section 3

Question 1

Accounting seeks to communicate

Answer 1

business information

Question 2

Parties interested in business information are

Answer 2

investors and creditors

Question 3

general purpose financial statements provide information to

Answer 3

creditors and investors

Question 4

2 required general purpose financial statements are the

Answer 4

balance sheet and income statement

Question 5

what is asset valuation

Answer 5

the dollar amount of the assets on the balance sheet

Question 6

historical cost principle

Answer 6

assets will be valued at the price paid upon acquisition

Question 7

a cost that has not been previously recorded is

Answer 7

an expense

Question 8

a cost that has been previously recorded is

Answer 8

a liability

Question 9

T/F GAAP requires that assets are to be presented on the balance sheet at fair market values when determinable by appraisal

Answer 9

False

Question 10

what is a general ledger?

Answer 10

a file in the memory of a computerized accounting system or a book of accounts in a manual system that has a separate record for each kind of asset, liability or owners’ equity including each kind of revenue, expense, and dividend

Question 11

a general ledger

Answer 11

—is a file of records for each asset, liability and owners’ equity account of a company
—summarizes the effect of all a company’s transactions on each of its individual accounts

Question 12

T/F Recorded transactions are posted from a company’s trial balance to its general journal

Answer 12

false

Question 13

T/F a company’s trial balance reflects the ending balance amounts of all of its general ledger accounts, whether they are debit or credit balances

Answer 13

true

Question 14

T/F a company’s trial balance will balance when the total debit balances equal the total credit bAlances of all accounts included in the company’s general ledger

Answer 14

true

Question 15

T/F when a trial balance balances it means that the ending balances in the various accounts are correct

Answer 15

false

Question 16

T/F a company’s financial statements could be prepared directly from a company’s general ledger without the use of a trial balance

Answer 16

true

Question 17

accounts payable is for what kind of purchase?

Answer 17

inventory

Question 18

What does a trial balance demonstrate?

Answer 18

it indicates that there’s an equal amount of debits and credits

Question 19

on the Income Statement, GAAP requires you to show not only

Answer 19

the revenues and expenses, but also the earnings per share