Accounting Test 1

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Accounting Test 1
2012-02-15 13:29:22

Note cards for accounting test
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  1. Assets=?
    Liabilites+Stockholders Equity
  2. Beginning Retained Earnings
    +Net Income
    - Dividends
    Ending R.E.
  3. What is it called when a customer owes money to the company?
    Accounts Recievable
  4. When the company owes the suppliers?
    Account Payable
  5. What increases assets? Decreases?
    • Debit increases
    • Credit decreases
  6. What increases liabilities? Decreases?
    • Credit increases
    • Debit decreases
  7. What increases S.E.? Decreases?
    • Credit increases
    • Debit decreases
  8. What is the Current Ratio?
    Current Assets divided by Current Liabilities
  9. Which accounting records revenues when cash is recieved and exepenses when cash is paid?
    Cash Basis
  10. Which account records revenues when they are earned, and expenses when they are incurred?
    Accural Basis
  11. Unearned Revenue is what kind of an account?
  12. Accounts Receivable is what kind of an account?
    • Asset
    • It's the right to collect cash from customers
  13. Prepaid expense is what kind of an account?
    Asset..Prepaid Rent
  14. DEAD?
    • Debit
    • Expenses
    • Assets
    • Dividends
  15. CURLS?
    • Credit
    • Unearned Revenue
    • Revenues
    • Liabilities
    • Stockholder's Equity
  16. What is an expense or revenue that is deferred on the income statement until a later period?
    Deferral Adjustment
  17. What is is called when you have earned revenue or incurred an expense but has NOT yet recorded it?
    Accural Adjustment
  18. What do you use when you are talking about depreciation?
    • Contra-Asset Account
    • Increases with a CREDIT, not DEBIT
  19. What is the normal balance?
    Whatever increases the account
  20. Prepaid Rent and Expense is an..
  21. Which 2 journal entries will Adjusting Journal entries effect?
    • Balance sheet
    • Income Statement
  22. A Current Asset is used up or converted into cash with how many months?
    12 months
  23. An asset is considered Long Term Asset after how many months?
    12 months
  24. What are the temporary accounts?
    Expenses, Revenues, and Dividends
  25. What are the permanent accounts?
    Assets, Liabilities, and S.E.
  26. What is the last step?
    Post Closing Trial Balance
  27. What decreases Stockholders Equity?
    Expenses and Dividends
  28. What does the Income Statement do?
    reports the amount of revenues earned and expenses incurred during the period.
  29. The purpose of the statement of retained earnings is:
    report how the profits of a company have been distributed to stockholders or retained in the business.
  30. A company has a loan that accrues interest at a rate of $20 a day. The company pays the interest once a quarter. Which of these would be an accurate adjustment for a month in which no payments are made?
    Debit Interest Expense and credit Interest Payable.
  31. A company pays its workforce on Fridays for a five day workweek. The payroll for a week is $100,000. If the accounting year-end falls on a Tuesday, the adjusting journal entry to record this will include a
    debit to Salaries Expense $40,000.
  32. What are operating activities?
    • The activities involved in earning revenues.
    • EX: The purchase or manufacturing of merchandise and the sale of the merchandise including marketing and administration.
  33. What are investing activities?
    The purchase and/or sale of long-term investments and property, plant, and equipment.
  34. What are financing activities?
    The issuance and/or the repurchase of a company's own bonds or stock. Dividend payments are also reported in this section.
  35. What happens when account receivable are collected?
    The amount of total assets are unchanged overall.
  36. Accrual basis accounting provides a better measure of operating performance than does cash basis accounting.

  37. What are total assets?
    • Accounts Receivable
    • Cash
    • Other Assets
    • Property and Equipment
    • Supplies
  38. Which concept should be applied when reporting on the balance sheet a piece of land that was bought for $50,000 five years ago, and which would probably now sell for $80,000?
    The Cost Principle