Final Exam 101 -- MyAccountingLab Test 1 Flashcards

(40 cards)

1
Q

The accounting equation is

A

Assets = Liabilities + stockholders’ equity

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2
Q

What is NOT an objective of an internal control system

A

Risk minimization

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3
Q

To compute ending retained earnings on the statement of retained earnings

A

net income is added to the beginning retained earnings and dividends are subtracted from the beginning retained earnings

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4
Q

A petty cash fund

A

is established to pay on-the-spot purchases

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5
Q

Notes payable, accounts payable, taxes payable, and salaries payable are all examples of

A

liabilities

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6
Q

The revenue principle requires that a business record revenue when the business

A

delivers goods or services to a customer

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7
Q

To be useful, accounting information must have the fundamental qualitative characteristic of

A

relevance and faithful representation

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8
Q

A doctor performed surgery in March and did not receive cash from the patient until July. Under accrual accounting, when does the doctor recognizes revenue?

A

in March

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9
Q

Net income is computed as

A

Revenues - Expenses

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10
Q

If a bookkeeper mistakenly records a disbursement as $36 instead of the correct amount of $63, the error should be shown on the bank reconciliation as a

A

$27 deduction from the books

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11
Q

When services are performed on account

A

accounts receivable is increased

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12
Q

The left side of a T-account is always the

A

Debit Side

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13
Q

Goods purchased on account for future use in the business, such as store supplies, are called

A

Prepaid Expenses

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14
Q

Which accounts will be closed?

Which account will NOT be closed?

A

Dividends – will be closed
Service Revenue – will be closed
Utilities Expense – will be closed

Cash – will NOT be closed

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15
Q

What increases retained earnings?

A

Net Income

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16
Q

Any event that has a financial impact on the business and can be measured reliable is a(n)

A

transaction

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17
Q

the accounting period that ends on a date other than December 31 is called a

18
Q

Adjusting entries are

A

prepared at the end of the accounting period to update certain accounts

19
Q

When a company borrows cash from the bank

A

liabilities are increased

20
Q

The rules for recording accounting transactions include all of the following - bad question

21
Q

when preparing the financial statements

A

assets, liabilities, and stockholders’ equity are reported on the balance sheet

22
Q

What appears on the balance sheet

A

Assets, Liaiblities, Stockholders’ equity

23
Q

The correct data flow from one financial statement tot he next is

A

Income Statement
Statement of Retained Earnings
Balance Sheet
Statement of Cash Flows

24
Q
At the end of the current accounting period, account balances weer as follows:
Cash $15,000
Accounts Receivable $20,000
Common Stock $8,000
Retained Earnings $14,000
Liabilities for the period were...
A

$13,000

Assets = Liabilities + Stockholders’ Equity

or
Assets - Liabilities = Stockhodlers’ Equity
or
Assets - Stockholders’ Equity = Liabilities

25
Verifiabilitiy means that the information
must be capable of being checked for accuracy
26
The 3 main components of the fraud triangle are
Motive (pressure) Opportunity and Rationalization
27
A system of handling cash receipts by mail whereby customers remit payments directly to the bank, rather than through the company's mail is a(n)
lock-box system
28
When preparing a bank reconciliation, which of the following items should be added to the book balance
EFT receipts | Collection Items
29
The primary way that fraud is prevented and detected is through a proper system of
internal control
30
What is a correct statement about GAAP and IFRS?
The FASB and the IASB are working toward convergence of standards
31
What is a correct statement about the methods of accounting?
GAAP requires accrual accounting
32
A company received cash in exchange for issuing stock. This transaction increased assets and
Increased equity
33
The Financial Accounting Standards Board is responsible for establishing
generally accepted accounting principles (GAAP)
34
Under accrual accounting, revenue is recorded
when the services are performed, regardless of when the cash is received
35
The acronym GAAP stands for
generally accepted accounting principles (GAAP)
36
Regarding financial statement elements
revenues are inflows of resources that increase retained earings
37
A construction company paid $80,000 cash for equipment used in the business. At the time of purchase, the equipment had a list price of $90,000. When the balance sheet was prepared, the value of the equipment was $83,000. At what amount should the equipment be recorded in the records of the company?
$80,000 -- historical principal
38
What is the allocation of cost of an asset over the asset's useful life?
Depreciaion
39
What are the two most common types of fraud impactnig financial statements ?
fraudulent financial reporting | misappropriation of assets
40
If a company fails to record a sale on account
assets on the balance sheet will be understated