Financial Accounting 1

Total Flash Cards » 113
 
1. 

A NEW ACCOUNT IS OPENED FOR EACH TRANSACTION ENTERED INTO BY A BUSINESS FIRM (true or false)

 

FALSE

 
2. 

THE RECORDING PROCESS BECOMES MORE EFFICIENT & INFORMATIVE IF ALL TRANSACTIONS ARE RECORDED IN ONE ACCOUNT. (true or false)

 

FALSE

 
3. 

WHEN THE VOLUME OF TRANSACTIONS IS LARGE, RECORDING THEM IN TABULAR FORM IS MORE EFFICIENT THAN USING JOURNALS & LEDGERS (true or false)

 

FALSE

 
4. 

AN ACCOUNT IS OFTEN REFERRED TO AS A T-ACCOUNT BECAUSE OF THE WAY IT IS CONSTRUCTED. (true or false)

 

TRUE

 
5. 

A DEBIT TO AN ACCOUTN ALWAYS INDICATES AN INCREASE IN THAT ACCOUNT. (true or false)

 

FALSE

 
6. 

IF A REVENUE ACOUNT IS CREDITED, THE REVENUE ACCOUNT IS INCREASED. (true or false)

 

TRUE

 
7. 

THE NORMAL BALANCE OF ALL ACCOUNT IS DEBT. (true or false)

 

FALSE

 
8. 

DEBIT & CREDIT CAN BE INTERPRETED TO MEAN "BAD" & "GOOD" RESPECTIVELY. (true or false)

 

FALSE

 
9. 

THE DOUBLE-ENTRY SYSTEM OF ACCOUNTING REFERS TO THE PLACEMENT OF A DOUBLE LINE AT THE END OF A COLUMN OF FIGURES. (true or false)

 

FALSE

 
10. 

A CREDIT BALANCE IN A LIABILITY ACCOUNT INDICATES THAT AN ERROR IN RECORDING HAS OCCURRED. (true or false)

 

FALSE

 
11. 

THE DIVIDENDS ACCT IS A SUBDIVISION OF THE RETAINED EARNINGS ACCT & APPEARS AS AN EXPENSE ON THE INCOME STATEMENT. (true or false)

 

FALSE

 
12. 

REVENUE ARE A SUBDIVISION OF STOCKHOLDERS' EQUITY. (true or false)

 

TRUE

 
13. 

UNDER THE DOUBLE-ENTRY SYSTEM, REVENUES MUST ALWAYS EQUAL EXPENSES. (true or false)

 

FALSE

 
14. 

TRANSACTIONS ARE ENTERED IN THE LEDGER FIRST & THEN THEY ARE ANALYZED IN TERMS OF THEIR EFFECT ON THE ACCOUNT. (true or false)

 

FALSE

 
15. 

BUSINESS DOCUMENTS CAN PROVIDE EVIDENCE THAT A TRANSACTION HAS OCCURRED. (true or false)

 

TRUE

 
16. 

EACH TRANSACTION MUST BE ANALYZED IN TERMS OF ITS EFFECT ON THE ACCT BEFORE IT CAN BE RECORDED IN A JOURNAL. (true or false)

 

TRUE

 
17. 

TRANSACTIONS ARE ENTERED IN THE LEDGER ACCT & THEN TRANSFERRED TO JOURNALS. (true or false)

 

TRUE

 
18. 

ALL BUSINESS TRANSACTIONS MUST BE ENTERED FIRT IN THE GENERAL LEDGER. (true or false)

 

FALSE

 
19. 

A SIMPLE JOURNAL ENTRY REQUIRES ONLY ONE DEBIT TO AN ACCOUNT & ONE CREDIT TO AN ACCOUNT. (true or false)

 

TRUE

 
20. 

A COMPOUND JOURNAL ENTRY REQUIRES SEVERAL DEBITS TO ONE ACCOUNT & SEVERAL CREDITS TO ONE ACCOUNT. (true or false)

 

FALSE

 
21. 

TRANSACTIONS ARE RECORDED IN ALPHABETICAL ORDER IN A JOURNAL. (true or false)

 

FALSE

 
22. 

A JOURNAL IS ALSO KNOWN AS A BOOK OF ORIGNAL ENTRIES. (true or false)

 

TRUE

 
23. 

A COMPLETE EFFECT OF A TRANSACTION ON THE ACCOUNTS IS DISCLOSED IN THE JOURNAL. (true or false)

 

TRUE

 
24. 

