Principles of Accounting I Chapter 1-3

Which of the following decreases equity?

Expenses

The process to go from transactions and events to financial statements begins with

Identifying each transaction and event from source documents

The debt ratio is used:

to measure the risk associated with a company’s use of liabilities

Unearned revenues are

Liabilities recorded when customers pay in advance for products or services

A credit:

Right side of a T-account

the length of time covered by a set of periodic financial statements, primarily a year for most companies, is referred to as the

accounting period

A company had the following accounts and amounts on December 31 using this information compute total assets for the company

$51,000. (16000+14500+20500)

If a company purchases equipment costing $6,100 on credit, the effect on the accounting equation would be:

assets increase $6,100 and liabilities increase $6,100

The rule that requires revenue to be recognized when (1) goods or services are provided to customers and (2) at the amount expected to be received from the customer is called the:

revenue-recognition principle

Adriana Graphic Design receives $1,700 from a client billed in a previous month for services provided. Which of the following general journal entries will Adriana Graphic Design make to record this transaction?

Cash debit Accounts receivable credit

If assets are $348,000 and liabilities are $188,000, then equity equals:

$160,000

Which of the following is an external user of accounting information?

lender

If a company receives 11,800 from a client for services provided the effect on the accounting equation would be

assets increase $11,800 and equity increases $11,800

The time period assumption:

Presume sthat the life of a company can be divided into time periods, such as months and years, and their useful reports can be prepared for those periods

A company list of all ledger accounts with an identification number assigned to each account is called a

chart of accounts

A law firm billed a client $1900 for work performed in the current month. which of the following general journal entries will the firm make to record this transaction

Debit accounts receivable, $1900; credit services revenue, $1900

A company purchased $20,100 of equipment on credit. the journal entry to record this transaction consists of a

debit two equipment for $20,100; credit to accounts payable for $20,100

A company provided $12,000 of consulting services on account. The customer promises payment in 30 days. Identify the journal entry below that properly records this transaction.

accounts receivable debit 12000, consulting services revenue credit 12000

A company receives $2000 cash in advance of providing landscaping services to a customer. Which of the following general journal entries will the company make to record this transaction?

Cash debit $2000, unearned revenue $2000

Determine the net income of a company for which the following information is available for the month of July (revenue - expense):

Employee salaries expense: $183,000

Interest expense: 13,000

Rent expense: 23,000

Consulting revenue: 412,000

$193,000