Accounting 205 Final Exam Review

Front 1

Which of the following organizations is responsible for the creation and government of accounting standards in the United States?

Back 1

Financial Accounting Standards Board

Front 2

The Equity of Autumn Company is $160,000 and total liabilities are $50,000. What are the total assets?

Back 2

$210,000

Front 3

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?

Back 3

Accounts Receivable

Front 4

Venus Inc. paid $12,000 on accounts payable. How does this transaction affect the accounting equation of Venus?

Back 4

Assets decrease by $12,000, Liabilities Decrease by $12,000

Front 5

Which financial statement would be most helpful if an analyst wants to know the profitability of a company?

Back 5

Income Statement

Front 6

Which one of the following account groups will decrease with a debit?

Back 6

Liabilities and Revenues

Front 7

What are transactions first recorded in?

Back 7

The Journal

Front 8

Mitchell Florist & Co. reported assets of $1,000 and equity of $450. What is the debt ratio?

Back 8

55%

Front 9

Which of the following formula is used to calculate average total assets for the return on assets ratio?

Back 9

Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2

Front 10

Accounts receivable is a_________ account and has a normal __________ balance.

Back 10

Asset; Debit

Front 11

If a company is using accrual basis accounting, when should it record revenue?

Back 11

When services are performed, even though cash may be received at a later date.

Front 12

What is considered a fiscal year?

Back 12

Twelve Months

Front 13

Adjusting entries are needed to correctly measure the___________.

Back 13

Net Income (Loss) on the income statement.

Front 14

Accrued revenue is revenue that__________.

Back 14

The business has earned, but not yet collected in cash.

Front 15

Unearned revenue is recorded when_________.

Front 16

The entry to record depreciation includes a debit to the__________.

Back 16

Depreciation Expense Account

Front 17

The advance cash payments of future expenses are called_________.

Back 17

deferred expenses

Front 18

What is the term used for the difference between the Equipment account and accumulated depreciation account?

Back 18

Book Value

Front 19

The adjusted trial balance shows__________.

Back 19

account balances after adjustment

Front 20

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?

Front 21

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?

Back 21

The total liabilities will be understated.

Front 22

The Current ratio measures_________.

Back 22

A company's ability to pay current liabilities with current assets.

Front 23

An account that is not closed at the end of the period is called a________________.

Back 23

Permanent Account

Front 24

Which of the following accounts will be closed by crediting the Income Summary Account?

Back 24

Service Revenue

Front 25

The formula for computing the current ratio is__________.

Back 25

Current Ratio = Current assets/Current Liabilities

Front 26

The entry to record depreciation includes a credit to the ____________.

Front 27

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 ___________.

Back 27

Matching Principle

Front 28

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?

Back 28

Time Period Concept

Front 29

A business should report the least favorable figures in the financial statement when two or more possible options are present?

Back 29

Conservatism

Front 30

Why do we use adjusting entries?

Back 30

So that the accounts are updated and we are seeing current numbers. To correct the incorrect numbers for the income statement.

Front 31

Gross Margin/ Net Sales = ?

Back 31

Gross Margin %

Front 32

Which account does revenue close into?

Back 32

Income Summary

Front 33

What account does income summary close into?

Back 33

Expenses

Front 34

Which account does income summary also close into?

Back 34

Retained Earnings

Front 35

What does retained earnings close into?

Back 35

Dividends