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Jamie C accounting C100

The payment of a telephone bill for the month would include
debiting Telephone Expense and crediting Cash
A T account has which of the following three major parts?
a title, a debit side, and a credit side
If owner’s equity and liabilities increased during the period, then assets must also have increased.
True
The balance sheet reports assets, liabilities, and owner’s equity on a specific date.
True
Writing or using one of the latest technological advances to enter a transaction in the accounting records is called summarizing.
False
A cash payment on a loan affects which of the following accounts?
Cash and Notes Payable
Liability, owner’s capital, and revenue accounts normally have
credit balances
Any accounting period of twelve months’ duration is usually referred to as a(n)
Fiscal year
A credit
is on the right side
The accounting equation may be expressed as
owner’s equity = assets – liabilities.
Examining a transaction or event to determine its fundamental significance to the business so that the relevant information may be properly processed is called
analyzing
Service revenue received in cash is entered by
debiting Cash and crediting Service Revenue.
If the revenue of a period exceeds the expenses, the excess represents a net loss.
False
The accounting equation may be expressed as assets – liabilities = owner’s equity.
True
Corrections in accounts should be made by
the ruling method.
The financial statement that should be completed first is the
Income statement
The principal accounting officer of a company is called a pubic accountant.
False
Jason purchased office equipment for $4,800 on account. This transaction would
increase assets and increase liabilities.
Stephen purchased office supplies for $800 in cash. This transaction would
increase one asset and decrease another asset.
Increases to owner’s equity may be from
revenue that is derived from sales of goods or services.
Financial statements commonly prepared by businesses include an income statement, a statement of owner’s equity, and a balance sheet.
True
Footings in T accounts
are used for accounts with more than one debit or credit.
It is not necessary to measure a business transaction in dollars.
False
An increase or decrease in any asset, liability, owner’s equity, revenue, or expense is always accompanied by an offsetting change within the basic accounting elements.
True
The financial statement that shows the state of the firm’s assets, liabilities, and owner’s equity on a specific date is called a(n)
balance sheet.
The sum of the debits must equal the sum of the credits on the trial balance.
True
An example of an expense is
investments.
Payment of a telephone bill represents an increase in a(n)
Expense
The person who reviews the operating and accounting control procedures adopted by management to make sure the controls are adequate may be referred to as a(n)
internal auditor.
Stockholders own which type of business?
corporation
The Financial Accounting Standards Board develops generally accepted accounting principles to provide some assurance that companies are reporting business activities in a similar manner.
True
The accounts in the chart of accounts are arranged in
numerical order
If cash is paid for office rent, the transaction includes
debiting Rent Expense and crediting Cash.
Cash is used to pay for a car for personal use by the owner. The transaction includes
debiting Capital and crediting Cash.
Increases are entered on the credit side of a(n)
drawing account.
Generally accepted accounting principles are procedures and guidelines to be followed in the accounting/reporting process.
True
Since financial information is communicated in accounting terms, accounting is said to be the “language of business.”
True
The person who records or enters information in accounting records may be referred to as a(n)
Accounting Clerk
Stockholders may have very little influence on business decisions.
True
The accounting function of classifying is
sorting and grouping similar items together.
Reviewing the events that have taken place and determining how this affects the business is called interpreting.
False
To debit an account is to enter an amount on the left side of the account.
True
The purpose of accounting is to provide financial information about a business to individuals and organizations.
True
The flow of data through the accounting information system includes analyzing transactions, journalizing, posting, and preparing a trial balance.
True
If the owner of a company invested cash in a business enterprise, the transaction would include
debiting Cash and crediting Capital.
The standard T account includes all of the following EXCEPT
the current date.
The six major steps of the accounting process are analyzing, recording, classifying, summarizing, reporting, and interpreting.
True
Accountants design accounting information systems and analyze and interpret information.
True
Because the first formal accounting record of a transaction is made in a journal from source document information, a journal is commonly referred to as a(n)
book of original entry.
A chronological record of financial transactions expressed as debits and credits to accounts is provided by the
Journal
A business that purchases a product from another business to sell to customers is called a
merchandising business.
Payment of office rent represents a decrease in
Cash
Bringing together various items of information to determine or explain a result is
Summarizing
The accounting equation shows the relationship among the three basic accounting elements-assets, revenues, and owner’s equity.
False
The trial balance
shows only debit balances.
A decrease in owner’s equity may result from a(n)
withdrawal of cash from the business by the owner.
A business entity is an individual, association, or organization with control over economic resources and which engages in economic activities.
True
Posting from the journal to the ledger does NOT involve which of the following steps?
Enter the description of the entry.
The steps in the journalizing process include all of the following EXCEPT
enter the balance.
