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ACC 201

ALL CHAPTERS (accumulative)

QuestionAnswer
Interest on a note payable is interest that will be paid. therefore , it is an ___________. Interest revenue results from notes receivable or investments that earn interest. expense
a liability account, such as Unearned Revenue, will be increased since the company has an obligation to fulfill. ___________ is recorded later when the sale is fulfilled or the service is performed. Revenue
Accounts receivable Balance sheet, debit
accounts payable balance sheet, credit
service revenue income statement, credit
cash balance sheet, debit
contributed capital balance sheet, credit
dividends balance sheet debit
sales revenue income statement, credit
inventory balance sheet, debit
interest revenue income statement, credit
land balance sheet, debit
maintenance expense income statement, debit
notes payable balance sheet, credit
prepaid legal fees balance sheet, debit
rent expense income statement, debit
rent revenue income statement, credit
wages expense income statement, debit
building balance sheet, debit
unearned subscription revenue balance sheet, credit
utilities expense income statement, debit
income taxes payable balance sheet, credit
hired an officer manager at $3,500 per month. The officer manager will start work on Feb. 1 NJE
Paid workers $8300 for work done in January. dr. salary expense $8300 cr. cash $8300
Provided $26,000 of services. $17,000 was received in cash and $9000 was provided on credit. dr. cash $17,000 dr. accounts receivable $9,000 cr. service revenue $26,000
bought $15,000 of new equipment, signing a promissory note dr. equipment $15,000 cr. note payable $15,000
bought $423 of supplies for cash dr. supplies $423 cr. cash $423
paid $3,500 legal fees in advance for legal services to be received over the next six months dr. prepaid legal fees $3,500 cr. cash $3,500
paid $689 on account for decembers utilities dr. accounts payable $689 dr. cash $689
Net income is the amount by which revenues exceed expenses
expenses on the income statement in the time period in which they are incurred
separate entity assumption a company's financial statements reflect only the business activities of that company and no other entity.
three main types of business activities operating, investing, and financing
assets represent the resources owned by a company
3 basic elements of balance sheet assets, liabilities, and stockholders' equity
True or False ---(liabilities-stockholders equity)=assets False.
if XYZ company had $12 million in revenue and net income of $3 million, then its expenses are $9 million
ABC company sold $11 million games in the 1st year of operations. company received payments of $7.5 million for these games. Companys income statement would report sales revenue of $11 million
During 2013, a company's assets increase by $56,000 and its liabilities increase by $38,000. If no dividends is paid and no further capital is contributed, net income for 2013 was $18,000
True or False (any item on a balance sheet labeled payable is a liability of that company) True
which one of the following is a long lived asset? a.accounts receivable b.cash c. supplies d.buildings d. buildings
True or False (a long-term liability is one that the company will not pay off for over one year) True
Which of the following is NOT an example of an asset? a.retained earnings b.notes receivable c.supplies d.prepaid expensees a. retained earnings
(classification) and (normal balance) of retained earnings account stockholders equity; credit
True or False (debits reduce expenses) False. credits increase revenues
costs of items used up this period but paid for next period is an example of what? Expense of this period.
the income statement shows the effects of the transactions in june During June, the XYX company mows 100 lawns/week & is paid in JULY by customers. company uses accrual base acct. How do these events affect companys financial statements?
(T/F) your company receives advance payment in october for services that are provided during november so a liability is recorded in october; in november the liability is reduced and revenue is recorded TRUE. liability is recorded in october; in november the liability is reduced and revenue is recorded
ur company orders & receives supplies in JAN, pays for them in FEB., provides services that use goods up in MAR, and is paid by customers in april. Using accrual basis of accounting. When are expenses are revenue recorded? expenses and revenues are recorded in march.
