question 34

what are the four adjusting entries?

Answer 34

Accrued revenue, deferred revenue, accrued expense, prepaid

Question 35

What is the purpose of closing entries?

Answer 35

Transfer the balances of temporary accounts to retained earnings and reduce the balances of the temporary accounts to zero to prepare them for next periods’ measuring

Question 36

In a classified balance sheet, long-term physical assets used in the normal course of business are known as

Answer 36

property, plant, and equipment

Question 37

What are characteristics of adjusting entries

Answer 37

allow for proper recognition of revenues and expenses
are part of accrual-basis accounting
are recorded at the end of the accounting period

Question 38

What accounts are listed in a post-closing trial balance

Answer 38

equipment, accounts receivable, interest payable

Question 39

Section 404 of the Sarbanes-Oxely Act requires companies to

Answer 39

document and assess internal controls

Question 40

What is Additional paid-in capital ?

Answer 40

Stockholders Equity and it’s on the balance account