Pre-Assessment Flashcards
What is an example of a macro factor in planning a budget?
Interest rates
Which organization is focused on developing generally accepted accounting principles (GAAP) within the United States?
Financial Accounting Standards Board (FASB)
Which statement is a financial accounting statement?
Income statement
What is a benefit of adopting a single set of international accounting standards?
More uniform financial reporting among international companies
What is a drawback of the United States using International Financial Reporting Standards (IFRS)?
It would cost U.S. companies time and money in the short term to adopt.
What must an accountant record when journalizing a transaction?
Description of the transaction
Which financial statement is used to ensure that all debits and credits balance?
Trial balance
Which account balance is entered in the balance sheet columns from the adjusted trial balance?
Accounts receivable
Which step should an accountant perform next after analyzing source documents to determine their effects on the basic accounting equation?
Journalize the transactions
How is a worksheet used?
To help prepare adjusting entries and financial statements
Which accounts do closing entries move to retained earnings?
Expense and revenue
Why does a stockholder’s equity need to be completed prior to preparing a balance sheet?
The amount of ending balance from the statement of stockholder’s equity must be presented on the balance sheet.
Which account appears on a post-closing trial balance?
Capital stock
How can accounting technology affect small businesses?
By simplifying the daily posting of routine transactions with accounting packages
A company has a lease that requires the company to pay its annual office space rent in advance on December 31 of each year. On a quarterly basis, this expense totals $10,000.
How should the rent expense be recorded on the firm’s books in the following year to account for this transaction?
It should be recorded as a decrease of $40,000 in the asset accounts under prepaid rent.
When are revenue and expenses recognized in accrual basis accounting?
Revenue is recognized when earned, and expenses are recognized when incurred.
Which account will be a part of the adjusting journal entry to record the interest that has been incurred, but not paid, on a note payable?
Interest payable
What information is contained in the balance sheet and the income statement?
The balance sheet contains assets, liabilities, and stockholder’s equity, and the income statement contains revenues and expenses.
Which statement reflects effective internal controls?
Each check should be matched to an approved invoice or payment authorization.
A firm sells a truck to a customer for $35,000, and the customer is required to pay for the vehicle within 90 days.
How is this purchase entered on the firm’s accounts receivable ledger?
$35,000 debit
Which method is used when calculating uncollectible accounts expense using the income statement approach?
Percentage of net credit sales
A firm has the following assets and liabilities:
Cash: $10,500
Accounts Receivable: $35,000
Allowance for Doubtful Accounts: $2,000
Accounts Payable: $8,000
After preparing a classified balance sheet, what should the firm’s total assets and liabilities be?
Total assets of $43,500, and total liabilities of $8,000
What should a journal entry include when a company purchases inventory on account?
Increase in liabilities
An examination of Company A’s finances shows assets of $50,000 and stockholder’s equity of $45,000.
What are the liabilities for Company A?
$5,000