insurance expired for the month of december dr. insurance expense cr. prepaid insurance
after a count, supplies on hand totaled $1020 dr. supplies expense cr. supplies
depreciation on the office equipment for december $3321 dr. depreciation expense cr. accumulated depreciation
accrued receptionist salary on dec 31 $190 dr. salaries expense cr. salaries payable
rent expired for the month of december dr. rent expense cr. prepaid rent
1/3 of the unearned service revenue was earned by dec 31 dr. unearned revenue cr service revenue
paid 3 months rent on a lease rental contract $4,500 dr. prepaid rent cr cash
paid the premium on property and casualty insurance policies for the year $1,800 dr. prepaid insurance cr cash
received cash from clients as payment for services to be provided next year $3000 dr. cash cr unearned revenue
purchased additional office furniture on account from abc company dr office furniture cr accounts payable
received cash from clients that received services on account dr cash cr accounts receivable
paid cash for newspaper advertisement dr advertising expense cr cash
paid morrilton company 800 for debt incurred on dec 7 dr accounts payable cr cash
recorded services provided on account for the period dec 4-15 $5000 dr accounts receivable cr service revenue
paid part time receptionist two weeks salary 950 dr salaries expense cr cash
recorded cash payment for services provided to clients 5025 dr cash cr service revenue
paid cash for supplies 750 dr supplies cr cash
recorded services provided on account for dec 18-22 $2100 dr accounts receivable cr service revenue
received cash from clients on account dr cash cr accounts receivable
paid part time receptionist two weeks salary dr salaries expense cr cash
paid telephone and electric bills for december dr utilities expense cr cash
recorded cash payment for services provided to clients dr cash cr service revenue
ceo received 4500 from the company as his salary dr salaries expense cr cash
temporary (nominal) accounts revenues and expenses on the income statement
permanent accounts (real) accounts assets, liabilities, equity on the balance sheet
T/F Retained earnings is the only permanent account affected by closing entries True
What comes next after closing entries? Post closing trial balance
_________ are needed to ensure that assets, liabilities, revenues, and expenses are reported at the appropriate amounts and in the proper period. ADJUSTMENTS
cash has been paid, but the expense has not been incurred deferred expense (asset)
involves an asset account and an expense account deferred expense (asset)
allocates a portion of an asset to an expense deferred expense (asset)
cash has been received, but the revenue has not been earned deferred revenue (liability)
involves a revenue account and a liability account deferred revenue (liability)
recognize revenues that have been earned or expenses that have been incurred but not yet recorded accrual adjustments
revenue has been earned, but cash has not been received accrued revenue (asset)
will debit an asset (receivable) and credit a revenue accrued revenue (asset)
liability and expense salaries payable and salaries expense
asset and revenue interest receivable and interest revenue
expense has been incurred, but cash has not been paid accrued expense (liability)
will always debit an expense and credit a liability (payable) accrued expense (liability)
Jackson has earned interest of $1000 dr interest receivable cr interest revenue
jackson owed the bank $2500 in unpaid interest dr. interest expense cr. interest payable
to check that the accounting records are still in balance adjusted trial balance
shows the balance of all accounts at the end of the accounting period adjusted trial balance
used to prepare the financial statements adjusted trial balance
What are the easiest entries to make? Closing Entries
What are the hardest entries to make? Adjusting Entries
company owes interest of 700 on bank loan, interest will be paid when the loan is repaid. no interest has been recorded dr interest expense cr interest payable
jordan collected six months rent on storage space. then jordan debited cash and credited unearned revenue dr unearned revenue cr rent revenue
the company earned service revenue on a special job that was completed. the collection will be made during later on. no entry has been recorded. dr accounts receivable cr service revenue
carl paid a one year premium for property insurance that started today. the cash was credited and prepaid insurance was debited for this amount. dr insurance expense cr prepaid insurance
wages earned by employees but not yet paid totaled an amount. employees will be paid on the next payroll date. dr wage expense cr wages payable
depreciation must be recognized on a service truck purchased this year dr depreciation expense cr accumulated depreciation
company received a tax bill from the city for property taxes on land. the tax bill is payable later on. dr property tax expense cr property tax payable
income before any of the adjustments or income taxes was 27,400. income tax rate 30 percent. compute adjusted income. determine income tax expense. dr income tax expense cr income tax payable
