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35 Cards in this Set
- Front
- Back
Which of the following organizations is responsible for the creation and government of accounting standards in the United States? |
Financial Accounting Standards Board |
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The Equity of Autumn Company is $160,000 and total liabilities are $50,000. What are the total assets? |
$210,000
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Lush Lawns Corporation earned $1,000 for lawn mowing services rendered. The customer promised to pay at a later time. Which of the following accounts increases? |
Accounts Receivable |
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Venus Inc. paid $12,000 on accounts payable. How does this transaction affect the accounting equation of Venus? |
Assets decrease by $12,000, Liabilities Decrease by $12,000 |
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Which financial statement would be most helpful if an analyst wants to know the profitability of a company? |
Income Statement |
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Which one of the following account groups will decrease with a debit? |
Liabilities and Revenues |
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What are transactions first recorded in? |
The Journal |
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Mitchell Florist & Co. reported assets of $1,000 and equity of $450. What is the debt ratio? |
55% |
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Which of the following formula is used to calculate average total assets for the return on assets ratio? |
Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2 |
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Accounts receivable is a_________ account and has a normal __________ balance. |
Asset; Debit |
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If a company is using accrual basis accounting, when should it record revenue? |
When services are performed, even though cash may be received at a later date. |
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What is considered a fiscal year? |
Twelve Months |
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Adjusting entries are needed to correctly measure the___________. |
Net Income (Loss) on the income statement. |
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Accrued revenue is revenue that__________. |
The business has earned, but not yet collected in cash. |
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Unearned revenue is recorded when_________. |
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The entry to record depreciation includes a debit to the__________. |
Depreciation Expense Account |
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The advance cash payments of future expenses are called_________. |
deferred expenses |
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What is the term used for the difference between the Equipment account and accumulated depreciation account? |
Book Value |
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The adjusted trial balance shows__________. |
account balances after adjustment |
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The accountant for Jones Auto Repair Inc. failed to make an adjusting entry to record $5000 of unpaid salaries for the last two weeks of the year. Which of the following is an effect of this omission? |
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The accountant for Sparks Electric inc failed to make an adjusting entry to record $3000 of telephone expenses for the last two months of the year. Which part of the accounting equation will be effected? |
The total liabilities will be understated. |
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The Current ratio measures_________. |
A company's ability to pay current liabilities with current assets. |
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An account that is not closed at the end of the period is called a________________. |
Permanent Account |
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Which of the following accounts will be closed by crediting the Income Summary Account? |
Service Revenue |
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The formula for computing the current ratio is__________. |
Current Ratio = Current assets/Current Liabilities |
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The entry to record depreciation includes a credit to the ____________. |
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The accounting principle that ensures all expenses are recorded during the period when they are incurred and offsets those expenses against the revenues of the period is called the ___________. |
Matching Principle |
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What term is used to assume that a business' activities can be divided into small segments and that financial statements can be prepared for specific periods such as a month, quarter or year? |
Time Period Concept |
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A business should report the least favorable figures in the financial statement when two or more possible options are present? |
Conservatism
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Why do we use adjusting entries? |
So that the accounts are updated and we are seeing current numbers. To correct the incorrect numbers for the income statement. |
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Gross Margin/ Net Sales = ? |
Gross Margin % |
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Which account does revenue close into? |
Income Summary |
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What account does income summary close into? |
Expenses |
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Which account does income summary also close into? |
Retained Earnings |
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What does retained earnings close into? |
Dividends |