Accounting Basics(Quick Test #2)

1. Which financial statement is considered to be a “snapshot” of a company’s financial position?

2. Which financial statement’s heading indicates a period of time (or time interval) such as the year ending December 31?

3. Total revenues minus total expenses is __________.

4. Which financial statement reports amounts according to operating, investing and financing activities?

5. Which financial statement reports the amount of a company’s accumulated depreciation?

6. The depreciation reported on a company’s financial statements is computed by using the estimated years of an asset’s __________.

7. Several years ago, a company purchased land at a cost of $100,000. Today the land has a market value of $175,000. The company’s current balance sheet should report the land at which amount?

8. An asset’s original cost minus its accumulated depreciation is the asset’s __________.

9. The amount of prepaid insurance that has expired during an accounting period should be reported as __________.

10. Which word indicates the right side of a general ledger account?

11. When an accounting entry is recorded in a general journal, it is customary to list first the account that is to be __________.

12. Under the accrual method of accounting, when are service revenues reported on the income statement?

13. A sale is made with credit terms that allow the customer to pay in 30 days. Under the accrual method of accounting, which account should be credited at the time of the sale?

14. When the company receives the money from its customer that was billed in the prior month, which account should the company debit?

15. When a retailer sells goods to its customers, the account Sales will be __________.

16. The account Accounts Payable is expected to have this type of balance.

17. The account Unearned Revenues is expected to have this type of balance.

18. When a company pays a supplier the amount owed on a previously recorded purchase, Accounts Payable will be __________.

19. Revenues cause a company’s total amount of owner’s equity or stockholders’ equity to __________.

20. When a company pays a portion of its Accounts Payable, the total amount of its owner’s equity or stockholders’ equity will __________.

21. Assets = Liabilities + Stockholders’ Equity is known as the basic accounting __________.

22. The account Retained Earnings will be included in which side of the accounting equation?

23. When a company uses the accrual method and it records interest expense that it incurred but has not yet paid, what is the effect on the basic accounting equation?

24. When an amount in the account Unearned Revenues becomes earned, the amount earned will be entered in Unearned Revenues as a __________.

25. Which accounts are not closed at the end of the accounting year?

26. Under the accrual method of accounting, revenues include the sales of products on credit and the fees earned from providing services on credit.

27. Under accrual accounting, which of the following is an expense of the current accounting period?

28. An advertisement with a cost of $900 is run in the media in December but it will be paid for in January. Under the accrual method of accounting, the $900 cost should be reported as an expense in which month?

29. Which of the following accounts will likely see an increase or decrease when a corporation prepares its financial statements at the end of the accounting year?

30. A corporation’s balance sheet and income statement are connected through the Retained Earnings account.