ACC 220 first exam study guide

The role of accounting is to provide many different users with financial information. True or false?

True

A business is an organization in which basic resources or inputs, like materials and labor, are assembled and processed to provide outputs in the form of goods or services to customers. True or False?

True

The Financial Accounting Standards Board is the authoritative body that has primary responsibility for developing accounting principles. True of false?

True

The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing entities. True or false?

False

The financial statements of a proprietorship should include the owner's personal assets and liabilities. True or false?

false

The accounting equation can be expressed as Assets − Liabilities = Stockholder's Equity. True or false?

True

If the liabilities owed by a business total $300,000 and stockholders' equity is equal to $300,000, then the assets also total $300,000. True or false?

False

Paying an account payable increases liabilities and decreases assets. True or false?

False

Assets that are used up during the process of earning revenue are called expenses. True or false?

True

Which of the following entries records the acquisition of office supplies on account?

*"On account", or "on credit" means office supplies were purchased but not paid for yet.

a. Cash, debit; Office Supplies, credit
b. Accounts Receivable, debit; Office Supplies, credit
c. Office Supplies, debit; Accounts Payable, credit
d. Office Supplies, debit; Cash, credit

C

Generally accepted accounting principles require accrual-basis accounting. True or false?

True

The matching principle requires expenses be recorded in the same period that the related revenue is recorded.

True

Which of the following is false?
A) An example of deferred revenue is Unearned Rent.
B) Accruals are needed to adjust revenue (or expenses) when an unrecorded expense has been incurred or an unrecorded revenue has been earned.
C) Accruals adjusts revenue because cash payment happens before the delivery of goods and services.
D) Accruals adjusts revenue because cash payment happens after the delivery of goods and services.

C

Adjusting entries is booked at
A) The beginning of accounting periods
B) The middle of accounting periods
C) The end of accounting periods

C

Prepaid expenses have
a. been recorded as expenses and paid
b. not yet been paid but recorded as expenses
c. not yet been paid nor recorded as expenses
d. not yet been recorded as expenses but have been paid

D

The adjusting entry for gym memberships earned that were previously recorded in the unearned gym memberships account is
a. debit Gym Memberships Revenue; credit Unearned Gym Memberships
b. debit Gym Memberships Expense; credit Unearned Gym Memberships
c. debit Unearned Gym Memberships; credit Prepaid Gym Memberships
d. debit Unearned Gym Memberships; credit Gym Memberships Revenue

D

The unearned rent account has a balance of $72,000. If $18,000 of the $72,000 is unearned at the end of the accounting period, the amount of the adjusting entry is
a. $90,000
b. $36,000
c. $54,000
d. $18,000

C

How do you calculate Retained Earnings (Net income) ?

Net Income = Total Revenues - Total Expenses

Which of the accounts below would be closed by posting a debit to the account?
a. Fees Earned ( i.e., Revenue)
b. Miscellaneous Expense
c. Equipment
d. Unearned Revenue

A

The following accounts were taken from the Adjusted Trial Balance columns of the end-of-period spreadsheet for April 30, for Finnegan Co.:
Accumulated Depreciation $32,000
Fees Earned 78,000
Depreciation Expense 7,250
Rent Expense 34,000
Prepaid Insurance 6,000
Supplies 400
Supplies Expense 1,800

How much income statement do we report on the income statement of this period?

34,950

Accounts receivable is a ______________ account.

asset

Service revenue is a ____________ account.

revenue

Unearned revenue is a _____________ account.

liability

Prepaid rent is a __________ account.

asset

Wages expense is a _____ account.

expense

Accounts payable is a _______ account.

liability

What are the 5 types of accounts

assets, liabilities, equity, revenue, expenses

My company bought Inventory for $30. I just sold it for $35 in cash. What is the effect of the sale?
• A. Cash increase by $30
• B. Stockholders' equity increases by $35
• C. Profit increases by $5
• D. Liabilities decrease by $30

C

Debit increases an equipment account. True or false?

true

Debit decreases accounts payable. True or false?

true

Debit increases a revenue. True or false?

false

Which of the following statements is True?
• A. Accrual accounts adjust the recognition of revenue and expenses when cash payment happens after the delivery of goods and services.

• B. Deferral accounts adjust the recognition of revenue and expenses when cash payment happens after the delivery of goods and services.

• C. The adjusting process happens at the beginning of every accounting period

A

____________ accounts are when cash payment happens after the delivery of goods and service.

Accrual

___________ accounts are when cash payment happened before the delivery of goods and service.

Deferral

Prepaid expenses have
• a. Been recorded as expenses and paid
• b. Not yet been paid but recorded as expenses
• c. Not yet been paid nor recorded as expenses
• d. Not yet been recorded as expenses but have been paid

D

Which of the following is considered to be an accrued expense[i.e. payable accounts] by your company?
• a. Your company hired a computer technician who has been paid in advance to provide a long-term service, such as installing software updates as they become available and fix computer issues as they arise

• b. Your company hired a computer technician who just installed the latest software updates, but you have not received an in voice or made payment

• c. Your company hired a computer technician to install the latest software updates and was paid on the same day

B

The adjusting entry to record the depreciation of a mixer[equipment] for the fiscal period is
• a. debit Depreciation Expense; credit Accumulated Depreciation
.• b. debit equipment; credit Depreciation Expense.
• c. debit Accumulated Depreciation; credit Depreciation Expense.
• d. debit Depreciation Expense; credit equipment.

A