Term
what is not a balance sheet item, assets, common stock, retained earnings, or revenues |
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Definition
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Term
retained earnings at the end of each year is calculated using what? |
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Definition
beginning retained earnings, net income, dividends |
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Term
what accounts represent the resources of a company? |
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Definition
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Term
if a company has gone bankrupt, its financial statements likely violate what assumption? |
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Definition
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Term
liabilities are best defned as what? |
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Definition
debts or obligations the company owes resulting from past transactions |
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Term
if a company has stockholder's equity of $60,000 at the end of the year, what is always true? |
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Definition
the company's assets exceed liabilities by $60,000 |
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Term
true or false, operating activities include transactions that relate to the primary operations of the company? |
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Definition
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Term
true or false, dividends represent a return of the company's profits to its owners, the stockholders? |
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Definition
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Term
true or false, financial accounting has an impact on everyday business decisions as well as wide-ranging economic consequences? |
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Definition
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Term
true or false, if total libilities of a company equal $16,000 and total stockholder's equity equals $9,000 then total assets equl $7,000? |
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Definition
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Term
true or false, any transaction that affects the income statement ultimately affects the blance sheet through the balance of retained earnings |
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Definition
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Term
true or false, investing cash flows generally include cash receipts and case payments for transactions involving revenue and expenses |
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Definition
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Term
McGill purchases a delivery truck to better service its customers. This purchase is classified as what type of activity? |
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Definition
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Term
What is the equation that best describes the income statement? |
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Definition
revenues - expenses = net income |
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Term
true or false, auditors are trained individuals hired by a party to express a professional opinion of the accuracy of that company's financial statements |
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Definition
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Term
the statement of stockholder's equity is a financial statement that summarizes the changes in stockholder's equity over an interval of time |
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Definition
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Term
what form of business organization is legally separate from its owners? |
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Definition
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Term
what is not a major section in the statement of cash flows? |
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Definition
cash flows from customers |
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Term
what is the primary purpose of closing entries? |
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Definition
update the balance of retained earnings and prepare revenue, expense, and dividend accounts for next periods transactions |
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Term
on april 1, a $3,000 premium on a one-year insurance policy on equipment was paid and charged to prepaid insurance. at the end of the year, the financial statements would report what? |
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Definition
insurance expense, $2,250; prepaid insurance $3,000 (3,000/12 months = 250 per month, 9 months til end of year = 2,250 insurance expense) |
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Term
the closing entry for expenses includes what? |
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Definition
debit retained earnings, credit expenses |
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Term
permanent accounts would not include what? |
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Definition
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Term
which of the following is true about adjusting entries? |
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Definition
they are a necessary part of accrual-basis accounting |
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Term
when are accrual-basis revenues recorded? |
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Definition
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Term
"all costs that are used to generate revenue are recorded in the period the revenue is recognized." this is the definition of which principle in accounting? |
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Definition
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Term
when a company makes an end-of-period adjusting entry which includes a credit to prepaid rent, the debit is usually made to what? |
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Definition
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Term
which would temporary accounts not include: salaries payable, advertising expense, supplies expense, dividends |
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Definition
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Term
what is the formula for change in retained earnings? |
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Definition
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Term
the retained earnings account had a beginning credit balance of $26,000. during the period, the business had a net loss of $12,000, and the company paid dividends of $8,000. the ending credit balance in the retained earnings account is what? |
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Definition
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Term
true or false, paying wages to company employees is an example of an adjusting entry |
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Definition
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Term
which of the following does cash flows from financing include: lending, salaries paid, the sale of land, dividends paid |
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Definition
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Term
what is the petty cash fund? |
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Definition
small amount of cash ept on hand to pay for minor purchases |
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Term
what is a bank reconciliation? |
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Definition
matching the balance of cash in the bank account with the balance of cash in the company's own records |
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Term
what is the Sarbanes-Oxley Act? |
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Definition
prompted by accounting scandals, sets forth new guidelines related to auditor-client relations and additional internal controls |
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Term
the statement of cash flows reports cash flows from what activities? |
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Definition
financing, investing, and operating |
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Term
true or false, cash flows from investing activities include borrowing |
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Definition
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Term
which of the following methods of payment would not be recorded as a cash sale: check, debit card, credit card, on account |
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Definition
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Term
under SOX, how long myst auditors retain working papers following an audit? |
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Definition
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Term
what key piece of legislation ws passed in response to accounting scandals by Enron, Worldcom, and others? |
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Definition
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Term
a company's cash balance is reported in which two financial statements? |
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Definition
balance sheet and statement of cash flows |
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Term
true or false, accounts receivable is a common example of a cash equivalent |
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Definition
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Term
what is separation of duties and what does it pertain to? |
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Definition
individuals who have physical responsibility for assets should not also have a access to accounting records. Important for internal controls |
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Term
when a company makes an end-of-period adjusting entry which includes a debit to supplies expense, the usual credit is made to what? |
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Definition
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Term
when using an aging method for estimating uncollectible accounts, what estimate, if any, is made? |
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Definition
older accounts are considered less likely to be collected |
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Term
what does 2/10, n/30 mean? |
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Definition
this is shorthand for a discount if amount is paid in a given time period. 2/10, n/10 means a 2% discount is given if the amount is paid with in 10 days, otherwise "net thirty" the full amount must be paid within 30 days |
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Term
when a customer makes a payment on account what happens to the company's accounts? |
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Definition
credit accounts receivable, debit cash account |
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Term
hughes aircraft sold an airplane for $380,000, receiving a $50,000 down payment and a 12% note for the balance, this transaction would include what account activity? |
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Definition
debit to notes receivable |
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Term
the percentage of credit sales method of accounting for uncollectible accounts is sometimes described as what? |
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Definition
the income statement method |
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Term
collections of accounts receivable that previously have been written off are credited to what account? |
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Definition
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Term
when a note is paid with interest after a certain time period, what account activity takes place? |
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Definition
debit cash account, credit interest revenue account, credit notes receivable account |
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Term
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Definition
firt in first out, method of determining inventory cost that states that the first goods purchased are the first goods to be sold |
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Term
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Definition
last in first out, last goods purchased are first goods sold |
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Term
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Definition
method for determining inventory cost that assumes each good costs the average purchase price |
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Term
the largest expense on a retailer's income statement is typically what? |
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Definition
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