Financial Accounting 1

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

FALSE

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

FALSE

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

FALSE

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

TRUE

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

FALSE

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

TRUE

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

FALSE

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

FALSE

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

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

FALSE

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

FALSE

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

TRUE

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

FALSE

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

FALSE

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

TRUE

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

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

TRUE

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

FALSE

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

TRUE

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

FALSE

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

FALSE

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

TRUE

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

TRUE

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

FALSE

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

FALSE

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

TRUE

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

FALSE

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

FALSE

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

TRUE

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

TRUE

THE LEFT SIDE OF AN ACCOUNT IS?

THE DEBIT SIDE

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

TRIAL BALANCE

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

AN ACCOUNT IS A SOURCE DOCUMENT

THE RIGHT SIDE OF AN ACCOUNT IS?

THE CREDIT SIDE

AN ACCOUNT CONSISTS OF

A TITLE, A DEBIT SIDE, & A CREDIT SIDE

A T-ACCOUNT IS

A WAY OF DEPICTING THE BASIC FORM OF AN ACCOUNT.

A DEBIT TO AN ASSET ACCOUNT INDICATES

AN INCREASE IN THE ASSET

THE NORMAL BALANCE OF ANY ACCOUNT IS THE

SIDE WHICH INCREASES THAT ACCOUNT

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

IN AT LEAST TWO DIFFERENT ACCOUNTS

WHAT IS THE EXPANDED BASIC ACCOUNTING EQUATION?

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

IDENTIFY THE NORMAL BALANCE OF ACCOUNTING.

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

THE BEST INTERPRETATION OF THE WORD CREDIT IS THE

RIGHT SIDE OF AN ACCOUNT

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

OF THE DEBITS MUST EQUAL THE AMOUNT OF THE CREDITS

AN ACCOUNTING CONVENTION IS BEST DESCRIBED AS

AN ACCOUNTING CUSTOM

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

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

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

FALSE

AN ACCOUNT WILL HAVE A CREDIT BALANCE IF THE

CREDITS EXCEED THE DEBITS

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

AFFECT TWO OR MORE ACCOUNTS

CREDITS DECREASE ASSETS & INCREASE LIABILITIES (true and false)

TRUE

ASSETS NORMALLY SHOW

DEBIT BALANCES

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

A CREDIT BALANCE IN AN EXPENSE ACCOUNT

IF A COMPANY HAS OVERDRAWN ITS BANK BALANCE, THEN

ITS CASH ACCOUNT WILL SHOW A CREDIT BALANCE

WHAT ACCOUNT IS NOT A STOCKHOLDERS' EQUITY?

LIABILITIES

WHEN A CORPORATION DISTRIBUTES A DIVIDEND...

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

EXPLAIN HOW DIVIDENEDS INCREASES OR DECREASES WITH DEBIT & CREDIT

INCREASED WITH DEBITS AND DECREASED WITH CREDITS.

EXPENSES INCREASES STOCKHOLDERS' EQUTY (true or false)

FALSE

A CREDIT TO A LIABILITY ACCOUNT

INDICATES AN INCREASE IN THE AMOUNT OWED TO CREDITORS

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

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

ANALYZE --> JOURNAL --> LEDGER

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

BUSINESS DOCUMENTS

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

LEDGER ACCOUNTS

THE FIRST STEP IN THE RECORDING PROCESS IS TO

ANALYZE THE TRANSACTION IN TERMS OF ITS EFFECT ON THE ACCOUNT

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

AN ADVERTISING BROCHURE

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

LEDGER

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.

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

LEDGER

THE RECORDING PROCESS OCCURS

REPEATEDLY DURING THE ACCOUNTING PERIOD

A JOURNAL PROVIDES

A CHRONOLOGICAL RECORD OF TRANSACTIONS

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

COMPOUND ENTRY

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

SIMPLE ENTRY

ANOTHER NAME FOR JOURNAL IS

BOOK OF ORIGINAL ENTRY

THE STANDARD FORMAT OF A JOURNAL WOULD NOT INCLUDE

A T-ACCOUNT

TRANSACTIONS IN A JOURNAL ARE INITIALLY RECORDED IN

CHRONOLOGICAL ORDER

A JOURNAL IS NOT USEFUL FOR

PREPARING FINANCIAL STATEMENTS

A COMPLETE JOURNAL ENTRY DOES NOT SHOW

THE NEW BALANCE IN THE ACCOUNTS AFFECTED BY THE TRANSACTION

THE NAME GIVEN TO ENTERING TRANSACTION DATA IN THE JOURNAL IS

JOURNALIZING

THE STANDARD FORM OF A JOURNAL ENTRY HAS THE

DEBIT ACCOUNT ENTERED FIRST AT THE EXTREME LEFT MARGIN

WHEN JOURNALIZING, THE REFERENCE COLUMN IS

LEFT BLANK

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

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

GENERAL LEDGER

THE USUAL ORDERING OF ACCOUNTS IN THE GENERAL LEDGER IS

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

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

ACCOUNTS RECEIVABLE

THE LEDGER ACCOUNTS SHOULD BE ARRANGED IN

STATEMENT ORDER

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

DEBIT, CREDIT AND BALANCE

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

POSTING

A NUMBER IN THE REFERENCE COLUMN IN A GENERAL JOURNAL INDICATES

THAT THE ENTRY HAS BEEN POSTED TO A PARTICULAR ACCOUNT

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

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

POSTING

ACCUMULATES THE EFFECTS OF JOURNALIZED TRANSACTIONS IN THE INDIVIDUAL ACCOUNTS

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

OF THE GENERAL LEDGER WILL SHOW JOURNAL PAGE NUMBERS

THE EXPLANATION COLUMN OF THE GENERAL LEDGER

IS USED INFREQUENTLY

A NUMBERING SYSTEM FOR A CHART OF ACCOUNTS

USUALLY STARTS WITH BALANCE SHEET ACCOUNTS

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

CHART OF ACCOUNTS

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

A TRIAL BALANCE

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

A TRIAL BALANCE IS A LISTING OF

GENERAL LEDGER ACCOUNTS & BALANCES

CUSTOMARILY, A TRIAL BALANCE IS PREPARED

AT THE END OF AN ACCOUNTING PERIOD

A TRIAL BALANCE WOULD ONLY HELP IN DETECTING WHAT ERRORS?

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

THE WORK SHEET IS A TYPE OF

WORKING PAPER

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

THE INCOME STATEMENT COLUMNS

THE PROPER SEQUENCE FOR THE ACCOUNT CYCLE IS

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

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

ZERO

THE POST-CLOSING TRIAL BALANCE WILL

CONTAIN ONLY BALANCE SHEET ACCOUNTS

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

FALSE

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

FALSE

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

FALSE

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

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

TRUE

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

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

FALSE

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

TRUE

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

TRUE

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

FALSE