Chapter 1-4 Mcgraw hill

The body of rules and procedures that guide the measurement and communication of financial accounting information in the United States is known as:.

Generally Accepted Accounting Principles (GAAP).

Independent auditors express an opinion on the:

Extent to which financial statements are in compliance with GAAP.

The role of the Public Company Accounting Oversight Board is to:

Ensure that auditors follow a strict set of guidelines when conducting their audits.

An expense has what effect on the accounting equation?

Decrease stockholders' equity

Which of the following accounts normally has a debit balance?

Salaries Expense

Which of the following accounts would normally have a credit balance?

Accounts Payable, Service Revenue, Common Stock.

A. Ensure that auditors follow strict guidelines when conducting their audits.

Public Company Accounting Oversight Board

B. Independent, private-sector group that is primarily responsible for setting financial reporting rules in the United States.

Financial Accounting Standards Boardselected

C. Develop a single set of high-quality, understandable global accounting standards.

International Accounting Standards Board

D. Enforce proper application of financial reporting rules for companies whose securities are publicly traded.

Securities and Exchange Commission

Consider the following cash flow items:

Pay amount owed to bank for previous borrowing.Pay utility costs.Purchase equipment to be used in operations.Purchase office supplies.Purchase one year of rent in advance.Pay workers' salaries.Pay for research and development costs.Pay taxes to the IRS.Sell common stock to investors.

How many of these cash flow items involve financing activities?

Two:

When customers pay for services with a debit card, the company should debit Cash and credit Service Revenue.

True

Below are cash transactions for a company that provides consulting services for mining companies.

a. Cash used for purchase of office supplies, $1,400.

$(1,400)selected answer correct

b. Cash provided from consulting to customers, $40,600.

40,600selected answer correct

c. Cash used for purchase of mining equipment, $63,000.not attempted

d. Cash provided from long-term borrowing, $50,000.not attempted

e. Cash used for payment of employee salaries, $23,000.(23,000)selected answer correct

f. Cash used for payment of office rent, $11,000.(11,000)selected answer correct

g. Cash provided from sale of equipment purchased in c. above, $21,500.not attempted

h. Cash used to repay a portion of the long-term borrowing in d. above, $35,000.not attempted

i. Cash used to pay office utilities, $3,300.(3,300)selected answer correct

j. Purchase of company vehicle, paying $9,000 cash.not attemptedCash flows from operating activities$1,900

operating activities

office supplies, employees salaries, office rent, office utilities, purchase of company vehicles.

Companies should set maximum purchase limits on debit cards and credit cards as part of internal controls.

True

Which of the following would be one of the ways that companies collect payments from customers?

Credit cards and debit cards

Electronic funds transfers

Mobile payments

Investing cash flows would include which of the following?

Purchase of a building with cash

When a company pays for services received using a credit card, it should credit Accounts Payable.

False. should credit " Credit Card Payable."

Calculate cash flows from financing activities

Cash provided from long-term borrowing, $51,000.

51,000

Cash used to repay a portion of the long-term borrowing in d. above, $35,500.

(35,500)

Payment of dividends to stockholders is considered a(n):

Financing cash flow.

Childers Service Company provides services to customers totaling $2,700, for which it billed the customers. How would the transaction be recorded?

Debit Accounts Receivable $2,700, credit Service Revenue $2,700

At the beginning of December, Coastal Corporation had $1,300 in supplies on hand. During the month, supplies purchased amounted to $3,500, but by the end of the month the supplies balance was only $1,900. What is the appropriate month-end adjusting entry?

Debit Supplies Expense $2,900, credit Supplies $2,900

Using the information below from the accounting records of Thomas Corporation, equity (also known as the owners' claims to the company's resources) must amount to:

Assets - Liabilities

When a company pays utilities of $1,890 in cash, the transaction is recorded as:

Debit Utilities Expense $1,890, credit Cash $1,890.

When a company pays $1,600 dividends to its stockholders, how would the transaction be recorded?

Debit Dividends; credit Cash

Summer Leasing received $11,300 from a customer to cover 24 months of rent in advance. How should Summer record this transaction?

debit cash ; credit deferred revenue

The ending Retained Earnings balance of Juan's Mexican Restaurant chain increased by $6.4 million from the beginning of the year. The company declared a dividend of $1.6 million during the year. What was the amount of net income during the year?

add Retained Earnings and Dividends to calculate net income= 8 million

investing activity

Purchase equipment to be used in operations

Financing activities

Pay amount owed to bank for previous borrowing.

Sell common stock to investors

Operating activities

Pay utility cost

Purchase office supplies

Purchase one year of rent in advance

Pay workers salaries

Pay taxes to the IRS

Record $190 purchase of office supplies using a debit card.

Debit Supplies$190, Credit $190

Record purchase of office equipment costing $680 using a credit card.

Debit equipment $689, Credit $689

Record payment of this month's utilities bill of $420 by issuing a check.

Debit utilities expense $420, Credit Cash $420

Accounting

The language of business

The maintenance of records and communication of information to decision makers

Managerial Accounting

internal users

Financial Accounting

external users

- stock value tied to profitability

- creditors should they lend

measurement of activities and communication to users

investors

ownership and right to share in profits

financing a business

financing activities

Investors- own stock

creditors- issue loans

Investing activities

Use of funds by the business to purchase long term assets

- property

- equipment

Operating Activities

revenue and expenses in operating business

Corporation

Separate entity from the owners

Limites liability

- double taxation. corporate earning then in dividend payment

Asset

resources of a company

Cash

Equipment

Inventory

buildings

Land

- current