The Posting Reference column of the journal provides a cross-reference between the
journal and ledger.
Prepaid Insurance is an expense account.
False
Forms and papers that provide information about a business transaction are called
source documents.
Accounts that affect owner’s equity are
expenses, capital, and drawing.
Every entry in the journal should include all of the following EXCEPT
the balance of the accounts affected.
An accounts payable is an unwritten promise to pay a supplier for assets purchased or services rendered.
True
Asset and expense accounts normally have
credit balances.
The terms “profit and loss statement” or “operating statement” are sometimes used as synonyms for the balance sheet.
False
A credit represents a decrease in
An asset
A debit
is on the left side
Instead of T accounts, businesses are more likely to use a
four-column account.
A partnership is owned by stockholders or shareholders.
False
The income statement provides information about events over a period of a month, year, or other period of time.
True
Revenue accounts normally have debit balances.
False
The month in the journal is recorded
as the first entry on a page.
The fact that each transaction has a dual effect on the accounting elements provides the basis for what is called
double-entry accounting.
If the person who is named as payee on a check transfers the right to receive the money by signing his/her name on the back of the check, the signature is called a
blank endorsement.
The depreciation system used by many businesses for tax purposes is the
Modified Accelerated Cost Recovery System.
Owner’s equity at the start of the period is $35,000; net income for the period is $30,000; the total investments by the owner is $15,000; and total withdrawals by the owner is $5,000. The owner’s equity at the end of the period is
$75,000.
The total revenue of the month of June amounted to $6,500; total expenses amounted to $3,500; and withdrawals amounted to $600. The net income for the month amounted to
$3,000
The Income Summary account is used to
close revenue accounts and expense accounts and update the owner’s capital account.
The journal entry to close the income summary account (showing a profit) includes
debiting Income Summary and crediting the owner’s capital account.
The balance in an expense account is closed to a(n)
income summary account.
The third pair of columns on a 10-column work sheet prepared at the end of the period would be the
Income Statement columns.
A petty cash fund of $200 has $17 in cash, $180 in petty cash vouchers, and $3 in miscellaneous receipts not included with the petty cash vouchers. The proper journal entry to replenish the fund would include a credit to Cash for
$183
A form of balance sheet that lists the liabilities and the owner’s equity sections below the assets section is called the
Report form
The fifth pair of columns on a 10-column work sheet prepared at the end of the period would be the
Balance Sheet columns.
The steps involved in handling all of the transactions and events completed during an accounting period, beginning with placing data in a book of original entry and ending with a post-closing trial balance, are referred to collectively as
the accounting cycle.
When assets are recorded at original value, they are recorded under the
historical cost principle.
Which step is taken at the end of the accounting period?
prepare a post-closing trial balance
The adjusting entry for the depreciation of office equipment for the period includes
debiting Depreciation Expense-Office Equipment and crediting Accumulated Depreciation-Office Equipment.
To record wages earned but not paid under the modified cash accounting method,
no entry is required.
Whenever the bank mails a credit memo to the depositor indicating the amount of interest credited to the account, the transaction that would be entered in the accounting records of the depositor would include
debiting Cash and crediting Interest Earned.
A separate explanation of each closing entry is necessary.
False
What is the correct sequence for closing the temporary accounts?
revenue accounts, expense accounts, Income Summary, drawing account
The matching principle in accounting requires the matching of
revenue earned with the expenses incurred to produce the revenue.
Owner’s equity can be increased through
investments by the owner.
The journal entry to close expense accounts includes
debiting Income Summary and crediting the expense accounts.
Net income is shown on the work sheet as a
debit in the Income Statement column.
Check No. 450, a payment of $45 for the telephone bill, was incorrectly entered on the check stub as $54. Which of the following adjustments needs to be made?
increase the book balance
A credit journal entry to the cash short and over account is used to record a cash overage.
True
A check involves three parties. The person directed to receive the money is called the
payee
The petty cash payments record indicates classified expenditures as follows: Automobile Expense, $20; Supplies Expense, $12; Postage Expense, $6; and Miscellaneous Expense, $5. The journal entry to replenish the petty cash fund would include a credit to Cash for
$43
Which of the following steps of the accounting cycle are in the correct order?
prepare a trial balance, make adjustments, prepare financial statements
After the closing entries are journalized and posted, which of the following accounts would NOT have a balance?
Delivery Fees
Supplies originally cost $500, but only $150 worth of supplies were used this period. The adjusting entry would be
debit Supplies Expense, $150; credit Supplies, $150.
The cost of an asset that is subject to depreciation is called
depreciable cost.
