QUESTION 1

Accounting is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization's business activities.

True

False

QUESTION 2

We use the accounting equation to identify what a company owns and owes. The accounting equation is:

Assets = Liabilities + Equity

Assets = Liabilities Equity

Assets = Liabilities + Revenues

Equity = Liabilities + Revenues

QUESTION 3

______ are beliefs that distinguish right from wrong. These beliefs are accepted standards of gauging good and dishonest behavior.

Accounting Standards

Ethics

Generally Accepted Accounting Principles

FASB

QUESTION 4

The _____ is a collection of all accounts within a companys accounting system.

General Journal

Chart of Accounts

General Ledger

Balance Sheet

QUESTION 5

We use the accounting equation to identify what a company owns and owes. _____ are resources a company owns or controls, _____ are claims creditors have against a companys assets, and _____ is the owners claim on a companys assets.

QUESTION 6

In double entry accounting a credit to an asset account will represent an increase in the asset account balance; and a debit will represent a decrease in the asset account balance.

True

False

QUESTION 7

The purchase of supplies on credit will ____ assets and ____ liabilities.

Increase, decrease

Decrease, increase

Decrease, decrease

Increase, increase

QUESTION 8

During the accounting cycle, we analyze transactions to prepare statements.

True

False

QUESTION 9

The supplies account for a company has a $1,000 debit balance at the beginning of the year. Supplies of $2,000 were purchased during the year and debited to the Supplies account. A December 31 physical count shows $500 of supplies remaining at the end of the year. Assume no other adjusting entries are made during the year. Using the 3-step process for creating adjusting entries, calculate the adjustment amount for supplies (no journal entry is required).

$1,000 adjustment

$2,000 adjustment

$2,500 adjustment

$3,000 adjustment

QUESTION 10

During the accounting cycle, to complete step 7 you would:

Prepare post-closing trial balance--Test clerical accuracy of the closing procedures.

Prepare adjusted trial balance--Summarize adjusted ledger accounts and amounts.

Prepare statements--Use adjusted trial balance to prepare financial statements.

Close--Journalize and post entries to close temporary accounts.

QUESTION 11

The three financial statements that should be prepared during the accounting cycle are the:

Balance sheet, adjusted trial balance, income statement

Balance sheet, unadjusted trial balance, Statement of Owners Equity

Income statement, adjusted trial balance, Statement of Owners Equity

Balance sheet, Income statement, Statement of Owners Equity

QUESTION 12

An optional working paper, which is not a required report or an accounting record, but is used to prepare a company's unadjusted trial balance, adjusting entries, adjusted trial balance, and financial statements is a(n):

Adjusted trial balance

Worksheet

Post-closing trial balance

Unadjusted trial balance

General ledger

QUESTION 13

The two goals for completing the closing process are:

To identify accounts for closing and record the closing entries

To journalize and post transactions

To post transactions and prepare post-closing trial balance

To reset revenues, expenses, and withdrawal account balances to zero at the end of each period, and help summarize an accounting periods revenues and expenses.

QUESTION 14

Fill in the Blank: The _____ describes a companys financial position by the types and amounts of assets, liabilities, and equity -- at a point in time.

QUESTION 15

Return on Assets is useful in evaluating management, analyzing and forecasting profits, and planning activities.

True

False

QUESTION 16

The Income Statement:

Identifies cash inflows (receipts) and cash outflows (payments) over a period-of-time.

Summarize adjusted ledger accounts and amounts

Describes a companys revenues and expenses along with the resulting net income or net loss -- over a period-of-time due to earnings activities

Resets revenues, expenses, and withdrawal account balances to zero at the end of each period.

QUESTION 17

An internal control system consists of the policies and procedures used to:

Protect assets and Ensure reliable accounting

Urge adherence to company policies and Promote efficient operations

All of the above

None of the above.

QUESTION 18

The cost-benefit principle is the second limitation of _______.

Bank reconciliations

Petty cash controls

Voucher system of controls

Internal controls

QUESTION 19

The Unadjusted Trial Balance columns of a company's work sheet shows the Store Supplies account with a balance of $750. The Adjustments columns shows a credit of $425 for supplies used during the period. The amount shown as Store Supplies in the Balance Sheet columns of the work sheet is:

$325 debit

$325 credit

$425 debit

$425 credit

QUESTION 20

A company shows a $600 balance in Prepaid Rent in the Unadjusted Trial Balance columns of the work sheet. The Adjustments columns show expired rent of $200. This adjusting entry results in:

$200 decrease to net income

$200 increase to net income

$200 different between the debit and credit columns of the Unadjusted Trial Balance

An error in the Balance Sheet

QUESTION 21

This semester we have discussed four major financial statements. List the 4 financial statements and describe them. Make sure to include how they flow together.

QUESTION 22

Explain the purpose of adjusting entries at the end of a period.