Test Ch.1-3

Question 1

Financial statements are the major means of communicating accounting information to interested parties

Answer 1

true

Question 2

economic entity assumption requires that the activities of an entity be kept separate and distinct from the activities of its owner and all other economic entities

Answer 2

true

Question 3

the basic accounting equation states assets=liabilities

Answer 3

false

Question 4

accounting communities financial info about a business enterprises to both internal and external use

Answer 4

true

Question 5

Which of the following would not be considered an external user of accounting data for GHI company?

Answer 5

Management

Question 6

Basic accounting equation can be expressed as

Answer 6

Assets = Liabilities + Shareholder equity

Question 7

Stockholder entity can be described as

Answer 7

ownership claim total assets

Question 8

basic accounting equation cannot be restated as

Answer 8

assets + liabilities = stockholder entity

Question 9

Stockholders equity is decreased by all of the following except…

Answer 9

sales of stocks

Question 10

If total liabilities increased by 30,000 and stockholders equity increased by 20,000 during a period of time, then total assets amount change by what amount and direction during same period

Answer 10

50,000 increase

Question 11

internal users of accounting info include all of the following except

Answer 11

external

Question 12

An account is often referred to as a T account because for the way it constructed

Answer 12

true

Question 13

if a revenue account is credited the revenue account is increased

Answer 13

true

Question 14

a journal is also known as a

Answer 14

book of original entry

Question 15

an account consists of

Answer 15

three parts….name of account, left or debit side, right or credit side

Question 16

which of the following is not part of an account

Answer 16

trial balance

Question 17

A T-account is

Answer 17

a way of depicting basic form of an account.

Question 18

A credit is not the normal balance for which

Answer 18

dividends (A.D.E..)

Question 19

The best interpretation of the word credit is the

Answer 19

right side of an account

Question 20

In recording an accounting transaction in a double entry system

Answer 20

amount of debits must equal credits

Question 21

An accountant has debited an asset account for 1,200 and credited liability account for 500. What can be done to complete the recording of the transaction?

Answer 21

Credit a different asset account for $700

Question 22

A journal provides a…

Answer 22

a chronological record

Question 23

The right side of an account is what?

Answer 23

the credit side

Question 24

A chart of accounts usually starts with what?

Answer 24

assets

Question 25

A trial balance is a listing of

Answer 25

general ledger of accounts

Question 26

Revenue received before services are preformed are expenses paid before being used/consumed are both initially listed as liabilities

Answer 26

false…

only revenue received first is a liability

Question 27

Financial statements can be prepared from the …… provided by an adjusted trail balance

Answer 27

true

Question 28

unearned revenue is a pre-payment that require an adjusting entry when a service is preformed

Answer 28

true

Question 29

A flowershop makes a large sale for 1,200 on Nov. 30th. the customer is sent a statement on Dec. 5th and check received Dec 10th. The flowershop follows G.A.A.P. and applies the principal. When is the 1,200 considered to be recognized

Answer 29

Nov. 30th….

recognized when service is performed

Question 30

Anything prepaid is an asset

Answer 30

true

Question 31

Which of the following is an accordance w/ generally accepted accounting principal?

Answer 31

accrual basis

Question 32

revenue recognition principal dictates that revenue should be recognized in accounting records…

Answer 32

when the service is performed

Question 33

in a service type business, revenue is recognized

Answer 33

when service is performed

Question 34

expense recognition principal states that expenses should be matched with revenue, another way to say this is

Answer 34

efforts with accomplishment

Question 35

A candy factory’s employees work overtime to finish an order sold on Feb 28th, office sends a statement to customer early March and payment received mid March. Overtime wages should be expressed when?

Answer 35

February