THE ACCOUNT TITLES USED IN JOURNALIZING TRANSACTIONS NEED NOT BE IDENTICAL TO THE ACCOUNT TITLES IN THE LEDGER. (true or false)

 

FALSE

 
25. 

THE CHART OF ACCOUNTS IS A SPECIAL LEDGER USED IN ACCOUNTING SYSTEMS. (true or false)

 

FALSE

 
26. 

A GENERAL LEDGER SHOULD BE ARRANGED IN STATEMENT ORDER BEGINNING WITH THE BALANCE SHEET ACCOUNTS. (true or false)

 

TRUE

 
27. 

THE # & TYPES OF ACCTS USED BY DIFFERENT COMPANYIES ARE THE SAME IF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ARE BEING FOLLOWED BY THE COMPANY

 

FALSE

 
28. 

POSTING IS THE PROCESS OF PROVING THE EQUALITY OF DEBITS & CREDITS IN THE TRIAL BALANCE. (true or false)

 

FALSE

 
29. 

AFTER A TRANSACTION HAS BEEN POSTED, THE REFERENCE OLUMN IN THE JOURNAL SHOULD NOT BE BLANK. (true or false)

 

TRUE

 
30. 

A TRIAL BALANCE DOES NOT PROVE THAT ALL TRANSACTIONS HAVE BEEN RECORDED OR THAT THE LEDGER IS CORRECT. (true or false)

 

TRUE

 
31. 

THE LEFT SIDE OF AN ACCOUNT IS?

 

THE DEBIT SIDE

 
32. 

WHICH ONE OF THE FOLLOWING IS NOT A PART OF AN ACCOUNT?

 

TRIAL BALANCE

 
33. 

AN ACCOUNT IS PART OF THE FINANCIAL INFORMATION SYSTEM & IS DESCRIBED AS WHAT TYPE OF ACCOUNT?

 

AN ACCOUNT IS A SOURCE DOCUMENT

 
34. 

THE RIGHT SIDE OF AN ACCOUNT IS?

 

THE CREDIT SIDE

 
35. 

AN ACCOUNT CONSISTS OF

 

A TITLE, A DEBIT SIDE, & A CREDIT SIDE

 
36. 

A T-ACCOUNT IS

 

A WAY OF DEPICTING THE BASIC FORM OF AN ACCOUNT.

 
37. 

A DEBIT TO AN ASSET ACCOUNT INDICATES

 

AN INCREASE IN THE ASSET

 
38. 

THE NORMAL BALANCE OF ANY ACCOUNT IS THE

 

SIDE WHICH INCREASES THAT ACCOUNT

 
39. 

THE DOUBLE-ENTRY SYSTEMS REQUIRES THAT EACH TRANSACTION MUST BE RECORDED IN...

 

IN AT LEAST TWO DIFFERENT ACCOUNTS

 
40. 

WHAT IS THE EXPANDED BASIC ACCOUNTING EQUATION?

 

ASSET + DIVIDENDS + EXPENSES = LIABILITIES + COMMON STOCK + REVENUE

 
41. 

IDENTIFY THE NORMAL BALANCE OF ACCOUNTING.

 

ASSETS -->DEBITS LIABILITIES --> CREDIT COMMON STOCK --> CREDIT REVENUES --> CREDIT EXPENSES --> DEBIT

 
42. 

THE BEST INTERPRETATION OF THE WORD CREDIT IS THE

 

RIGHT SIDE OF AN ACCOUNT

 
43. 

IN RECORDING AN ACCOUNTING TRANSACTION IN A DOUBLE-ENTRY SYSTEM THE AMOUNT...

 

OF THE DEBITS MUST EQUAL THE AMOUNT OF THE CREDITS

 
44. 

AN ACCOUNTING CONVENTION IS BEST DESCRIBED AS

 

AN ACCOUNTING CUSTOM

 
45. 

AN ACCOUNTANT HAS DEBITED AN ASSET ACCT FOR $1000 & CREDITED A LIABILITY ACCT FOR $500. WHAT CAN BE DONE TO COMPLETE THE RECORDING

 

CREDIT A DIFFERENT ASSET ACCOUNT FOR $500

 
46. 

AN ACCOUNTANT HAS DEBITED AN ASSET ACCT FOR $1000 & CREDITED A LIABILITY ACCT FOR $500. WHAT WOULD BE AN INCORRECT WAY OF RECORDING TRANSACTION?