two year insurance premium on equipment was paid and debited in full to prepaid insurance. coverage began today. dr insurance expense cr prepaid insurance
unadjusted balance in officie supplies is blah blah blah. physical count on supplies indicated supplies were still on hand. dr. supplies expense cr. supplies
carl completed repairs on brians truck. amount not recorded. it will be paid later on. dr. maintenance expense cr. maintenance payable
property tax bill was received from city. taxes have not been recorded, will be paid later on dr property tax expense cr property tax payable
brian and chaz completed a contract for an out of state company. payable by the customer within 30 days. no cash has been collected. no journal entry has been made. dr accounts receivable cr service revenue
chaz purchased a new turbo charged car depreciation has not been recorded dr depreciation expense cr accumulated depreciation
brian owes interest on a bank loan taken out yesterday. interest will be paid when the loan is repaid tomorrow. no interest has been recorded yet. dr interest expense cr interest payable
dr expense cr cash cash at the same time as expense
dr accounts payable cr cash cash paid after expense is incurred
dr expense cr accounts payable cash paid after expense is incurred
dr cash cr unearned revenue cash received before revenue is earned
dr unearned revenue cr revenue cash received before revenue is earned
dr cash cr revenue cash at the same time as revenue
dr cash cr accounts receivable cash received after revenue is earned
dr accounts receivable cr revenue cash received after revenue is earned
dr prepaid cr cash cash paid before expense is incurred
dr expense cr prepaid cash paid before expense is incurred
What are the 9 words to remember when constructing a balance sheet? Assets,current assets,total current assets, total assets, current liabilities, total current liabilities, total liabilities, total stockholders equity, total liabilities and stock holders equity
adjusted trial balance a list of all accounts and their adjusted balances to check on the equality of recorded debits and credits
adjusting journal entries entries necessary at the end of each accounting period to measure all revenues and expenses of that period
adjustments made to the accounting records at the end of the period to ensure assets and liabilities are reported at appropriate amounts.
Net Book Value (book value, carrying value) the amount at which an asset or liability is reported after deducting any contra accounts
contra account an account that is an offset to, or reduction of, another account
depreciation process of allocating the cost of building and equipment over their productive lives using a systematic and rational method of allocation
permanent accounts the balance sheet accounts that carry their ending balances into the next accounting period
post closing trial balance prepared as the last step in the accounting cycle to check that debits equal credits and that all temporary accounts have been closed
temporary accounts income statement accounts that are closed to retained earnings at the end of the accounting period
accrued liabilities previously unrecorded expenses that need to be adjusted at the end of the accounting period to reflect the amount incurred and its related liability account
accrued revenues previously unrecorded revenues that need to be adjusted at the end of the accounting period to reflect the amount earned and its related receivable account
deferred expenses previously acquired assets that need to be adjusted at the end of the accounting period to reflect the amount of expense incurred in using the asset to generate revenue
deferred revenues previously recorded liabilities that need to be adjusted at the end of the period to reflect the amount of revenue earned
expenses decrease in assets or increases in liabilities from ongoing operations, incurred to generate revenues during the current period
investing activities involve buying or selling long lived items such as land, buildings and equipment
long lived assets tangible and intangible resources owned by a business and used in its operations over several years
long term assets resources that will be used up or turned into cash more than 12 months after the balance sheet date
long term liabilities all of the entity's obligations that are not classified as current liabilities
prepaid expenses a general account name used to describe payments made in advance of receiving future services; typically includes prepaid rent, prepaid insurance, and other specific types of prepayments
statement of retained earnings reports the way that net income and the distribution of dividends affected the financial position of the company during the accounting period
t account a simplified version of a ledger account used for summarizing transaction effects and determining balances for each account
time period assumption the assumption that allows the long life of a company to be reported in shorter time periods
current asset assets that will be used up or turned into cash within 12 months or the next operating cycle, whichever is longer
current liability short term obligations that will be paid in cash ( or fulfilled with other current assets ) within 12 months or the next operating cycle, whichever is longer.
