Accounting 2

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Accounting 2
2014-10-17 00:33:29

Accounting 2
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  1. The term “recognition” means to
    report an economic event in the financial statements.
  2. The term “accrual” describes an earnings event that is
    recognized before cash is paid or received
  3. The cost of a resource that will produce revenue in the
    future is an asset.
  4. Adjusting entries never affect a business’s Cash account.
  5. An adjusting entry to accrue salary expense is a
    claims exchange transaction.
  6. Revenues are temporary accounts, but liabilities are not
  7. In the closing process, the amounts in temporary accounts are moved to
    Retained Earnings, a permanent account.
  8. Immediately after closing, every temporary account has a balance of
  9. Accounts that are closed include expenses and
  10. After closing, the only accounts with non-zero balances are
    assets, liabilities, and equity.
  11. Two of the steps in the accounting cycle are adjusting the accounts and closing the accounts.
  12. Cash-basis accounting often fails to match expenses with revenues.
  13. The matching concept leads accountants to select the recognition alternative that produces the lowest amount of net income.
  14. A company sometimes recognizes a revenue or expense, even though the corresponding cash collection or payment does not occur in the same accounting period.
  15. The collection of an account receivable is a claims exchange transaction.
  16. Providing services to customers on account is an
    asset source transaction.
  17. An adjusting entry that decreases Unearned Service Revenue and increases Service Revenue is a claims exchange transaction.
  18. Revenue is the economic benefit derived from operating a business.
  19. Often, the recognition of revenue is accompanied by an increase in liabilities.
  20. Realization means
    the collection of cash
  21. an example of an accrual
    interest earned but not received
  22. The entry to recognize salary expense incurred but not yet paid involves which of
    the following?
    an increase in liabilities
  23. Recording accrued salary expense at the end of an accounting period causes an increase in
    Salaries Expense and
    an increase in a liability
  24. Which of the following costs is considered an expense?
    payment of cash for current utility bill, payment of cash for equipment or purchasing supplies would be assets
  25. Which of the following costs is considered an asset?
    purchase of equipment for cash
  26. The adjustment to record the completion of services for which clients had paid in
    advance would involve which of the following?
    a decrease in liabilities and an increase in equity
  27. If a company purchases supplies on account, this transaction would cause
    liabilities to increase
  28. Sort cash, accounts payable, common stock, land, accounts receivable
    • cash=assets
    • accounts payable=liable
    • common stock= stockholder's equity
    • land=assets
    • Accounts receivable= assets
  29. Recognition of revenue may result in which of the following?
    an increase in assets
  30. Which of the following financial statement elements is closed at the end of an
    accounting cycle?
  31. Which of the following accounts would not be closed at the end of an accounting
    Common Stock
  32. The matching concept refers to the "matching" of:
    expenses and revenues
  33. The result of the matching process is best reported on which financial statement?
    • Income
    • Statement
  34. Which of the following accounts is a permanent account?
    • Unearned
    • Subscription Revenue
  35. asset source transaction
    increases business's assets (cash) and its stockholders' equity
  36. asset exchange transaction
    reflects changes in the composition of assets
  37. Revenue
    represents an economic benefit a company obtains by providing customers with goods and services
  38. All asset use transactions do what
    decrease the total amount of assets and the total amount of claims on assets (liabilities or stockholders' equity).
  39. The assets and services consumed to generate revenue are called
  40. assets=
    liabilities+common stock+ retained earnings
  41. asset source transaction
    increase the total amount of assets and increase the total amount of claims
  42. asset exchange transactions
    decrease one asset and increase another asset.Total amount of assets is exchanged
  43. asset use transactions
    decrase the total amount of assets and the total amount of claims
  44. income statement
    matches the revenues that occur during a period when operating a business.
  45. If expenses are greater than revenues, the difference is called
    net loss
  46. The practice of pairing revenues with expenses on the income statement is called the
    matching statement
  47. balance sheet
    total assets balance with equal liabilities and stockholder's equity.
  48. statement of cash flows
    explained how a company obtained and used cash during the accounting period.
  49. financing activities include
    obtaining cash (inflow) from owners or paying cash (outflow) to owners (dividends)
  50. investing activities involve
    paying cash (outflow) to purchase long-term assets or receiving cash (inflow) from selling long-term assets.
  51. operating activities involve
    receiving cash (inflow) from revenue and paying cash (outflow) for expenses.
  52. At the end of the accounting period, revenue, expense, and dividend accounts data is moved to
    retained earnings
  53. transferring account balances into retained earnings is called
  54. since revenue, expense, and dividend accounts are closed each period, they are called
    temporary accounts
  55. --------- is a permanent account, bebcause it carries forward from one accounting period to the next
    retained earnings