 

DEBIT A STOCKHOLDERS' EQUITY ACCOUNT FOR $500

 
47. 

CAN DEBIT & CREDIT BE INTERPRETED TO MEAN INCREASE & DECREASE? (true or false)

 

FALSE

 
48. 

AN ACCOUNT WILL HAVE A CREDIT BALANCE IF THE

 

CREDITS EXCEED THE DEBITS

 
49. 

FOR THE BASIC ACCOUNTING EQUATION TO STAY IN BALANCE, EACH TRANSACTION RECORDED MUST

 

AFFECT TWO OR MORE ACCOUNTS

 
50. 

CREDITS DECREASE ASSETS & INCREASE LIABILITIES (true and false)

 

TRUE

 
51. 

ASSETS NORMALLY SHOW

 

DEBIT BALANCES

 
52. 

AN AWARENESS OF THE NORMAL BALANCES OF ACCOUNTS WOULD HELP YOU SPOT WHICH ERROR IN RECORDINGS.

 

A CREDIT BALANCE IN AN EXPENSE ACCOUNT

 
53. 

IF A COMPANY HAS OVERDRAWN ITS BANK BALANCE, THEN

 

ITS CASH ACCOUNT WILL SHOW A CREDIT BALANCE

 
54. 

WHAT ACCOUNT IS NOT A STOCKHOLDERS' EQUITY?

 

LIABILITIES

 
55. 

WHEN A CORPORATION DISTRIBUTES A DIVIDEND...

 

IT DOESN'T HAVE TO BE CASH, IT COULD BE ANOTHER ASSET

 
56. 

EXPLAIN HOW DIVIDENEDS INCREASES OR DECREASES WITH DEBIT & CREDIT

 

INCREASED WITH DEBITS AND DECREASED WITH CREDITS.

 
57. 

EXPENSES INCREASES STOCKHOLDERS' EQUTY (true or false)

 

FALSE

 
58. 

A CREDIT TO A LIABILITY ACCOUNT

 

INDICATES AN INCREASE IN THE AMOUNT OWED TO CREDITORS

 
59. 

1ST MONTH OF OPERATIONS, TOTAL DEBIT ENTRIES TO CASH ACCT AMOUNT TO $800 TOTAL CREDIT ENTRIES TO CASH AMOUNT TO$600. CASH ACCT HAS A...

 

$200 DEBIT BALANCE

 
60. 

THE USUAL SEQUENCE OF STEPS IN THE TRANSACTION RECORDING PROCESS IS.

 

ANALYZE --> JOURNAL --> LEDGER

 
61. 

IN RECORDING BUSINESS TRANSACTIONS, EVIDENCE THAT AN ACCOUNTING TRANSACTION HAS TAKEN PLACE IS OBTAINED FROM

 

BUSINESS DOCUMENTS

 
62. 

AFTER A BUSINESS TRANSACTIONS HAS BEEN ANALYZED & ENTERED IN THE BOOK OF ORIGINAL ENTRY, THE NEXT STEP IN RECORDING PROCESS IS...

 

LEDGER ACCOUNTS

 
63. 

THE FIRST STEP IN THE RECORDING PROCESS IS TO

 

ANALYZE THE TRANSACTION IN TERMS OF ITS EFFECT ON THE ACCOUNT

 
64. 

EVIDENCE THAT WOULD NOT HELP WITH DETERMING THE EFFECTS OF A TRANSACTION ON THE ACCOUNT WOULD BE...

 

AN ADVERTISING BROCHURE

 
65. 

AFTER TRANSACTION INFORMATION HAS BEEN RECORDED IN THE JOURNAL, IT IS TRANSFERRED TO THE

 

LEDGER

 
66. 

THE USUAL SEQUENCE OF STEPS IN THE RECORDING PROCESS IS TO

 

ANALYZE EACH TRANSACTION, ENTER THE TRANSACTION IN THE JOURNAL, & TRANSFER THE INFORMATION TO THE LEDGER ACCOUNTS.

 
67. 

THE FINAL STEP IN THE RECORDING PROCESS IS TO TRANSFER THE JOURNAL INFORMATION TO THE

 

LEDGER

 
68. 

THE RECORDING PROCESS OCCURS

 

REPEATEDLY DURING THE ACCOUNTING PERIOD

 
69. 

