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VYC1
Principles of accounting WGU VYC1
| Question | Answer |
|---|---|
| Which fundamental principle requires an accounting information system to work and be consistent with the overall goals of the company? | The compatibility principle. |
| To which 2 government agencies would a large company that is operating at a loss have to make payments? | Social Security and Medicare |
| When a company purchases inventory on account, what should the journal entry include? | An increase in liabilities. |
| Which 3 pieces of information are employers required to collect and maintain as part of employee payroll records? | Proof of US employment eligibility, amount of income tax withheld, and cumulative wages paid |
| Which concept dictates that a company must make adjustments to accounts receivable because each period there is a risk that not all customers will pay their account in full. | The allowance method. |
| Which method is used when calculating uncollectable accounts expense using the income statement approach? | Aging of accounts receivable |
| Which statement reflects effective internal controls? | Each check should be matched to an approved invoice or payment authorization |
| Which situation is an improper use of petty cash? | Any big amount |
| What is an appropriate control over cash receipts? | Bonding employees |
| An accountant is preparing financial statements for a firm and realizes that the adjustments need to be made to the financial statements based on supplies used for the quarter. How will the financial statements be affected by this type of adjustment? | Supplies expense is increased on the income statement and supplies is decreased on the balance sheet. |
| An accountant is preparing financial statements for a firm and realizes that adjustments need to be made to the financial statements based on equipment depreciation for the quarter. How will the financial statements be affected by this type of adjustment? | Depreciation expense is increased on the income statement and accumulated depreciation is increased on the balance sheet. |
| What information does an income summary account provide? | A summary of revenues from the point of view of the owner. |
| The worksheet pulls together certain information. What is this information needed for? | Preparing the statement of cash flows, preparing the income statement, preparing the balance sheet, or entering correcting entries |
| After analyzing source documents to determine their effects on the basic accounting equation, which step should an accountant perform next? | Journalize the transactions |
| Smiths consulting services issued a check for $10,000 on December 1 to prepay the rent for the months of December and January. What journal entry should they make? | Debit prepaid rent for $10,000. Credit Cash for $10,000 |
| Using the cash basis method of accounting, which of the following journal entries would be correct when the company is paying for supplies? | Debit cash, Credit Supplies |
| A company has a lease which requires that it pays its annual office space rent in advance on Dec31 of each yr. On a qtrly basis, this expense totals $10,000. To acct for this transaction, how should the rent expense be recorded on the firms books on Jan1? | It should be recorded as a decrease of $10,000 in the asset accounts under prepaid rent. |
| Which statement is true about accrual basis accounting? | Revenue is recognized when earned, and expenses are recognized when incurred |
| According to GAAP, when is the earliest instance that revenue should be recorded? | When the good or service has been provided. |
| Which 2 accounts will have adjusting journal entries to record the interest that has been incurred but not paid on a note payable? | Interest Expense and Interest Payable |
| Which adjusting entry is required to reflect a change in the supplies account balance? | A debit to supplies expense and a credit to supplies |
| A company writes a check to purchase printer cartridges. Which account would be debited in the journal entry to record this purchase? | Office supplies. |
| A company has just purchased a new computer system for $100,000 in cash. How should the transaction be recorded? | Equipment $100,000, Cash $100,000 |
| What are the key components of every double entry bookkeeping record? | At least one debit and at least one credit |
| What is the next step if the trial balance debit and credit columns are not equal? | Analyze the trial balance and financial records to find the error. |
| What would a bookkeeper debit to record the purchase of machinery with a long term loan? | Machinery |
| What information is contained in the balance sheet and the income statement? | The balance sheet contains assets, liabilities, and owner's equity and the income statement contains revenues, expenses, and net profit/loss. |
| Which financial stmnt shows all of the expenses of doing business over a specific period of time? | The income statement |
| Which account is on the income statement? | Sales Revenue |
| The balance sheet is a reflection of which fundamental accounting equation? | Asset= liabilities + owners equity (A=L+E) |
| A company paid $1,800 for supplies during the accounting period. At the end of the accounting period, the company had $500 of the supplies on hand. What adjustment should be entered on the worksheet? | Supplies expense $1,300, Supplies $1,300 |
| On november 30, 2014, company A paid $6,000 rent for December and January. What would be the correct adjusting entry at the end of December to show the expiration of 1 month's rent? | Debit rent expense $3,000, Credit Prepaid Rent $3,000 |
| A corporation did not yet receive the september electric bill, so it decides to accrue an estimate of $1,000. What is an appropriate journal entry? | Credit to Utilities Payable. |
| Which account is used to close revenue and expense accounts? | Income summary |
| A corporation paid $5,000 for the current months payroll. Which entry is needed? | Debit wages expense $5,000, Credit Cash $5,000 |
| What information does an accountant enter into the G/L? | The credit amount. |
| From the adjusted trial balance, which account balance is entered in the balance sheet columns? | Owner capital |
| Which group is an organization focused on developing GAAP within the US? | FASB- Financial Accounting Standards Board |
| Which financial statement shows the results of operations for a given period? | The income statement |
| Which group should make use of accounting information when determining whether to open an additional store location? | Owners and managers |
| What is one reason for honest and ethical accounting practices? | To ensure clarity of accounting data for all interested parties. |
Created by:
rebej07
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