Test Ch.1-3 Flashcards
Financial statements are the major means of communicating accounting information to interested parties
true
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
true
the basic accounting equation states assets=liabilities
false
accounting communities financial info about a business enterprises to both internal and external use
true
Which of the following would not be considered an external user of accounting data for GHI company?
Management
Basic accounting equation can be expressed as
Assets = Liabilities + Shareholder equity
Stockholder entity can be described as
ownership claim total assets
basic accounting equation cannot be restated as
assets + liabilities = stockholder entity
Stockholders equity is decreased by all of the following except…
sales of stocks
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
50,000 increase
internal users of accounting info include all of the following except
external
An account is often referred to as a T account because for the way it constructed
true
if a revenue account is credited the revenue account is increased
true
a journal is also known as a
book of original entry
an account consists of
three parts….name of account, left or debit side, right or credit side
which of the following is not part of an account
trial balance
A T-account is
a way of depicting basic form of an account.
A credit is not the normal balance for which
dividends (A.D.E..)
The best interpretation of the word credit is the
right side of an account
In recording an accounting transaction in a double entry system
amount of debits must equal credits
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?
Credit a different asset account for $700
A journal provides a…
a chronological record
The right side of an account is what?
the credit side
A chart of accounts usually starts with what?
assets
A trial balance is a listing of
general ledger of accounts
Revenue received before services are preformed are expenses paid before being used/consumed are both initially listed as liabilities
false…
only revenue received first is a liability
Financial statements can be prepared from the …… provided by an adjusted trail balance
true
unearned revenue is a pre-payment that require an adjusting entry when a service is preformed
true
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
Nov. 30th….
recognized when service is performed
Anything prepaid is an asset
true
Which of the following is an accordance w/ generally accepted accounting principal?
accrual basis
revenue recognition principal dictates that revenue should be recognized in accounting records…
when the service is performed
in a service type business, revenue is recognized
when service is performed
expense recognition principal states that expenses should be matched with revenue, another way to say this is
efforts with accomplishment
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?
February