A JOURNAL PROVIDES

 

A CHRONOLOGICAL RECORD OF TRANSACTIONS

 
70. 

WHEN THREE OR MORE ACCOUNTS ARE REQUIRED IN ONE JOURNAL ENTRY, THE ENTRY IS REFERRED TO AS A

 

COMPOUND ENTRY

 
71. 

WHEN TWO ACCOUNTS ARE REQUIRED IN ONE JOURNAL ENTRY, THE ENTRY IS REFERRED TO AS A

 

SIMPLE ENTRY

 
72. 

ANOTHER NAME FOR JOURNAL IS

 

BOOK OF ORIGINAL ENTRY

 
73. 

THE STANDARD FORMAT OF A JOURNAL WOULD NOT INCLUDE

 

A T-ACCOUNT

 
74. 

TRANSACTIONS IN A JOURNAL ARE INITIALLY RECORDED IN

 

CHRONOLOGICAL ORDER

 
75. 

A JOURNAL IS NOT USEFUL FOR

 

PREPARING FINANCIAL STATEMENTS

 
76. 

A COMPLETE JOURNAL ENTRY DOES NOT SHOW

 

THE NEW BALANCE IN THE ACCOUNTS AFFECTED BY THE TRANSACTION

 
77. 

THE NAME GIVEN TO ENTERING TRANSACTION DATA IN THE JOURNAL IS

 

JOURNALIZING

 
78. 

THE STANDARD FORM OF A JOURNAL ENTRY HAS THE

 

DEBIT ACCOUNT ENTERED FIRST AT THE EXTREME LEFT MARGIN

 
79. 

WHEN JOURNALIZING, THE REFERENCE COLUMN IS

 

LEFT BLANK

 
80. 

ON 03/01/03 DONNA BUYS A COPIER FOR HER BUSINESS & FINANCES THIS PURCHASE ON CASH & A NOTE. HOW DO YOU JOURNALIZE

 

MAKE A COMPOUND ENTRY

 
81. 

A RECORD OF INCREASES & DECREASES IN SPECIFIC ASSET, LIABILITY, & STOCKHOLDERS' EQUITY ITEMS IS CALLED A

 

GENERAL LEDGER

 
82. 

THE USUAL ORDERING OF ACCOUNTS IN THE GENERAL LEDGER IS

 

ASSETS, LIABILITIES, STOCKHOLDERS' EQUITY, REVENUES, AND EXPENSES

 
83. 

MANAGEMENT COULD DETERMINE THE AMOUNTS DUE FROM CUSTOMERS BY EXAMING WHICH LEDGER ACCOUNT?

 

ACCOUNTS RECEIVABLE

 
84. 

THE LEDGER ACCOUNTS SHOULD BE ARRANGED IN

 

STATEMENT ORDER

 
85. 

A THREE COLUMN FORM OF ACCOUNT IS SO NAMED BECAUSE IT HAS COLUMNS FOR

 

DEBIT, CREDIT AND BALANCE

 
86. 

THE PROCEDURE OF TRANSFERRING JOURNAL ENTRIES TO THE LEDGER ACCOUNTS IS CALLED

 

POSTING

 
87. 

A NUMBER IN THE REFERENCE COLUMN IN A GENERAL JOURNAL INDICATES

 

THAT THE ENTRY HAS BEEN POSTED TO A PARTICULAR ACCOUNT

 
88. 

A CHART OF ACCOUNT FOR A BUSINESS FIRM LIST WHAT ACCOUNTS?

 

LISTS ACCOUNTS & ACCOUNT NUMBERS THAT IDENTIFY THEIR LOCATION IN THE LEDGER

 
89. 

POSTING

 

ACCUMULATES THE EFFECTS OF JOURNALIZED TRANSACTIONS IN THE INDIVIDUAL ACCOUNTS

 
90. 

AFTER JOURNAL ENTRIES ARE POSTED, THE REFERENCE COLUMN WILL SHOW...

 

OF THE GENERAL LEDGER WILL SHOW JOURNAL PAGE NUMBERS

 
91. 

THE EXPLANATION COLUMN OF THE GENERAL LEDGER

 

IS USED INFREQUENTLY

 
92. 

A NUMBERING SYSTEM FOR A CHART OF ACCOUNTS

 

USUALLY STARTS WITH BALANCE SHEET ACCOUNTS

 
93. 

