Study your flashcards anywhere!

Download the official Cram app for free >

  • Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off
Reading...
Front

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key

image

Play button

image

Play button

image

Progress

1/19

Click to flip

19 Cards in this Set

  • Front
  • Back
Before recording a business transaction, the accountant must determine three things:
a. When the transaction should be recorded (recognition)
b. What value, or dollar amount, to place on the transaction (valuation)
c. How the components of the transaction should be categorized (classification)
requires that one or more accounts be debited and one or more accounts be credited for each transition and that total dollar amounts of debits equal total dollar amounts of credits.
Double-entry system
Three parts to T-Account
a. Title that expresses name of asset, liability, or stockholder's equity account
b. left side = debit
c. right side = credit
work-paper listing of the accounts (typically in their order of appearance in the financial statements) with their end of period balances (debit or credit)
Trial Balance
Deciding whether to record a sale when the order for services is received or when the services are performed is an example of:

a. recognition issue
b. valuation issue
c. classification issue
d. communication issue
a. recognition issue
Which of the following statements is true?

a. The chart of accounts usually is presented in alphabetical order
b. The general ledger contains all the accounts found in the chart of accounts.
c. The general journal contains a list of the chart of accounts
d. Companies generally use the same chart of accounts.
b. The general ledger contains all the accounts found in the chart of accounts.
Which of the following is a liability account?
a. Accounts Receivable
b. Dividends
c. Rent Expense
d. Unearned Design Revenue
d. Unearned Design Revenue
Although debits increase assets, they also:

a. decrease assets
b. increase stockholder's equity
c. increase expenses
increase liabilities
c. increase expenses
Payment for a two-year insurance policy is recorded as a debit to

a. Prepaid Insurance
b. Insurance Expense
c. Cash
d. Accounts Payable
a. Prepaid Insurance
An agreement to spend $250 a month on advertising beginning next month requires

a. a debit to Advertising Expense
b. a debit to Prepaid Advertising
c. no entry
d. a credit to Cash
c. no entry
Transactions initially are recorded in the

a. trial balance
b. T account
c. journal
d. ledger
c. journal
To test the total of debits and the total of credits are equal, the accountant periodically prepares a

a. trial balance
b. T account
c. general journal
d. ledger
a. trial balance
When a liability is paid, which of the following is true?

a. Total assets and total liabilities remain the same
b. Total assets and total stockholder's equity decrease
c. Total assets decrease by the same amount that total liabilities increase
d. Total assets and total liabilities decrease
d. total assets and total liabilities decrease
Which of the following is not true about a proper journal entry?

a. All credits are indented
b. All debits are listed before the first credit
c. An explanation is needed for each debit and each credit
d. A debit is never indented, even if a liability or stockholder's equity account is involved
c. An explanation is needed for each debit and each credit
When cash is received in payment of an account receivable, which of the following is true?

a. Total assets increase
b. Total assets stay the same
c. Total assets decrease
d. Total assets and total stockholder's equity increase
b. Total Assets remain the same
Which of the following is increased by debits?

a. Dividends
b. Unearned Revenue
c. Wages Payable
d. Retained Earnings
a. Dividends
Which of the following is an asset?

a. Unearned Revenue
b. Prepaid Rent
c. Retained Earnings
d. Service Revenue
b. Prepaid Rent
Which of the following accounts is a liability?

a. Interest Payable
b. Interest Expense
c. Interest Receivable
d. Interest Income
a. Interest Payable
Which of the following accounts has a normal credit balance?

a. Prepaid Insurance
b. Dividends
c. Fees Earned
d. Advertising Expense
c. Fees Earned