Accounting Terminology

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Accounting Terminology Questions and Answers

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Which of the following activities is an example of a financing activity? a. Purchase of land by issuing stock b. Payment of cash dividends c. Purchase of land for cash d. Purchase of inventory for...
Which of the following are not included as part of the income statement? a. salvage value b. revenue c. depreciation d. income taxes
Which of the following accounts has a normal debit balance? a. Assets and Revenues b. Liabilities and Revenues c. Expenses and Assets d. Liabilities and Retained Earnings
What duration does the heading of a balance sheet indicate? a. A period of time b. A moment of time
On a multiple-step income statement, which of the following account balances would normally appear below the "operating income" subtotal line? (Select all that apply.) a. Interest revenue b. Cost o...
The stockholders' equity section of the balance sheet includes which of the following accounts? A. Dividends B. Contributed Capital C. Treasury Stock D. Retained Earnings
The major difference between the indirect and the direct method of a statement of cash flows appears in which of the following activities section(s)? A. The investing activities and financing activ...
Joe earns 4 weeks vacation time in a year. How much vacation time is earned in a week?
Which of the following is shown on a multi-step income statement but not on a single-step income statement? a. net sales revenue b. cost of goods sold c. gross profit d. net income
What is the journal entry rule? How to record accounts of asset, liability, equity, revenues, and expenses?
Which of the following are not found in the heading of a balance sheet? (Select all that apply.) a. cash b. assets c. gross profit d. liability
What is the purpose of a trial balance? If the debits equal the credits in the trial balance, will the financial statements be error-free? Why or why not?
Which financial statement's structure is closest to that of the basic accounting equation?
Where would the decrease in inventory over the period go on the statement of cash flows?
Where on the statement of cash flows is the payment of cash dividends reported?
Which financial statement reports assets, liabilities, and stockholders equity?
Which account balance will be credited when payment is received from the customer?
What type of entry will decrease the normal balances of the accounts prepaid insurance and prepaid expenses, and insurance expense?
What is the journal entry for paying a vendor for an outstanding balance?
What guidelines are used to match costs with revenues in determining income?
Under the accrual basis, revenues are recognized and reported when they are are _____.
Notes payable and owner's equity are included in what section of the statement of cash flows?
Accounts payable does a three-way match before paying an invoice. What three terms are matched in this process?
The company receives cash from a bank loan. What is the change to owner's equity?
Gain and losses are reported on the multi-step income statement under what classifications?
The issuance of a long-term debt instrument, such as a bond, by a company would have an immediate effect on what balance sheet items?
Explain why plant assets are not reported at liquidation value.
Expenses are reported on what financial statement(s)?
Under GAAP, why is interest received on a loan considered as operating cash flow?
Baldwin earned revenue of $187,807,793 and had expenses of $173,482,884. This will cause which of the following changes in equity? a. Equity will decrease $14,324,909. b. Equity will increase $187,...
Under the accrual method of accounting, why is it necessary to update some expenses?
What characteristics do contingent liabilities have to be included in the notes?
What does it mean when a vendor has a debit balance and what would you do in this case?
What accounting entry is made when a company makes an order for supplies?
What are the effects of this transaction on the accounting equation? A) expenses increased B) liabilities increased C) assets increased
What do you debit and credit if you paid for an asset with your personal money in your corporation?
What do you debit in stockholders equity when you credit accounts payable?
What does it mean when numbers are in parenthesis in the net cash flows investing?
What happens when you estimate uncollectible accounts to the accounting equation?
What happens if our accountant refuses to provide a general ledger and chart of accounts for our non-profit?
A) What is the allowance for doubtful accounts? B) What is normal balance? C) Which financial statement includes the allowance for doubtful accounts balance?
What is the effect on the income statement when there is decreased inventory in the period?
What is the journal entry for receiving advance payment on a service to be performed later?
What is the two-column summary of all the debits and credits in the chart of accounts?
What is the journal entry if the asset is sold before realizing salvage value?
What is the journal entry for purchasing a cell phone over the life of a contract?
When a business makes a payment on account for goods or services, do they debit or credit the liability account?
When a business collects revenue, how is the accounting equation affected?
When a firm sells a building at a loss, it will have a cash outflow from investing activities. Explain why.
When a company obtains a loan and receives cash from that loan, what category is that recorded on the cash flow statement?
When a payment is collected from a customer on account, the result of this receipt is (blank).
When a business pays off a short term liability, the effect this transaction would most likely have on the balance sheet is (blank).
When a business owner deposits their own money into the business, how does that affect the accounting equation?
When a business provides services for cash, which elements of the accounting equation are affected?
When prepaid insurance expired, the adjusting entry would decrease the prepaid insurance account. Explain why.
When an owner invests assets in the business, the retained earnings account increases. Explain why.
When a project is financed with borrowed funds, the interest on the debt is included in the income statement and the repayment on the principal is included in the cash flow statement. Why?
When goods have been sold but not paid for, where are they documented on the balance sheet?
When cash is received in payment of an account receivable what happens to assets?
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