THE FIRST STEP IN DESIGNING A COMPUTERIZED ACCOUNTING SYSTEM IS THE CREATION OF THE

 

CHART OF ACCOUNTS

 
94. 

A LIST OF ACCOUNTS & THEIR BALANCES AT A GIVEN TIME IS CALLED

 

A TRIAL BALANCE

 
95. 

IF THE SUM OF THE DEBIT COLUMN EQUALS THE SUM OF THE CREID COLUMN IN A TRIAL BALANCE, IT INDICATES

 

THE MATHEMATICAL EQUALITY OF THE ACCOUNTING EQUATION

 
96. 

A TRIAL BALANCE IS A LISTING OF

 

GENERAL LEDGER ACCOUNTS & BALANCES

 
97. 

CUSTOMARILY, A TRIAL BALANCE IS PREPARED

 

AT THE END OF AN ACCOUNTING PERIOD

 
98. 

A TRIAL BALANCE WOULD ONLY HELP IN DETECTING WHAT ERRORS?

 

A TRANSPOSITION ERROR WHEN TRANSFERRING THE DEBIT SIDE OF JOURNAL ENTRY TO THE LEDGER.

 
99. 

THE WORK SHEET IS A TYPE OF

 

WORKING PAPER

 
100. 

IN PREPARING CLOSING ENTRIES, WHAT COLUMN OF THE WORKSHEET IS MOST HELPFUL

 

THE INCOME STATEMENT COLUMNS

 
101. 

THE PROPER SEQUENCE FOR THE ACCOUNT CYCLE IS

 

ANALYZE, JOURNALIZE, POST, ADJUST, PREPARE STATEMENTS, CLOSE.

 
102. 

AFTER ALL THE CLOSING ENTRIES HAVE BEEN POSTED, THE BALANCE OF THE INCOME SUMMARY ACCOUNT WILL BE

 

ZERO

 
103. 

THE POST-CLOSING TRIAL BALANCE WILL

 

CONTAIN ONLY BALANCE SHEET ACCOUNTS

 
104. 

AN IMPORTANT PURPOSE OF CLOSING ENTRIES IS TO SET PERMANENT ACCOUNT BALANCES TO ZERO IN ORDER TO BEGIN THE NEXT PERIOD (T/F)

 

FALSE

 
105. 

THE PREPARATION OF REVERSING ENTRIES IS A REQUIRED STEP IN THE ACCOUNTING CYCLE (T/F)

 

FALSE

 
106. 

A WORK SHEET CAN BE USED AS A BASIS FOR POSTING THE ADJUSTMENTS TO THE LEDGER (T/F)

 

FALSE

 
107. 

THE CONTENTS OF THE OWNER'S EQUITY SECTION OF A PROPRIETORSHIP IS THE SAME AS THE CONTENT OF THE OWNER'S EQUITY SECTION OF A CORPORATION

 

FALSE

 
108. 

ADJ. ARE JOURNALIZED & POSTED ONLY AT THE ENDING PERIOD, WHEREAS CORRECTING ENTRIES ARE JOURNALIZED & POSTED WHENEVER AN ERROR IS DISCOVERED (T/F)

 

TRUE

 
109. 

CURRENT ASSETS ARE RESOURCES THAT CAN BE REALIZED IN CASH, BUT ARE NOT EXPECTED TO BE CONVERTED INTO CASH WITHIN 1 YR OF THE OPERATING CYCLE, WHICHEVER IS LONGER. (T/F)

 

FALSE

 
110. 

LONG-TERM LIABILITES SUCH AS BANK NOTES PAYABLE, MORTGAGES PAYABLE, & BONDS PAYABLE ARE EXPECTED TO BE PAID FROM EXISTING CURRENT ASSETS. (T/F)

 

FALSE

 
111. 

THE BALANCE OF ACCUMULATED DEPRECIATION WIL APPEAR IN THE CREDIT SIDE OF THE WORK SHEET'S BALANCE SHEET COLUMN (T/F)

 

TRUE

 
112. 

THE RELATIONSHIP BETWEEN CURRENT ASSETS & CURRENT LIABILITIES IS IMPORTANT IN EVALUATING A COMPANY'S LIQUIDITY.

 

TRUE

 
113. 

INTANGIBLE ASSETS ARE NOT LISTED ON THE BALANCE SHEET BECAUSE THEY DO NOT HAVE PHYSICAL SUBSTANCE

 

FALSE