exam 1

Stockholders equity is equal to

Assets minus liabilities

Which of the following would not be considered an internal user of accounting data for a company

Internal Revenue Service

Performing services on account will have the following effects on the components of the basic accounting equation

Increase assets and increase stockholders equity

Which of the following events is not recorded in the accounting records

An employee is terminated

Payment of accounts payable affects the components of the accounting equation in the following way

Decreases assets and liabilities

Revenues and expenses are reported on the

Income statement

The financial statement that reports assets,liabilities, and stockholders equity is the

Balance sheet

A credit to liability account indicates a

increase in the liability

A list of accounts and their balances at a given point in time is called a

Trial balance

A credit to a liability account

Indicates an increase in the account

Which of the following is not part of the recording process

Preparing a trial balance

Accounts that normally have debit balances are

Assets,dividends, and expenses

The left side of an account

Is always the debit side

Credits

Increase liabilities and decrease assets

An account will show a debit balance if the

Total of the debit amounts exceeds the total of the credit amounts

Which of the following statements is false

Revenue accounts are increased by debits

Expanded accounting equation is

Assets=liabilities+common stock-dividends+revenues-expenses

The unearned service revenue account is a

Liability

A trial balance

Proves that all transactions have been recorded

Which of the following statements related to the adjusted trail balance is incorrect

It is prepared before adjusting entries have been made. It is made after

time period assumption states that

The economic life of a business can be divided into artificial time periods

The expense recognition principle matches

Expenses with revenues

Expenses paid in cash and recorded as assets before they are used are called

Prepaid expenses

The accumulated depreciation account

Is a contra asset account with a credit balance

All of the following are considered internal users of Red Company, Inc. except:

Shareholders of Red Company Inc.

Which of the following events cannot be recorded due to violation of the monetary unit assumption?

Customer satisfaction

Combining the activities of an individual’s personal vehicle insurance with their pizza restaurant’s utilities for the month would violate:

economic entity assumption

If assets increase $100,000 and stockholder’s equity decreases $20,000 then liabilities must:

increase $120,000

The financial statement that reports assets, liabilities and stockholder’s equity at a certain date correctly describes the:

Balance sheet

The normal balance of any account is the

left side. b. right side side which reduces that account.

On January 15th , a company receives cash for services to be performed on February 3rd , which of the following correctly depicts what accounts will be debited and credited on January 15th?

Cash will be debited and unearned service revenue will be credited

All of the following accounts are reported on the income statement except?

Prepaid insurance expense

An adjusting entry generally

Affects a balance sheet account and an income statement account

The adjusted trial balance is:

Used to prepare financial statements

Accumulated depreciation:

Has a normal credit balance and offsets equipment on the balance sheet

Which of the following correctly depicts how each of the following affects Stockholder’s Equity?

Expenses decrease stockholder’s equity

If equipment increases $20,000, for the accounting equation to balance, then which of the following could also happen:

Accounts payable increases $20,000