If a business records revenues when earned, regardless of whether cash has been received, and records expenses when they are incurred, the accounting system is a(n)
accrual basis of accounting.
To reconcile the bank statement, which of the following amounts would be subtracted from the bank statement balance?
outstanding checks
If the book value of an asset is $12,500 and the accumulated depreciation is $3,500, the original cost of the asset is
$16,000
In reconciling a bank statement, the bank statement balance is $1,000 and the balance per books is $1,205. A bank service charge is $5; a deposit in transit totals $500; and outstanding checks total $300. The journal entry for a bank service charge would include
debiting Miscellaneous Expense and crediting Cash.
When posting an adjusting entry to the general ledger, write
“adjusting” in the Item column.
In reconciling a bank statement, the bank statement balance is $1,000 and the balance per books is $1,205. A bank service charge is $5; a deposit in transit totals $500, and outstanding checks total $300. The adjusted bank balance and book balance is
$1,200
The bank statement for a checking account normally shows the
amount of deposits and other credits added during the period.
The order in which financial statements should be prepared is
income statement, statement of owner’s equity, balance sheet.
To reconcile the bank statement, which of the following amounts would be added to the checkbook balance?
amounts collected by the bank for the depositor’s account
The amount reported in the Balance Sheet columns of the work sheet for the owner’s capital represents the
beginning balance plus additional investments.
On a bank reconciliation, checks issued during the period that were not presented to the bank for payment before the bank statement was prepared are known as
outstanding checks.
A net loss is shown on the work sheet as a(n)
debit in the Balance Sheet columns.
After the closing entries have been posted, which of the following accounts would NOT have a balance?
Miscellaneous Expense
After the accounts are closed and the journal entries have been posted, which of the following accounts would have a balance?
Supplies
A special form of receipt showing the name of the payee, the purpose of the payment, and the account to be charged for each petty cash payment is known as a
petty cash voucher.
The balance sheet reports
Assets
To reconcile the bank statement, which of the following amounts would be subtracted from the checkbook balance?
Service charge
The fourth pair of columns on a 10-column work sheet prepared at the end of the period would be the
Income Statement columns.
To prove the equality of the debit and credit balances in the general ledger accounts after the closing entries have been journalized and posted, prepare the
post-closing trial balance.
To record the purchase of assets on account under the modified cash basis of accounting method,
debit the asset and credit Accounts Payable.
The time an asset is expected to last is called its
useful life
An asset cost $33,000. It has an expected useful life of 5 years and an expected salvage value of $3,000. Depreciation expense for the first year of the asset’s life using the straight-line method is
$6,000
To complete transactions with the bank, electronic funds transfer (EFT) systems use
computer
The second pair of columns on a 10-column work sheet prepared at the end of the period would be the
Adjustments columns.
Each check should be identified by its
ABA number
When recording closing entries in the general journal, which of the following is written in the Description column?
“closing entries”
Changes in owner’s equity that result from investments or withdrawals of assets by the owner are included in the
statement of owner’s equity.
To reconcile the bank statement, which of the following amounts would be added to the bank statement balance?
outstanding checks
The process of bringing the book and the bank balance into agreement is called
reconciling the bank statement.
A check involves three parties. The person who orders the bank to pay a certain amount of money is called the
endorser.
A check involves three parties. The bank in which the drawer has money on deposit is called the
drawee.
The total assets amount to $24,000 and the total liabilities amount to $18,000. The amount of the owner’s equity is
$6,000
An account used with a related account to bring about a decrease in the net amount of the two account balances is called a(n)
contra-account.
To use an ATM machine, the depositor must have a
PIN number
The check written to establish the petty cash fund is entered in the journal by
debiting Petty Cash and crediting Cash.
A debit to Accounts Receivable for $50 and a credit to Cash for $50 would be an accurate journal entry to record
not sufficient funds (NSF) checks.
What is the purpose of the post-closing trial balance?
to prove the balances in the general ledger accounts are correct
The journal entry to close the income summary account (showing a net loss) includes
debiting the owner’s capital account and crediting Income Summary.
A typical account number for a contra-account would be
185.1
Matching the cost of an asset with the revenue it is expected to produce is called
depreciation.
To sign the back of a check with the name of the company and “Pay to any bank” is an example of a
restrictive endorsement.
The owner’s equity in a business amounted to $56,000 at the beginning of the year and $100,000 at the end of the year. The owner had made no additional investments and had withdrawn $19,000 during the year. The net income for the year amounted to
$63,000
In completing the work sheet, what is the reason for adding the net income for the year to the Balance Sheet Credit column?
Owner’s equity is not up-to-date.
The journal entry to close revenue accounts includes
debiting Income Summary and crediting the revenue accounts.

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