final Flashcards Preview

Business 241- southern union > final > Flashcards

Flashcards in final Deck (211)
Loading flashcards...
1

sell products purchased from other businesses.

merchandising business

2

A(n) __________ changes basic inputs into products that are sold to customers.

manufactoring business

3

The business entity concept is important because

it limits economic data in the accounting system to data directly related to the activities of the business.

4

Equipment with a sales price of $100,000 is purchased at a discount of 10% by Aaron Company. At what value should the equipment be recorded in Aaron Company's records?

90,000

5

Which of the following concepts requires that economic data be recorded in dollars in the United States?

Unit of measure concept

6

Clayton Company purchased a new welder for $3,500. Clayton paid $1,000 cash down and will pay the remainder in 60 days. What effect does this transaction have on the accounting equation?

$2,500 net increase in assets and $2,500 increase in liabilities

7

Which of the following statements is not true?

None of these statements are true

8

Marvin Company negotiated the purchase of a new building for $250,000. Marvin paid a $100,000 cash down payment and will pay off the remainder over seven years. What effect does this transaction have on the accounting equation?

$150,000 net increase in assets and $150,000 increase in liabilities

9

Cool Taste Company recorded $5,000 in sales on account for the week. What effect does this transaction have on the accounting equation?

$5,000 increase in assets and $5,000 increase in owner's equity

10

Clayton Company purchased a new welder for $3,500. Clayton paid $1,000 cash down and will pay the remainder in 60 days. What effect does this transaction have on the accounting equation?

$2,500 net increase in assets and $2,500 increase in liabilities

11

All business transactions can be stated in terms of

changes in the elements of the accounting equation

12

The following data were taken from Reynolds Company's balance sheet:

Dec. 31, 20Y7 Dec. 31, 20Y6
Total liabilities $240,000 $210,000
Total owner's equity $160,000 $150,000

Which of the following best explains the change in creditors' risk from 20Y6 to 20Y7?

risk increased

13

The numerator in the calculation of the ratio of liabilities to owner's equity is

total liabilities

14

The ratio of liabilities to owner's equity is a tool used to assess a company's ability to

pay its creditors

15

the statement that provides the financial position of a company as of a specific date is the

balance sheet

16

The statement that reports net income or loss for a certain period in time is the

income statement

17

The amounts needed to calculate the ratio of liabilities to owner's equity can be found on

balance sheet

18

The right-hand side of a T account is called the

credit side

19

The chart of accounts is a

list of the accounts in the ledger.

20

Which of the following statements is FALSE regarding T accounts?
a. The excess of the credits of an owner's equity account over the debits is the balance of the account.
b. A T account is not the same thing as the general ledger.
c. The excess of the credits of an asset account over the debits is the balance of the account.
d. The excess of the credits of a liability account over the debits is the balance of the account.

The excess of the credits of an asset account over the debits is the balance of the account.

21

The journal entry to pay creditors on account would include

a debit to Accounts Payable

22

The journal entry to record fees of $13,500 earned on account would include

a debit to Accounts Receivable for $13,500 and a credit to Fees Earned for $13,500

23

The normal balance of an asset account is

a debit

24

The debits and credits for each journal entry are posted to the accounts

in the order in which they occur in the journal.

25

Claremore Company received $7,000 cash as payment from Tulsa Company for a sale made on account in the previous month. Which of the following journal entries should the company record?

Cash7,000
Accounts Receivable7,000

26

The process of posting is transferring the debits and credits from the

journal to the ledger

27

A fee earned on account was journalized and posted in error as a debit to Fees Earned and a credit to Accounts Receivable. The correcting journal entry would include

a debit to accounts receivable

28

Which of the following is not an error that would cause the trial balance to become unequal?
a. Balance entered in wrong column of account
b. Debit is posted as a credit, or vice versa
c. Column incorrectly added
d. The debit part of an entry posted to the wrong account as a debit

The debit part of an entry posted to the wrong account as a debit

29

If a fee of $2,850 earned from a client was debited to Accounts Receivable for $2,580 and credited to Fees Earned for $2,850, which of the following statements would be true?
a. The credit total of the trial balance would be higher by $270.
b. The wrong account is credited.
c. The trial balance totals would be equal.
d. The debit total of the trial balance would be higher by $270.

The credit total of the trial balance would be higher by $270

30

Horizontal analysis of a balance sheet

shows changes in individual asset, liability, and equity items over time.