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Accounting Exam 1
2/23/15
| Question | Answer |
|---|---|
| The interest rate is always an _____ rate unless specified otherwise | annual |
| _____ allows businesses in Oregon and Mississippi to account for financial information in the same manner | USGAAP |
| Cost of goods sold is a _____ cost | product |
| Unearned revenue is an example of a ______ | liability |
| The difference between a company's sales and cost of goods sold is referred to as _____ | gross profit |
| _____ are not included in the computation of net income because they reflect a sharing of profits with owners and not a cost incurred to generate revenue | dividends |
| non operating activities that affect either a liability or a stockholders equity account are reported under the ____ section of the statement of cash flow | financing |
| Goodwill is an example of an ____ asset | intangible |
| The cost of PP&E asset minus its accumulated depreciation equals its _____ | book value |
| Accounts receivables are shown at their ______ in the balance sheet of a company | net realizable value |
| Marketable securities (investments) are valued at _____ on the balance sheet | market to market |
| The _____ principle states that revenue can only be recognized when it has been substantially earned | revenue recognition |
| The United States is considering switching from USGAAP to ____ | IFRS |
| _____ is the communication of financial information for decision-making purposes | accounting |
| The ____ basis of accounting records revenues when cash is received and expenses when cash is paid | cash |
| The allowance for doubtful accounts is classified as a ______ | contra asset |
| At least ____ accounts must be impacted by every transaction | two |
| PP&E is values at ____ on the balance sheet | historical cost |
| The difference between the cost of an asset and its salvage value is its | depreciable basis |
| ____ is a legal characteristic granted to owners in a corporation which restricts their loss to the amount of their investment | limited liability |
| ____ is an expense that reflects the cost of all inventory items acquired by customers | cost of goods sold |
| The ____ principle states that expenses should be reported in the same period as the revenues they help generate | matching |
| _____ accounting focuses on providing information to internal management | managerial |
| A _____ is a legal form of business which has been formerly recognized by a state government as separate entity from its owner | corporation |
| IFRS are produced by the _____ | IASB |
| A ____ is a type of organization legally separate from its owners | corporation |
| Unearned revenue is also referred to as a ____ revenue | deferred |
| The _____ oversees the audits of companies, that sell stock to the public | PCAOB |
| A company makes cash payment for ads which will run over the next three months. The amount aid for advertising should be classified as a _____ | current asset |
| The account used to show the cost of an asset that has been expensed is _____ | accumulated depreciation |
| _____ accounting refers to the rules established by USGAAP to standardize the timing of the recognition of revenues and expenses | accural |
| Depreciation is an application of the _____ principle | matching |
| An _____ is a decrease in net assets to generate revenue | expense |
| The _____ is primarily responsible for creating USGAAP | FASB |
| A number printed on the stock certificate to indicate the minimum amount owners must legally leave in the business (i.e. legal capital) is known as _____ | par value |
| _____ represents the issued shares of a corporation's own stock which have ben reacquired | treasury stock |
| In a statement of cash flows, paying salaries to employees for the year is classified as an ____ activity | operating |
| A _____ is probable future sacrifice of economic benefits arising from present obligations | liability |
| An asset's _____ is the amount it will be worth at the end of its useful life | salvage value |
| In order to be reported in an entity's financial statements, a contingent liability should be _____ and should be able to be estimated | probable |
| A _____ is a legal form of business created by one person who is liable for the debts of the business | proprietorship |
| Short-term liabilities to pay for goods and services that have been acquired on credit is known as _____ | accounts payable |
| _____ is a financial statement that is prepared for a particular date | balance sheet |
| An _____ is a future economic benefit owned or controlled by a company | asset |
| _____ is the difference between the ending accounts receivable balance and its net realizable value | allowance for bad debt |
| A _____ is a debt which will be satisfied within one year from the balance sheet date | current liability |
| Inventory is valued at _____ on the balance sheet | LCM (Lower of Cost or Market) |
| The face amount of a loan is called the _____ | principal |
| A _____ expense is one which is paid in advance of incurring it | prepaid |
| _____ sales generate accounts receivables | Credit |
| Salary expense is an example of a _____ cost | period |
| The role of the ____ is to regulate publicly traded companies and enforce financial reporting standards | SEC |
| Recognizing revenue when it is earned and not when cash is relied and recognizing expenses when the related goods or services are used rather than when they are paid for is called | accrual accounting |
| The Retained Earnings statement is based upon which of the following relationships? | Retained Earnings + Net Income - Dividends |
| The normal order in which the financial statements are prepared is | Income statement, statement of retained earnings, balance sheet |
| Publicly traded companies must file audited financial statements with the: | SEC |
| Financial statements are prepared | Primary for the benefit of persons outside the business organization |
| Which financial statement is prepared as of a specific date? | balance sheet |
| The accounting standards and concepts used in the preparation of financial statements are called: | GAAP (Generally accepted accounting principles) |
| From an accounting viewpoint, when is a business considered an entity separate from its owners? | when organized as a sole proprietorship, partnership, corporation |
| If a company purchases equipment for $65,000 by issuing a note payable, what will happen to assets? | Total assets will increase by $65,000 |
| Which business organization is recognized as a separate legal entity under the law? | Corporation |
| The revenue recognition principle indicated that revenue usually should be recognized and recorded in the accounting records: | when goods ar sold or services are rendered to customers |
| The matching principle: | Is used in accrual accounting to determine the proper period for recognition of expenses |
| How do you calculate gross profit? | sales - cost of goods sold |
| How do you calculate net operating income? | Gross profit - SGA |
Created by:
Ljg1237
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