____________ is a generic account name that can include liabilities recorded using accrual adjustments for salaries, utilities, income taxes, and many other items. accrued liabilities
when determining each adjustment, draw timelines to picture where we are now, where we need to be and the _____________ to get us there adjustment
__________ is never part of an accrual or deferral adjustment cash
the ____________ is the temporary home for revenue and expense accounts, and their permanent home is retained earnings in the stockholders' equity section of the balance sheet income statement
___________ are not expenses, but rather are distributions to stockholders of the company's prior profits that have accumulated in retained earning dividends
the _________ balance from the statement of retained earnings is reported on the balance sheet ending
each _________ journal entry affects one balance sheet and one income statement account adjusting
credit the ______________ account for the amount of its balance and debit retained earnings for the same amount dividends declared
_______________ help ensure all revenues and expenses are reported in the period in which they are earned and incurred, as a result of a company's activities adjustments
when a concert promotions company collects cash for ticket sales two months in advance of the show date, which of the following accounts is recorded? unearned revenue
after adjustments been completed the balance in"wages expense" account represents A) wages that have been incurred but not yet paid at the end of the accounting period or B) total wages, paid & unpaid that have been incurred during the accounting period B) total wages, paid and unpaid, that have been incurred during the accounting period
sales discounts should appear in the financial statements as deduction from sales
the gross profit percentage measures the percentage of profit earned on each dollar of sales before deducting all expenses other than cost of goods sold. This ratio is used to compare one company with another and make comparisons over time
xyz company sold merchandise for 5000 with payment terms of 2/10,n/30. if the customer pays within the discount period and takes the discount, xyz will receive.. 4900
create income statement in the proper order sales revenue, sales discounts, nets sales, cost of goods sold, gross profit
under the __________ inventory system, the inventory account is updated every time inventory is bought, sold, or returned perpetual
company uses perpetual invent. system. bookkeeper recorded 5000 sale on account, forgot to record related cost of goods sold for 3000. as result of this error... total assets will be too high and net income will be too high
which inventory system updates the inventory account ONLY at the end of the accounting period? Periodic
what does FOB destination mean? goods are owned by the buyer as soon as they arrive at the buyers place of business
which of the following are reasons for maintaining inventory accounting systems? to assist management in setting appropriate selling prices, to control inventory levels, to determine gross profit
XYZ company sold merch for 5000 w/ payment terms of 2/10,n/30. if the customer pays within the discount period and takes the discount, xyz will receive... 4900
Perpetual inventory system after inventory is sold, its cost is removed from the balance sheet and reported on the income statement as an expense
perpetual inventory system until inventory is sold, it is an asset reported at its cost on the balance sheet
sales discounts should appear in the financial statements as deduction from sales
if the customer returned the product, acme would also record a debit to inventory and a credit to ___________________. cost of goods sold
under the ______ inventory system, the inventory account is updated everytime inventory is bought, sold or returned perpetual
bank reconciliation process of using both the bank statement and the cash accounts of a business to determine the appropriate amount of cash in a bank account, after taking into consideration delays or errors in processing cash transactions.
cash Money or any instrument that banks will accept for deposit and immediate credit to the company's account, such as a check, money order, or bank draft.
cash equivalents short-term, highly liquid investments purchased within three months of maturity.
FOB destination term of sale indicating that goods are owned by the seller until delivered to the customer.
FOB Shipping Point term of sale indicating that goods are owned by the customer the moment they leave the seller's premises.
Gross Profit (or gross margin) net sales less cost of goods sold
gross profit percentage indicates how much above cost a company sells its products; calculated as gross profit divided by net sales
imprest system a process that controls the amount paid to others by limiting the total amount of money available for making payments to others
internal controls processes by which a company provides reasonable assurance regarding the reliability of the company's financial reporting, the effectiveness and efficiency of its operation, and its compliance with applicable laws and regulations
manufacturing company a company that sells goods that it has made itself
merchandising company a company that sells goods which have been obtained from a supplier
multistep income statement reports alternative measures of income by calculating subtotals for core and peripheral business activities
NSF (Not Sufficient Funds) Check checks written for an amount greater than the funds available to cover them
Periodic Inventory System a system in which ending inventory and cost of goods sold are determined only at the end of the accounting period based on a physical inventory count
Perpetual Inventory System a system in which a detailed inventory record is maintained by recording each purchase and sale of inventory during the accounting period
Sales Discount cash discount offered to customers to encourage prompt payment of an account receivable
Sales Returns and Allowances reduction of sales revenues for return of or allowances for unsatisfactory goods
Segregation of Duties an internal control that involves separating employees' duties so that the work of one person can be used to check the work of another person
Service Company a company that sells services rather than physical goods
Shrinkage the cost of inventory lost to theft, fraud, and error
Voucher System a process for approving and documenting all purchases and payments on account
Created by: 1143643238