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Accounting #1
| Question | Answer |
|---|---|
| Qualitative characteristic being employed when companies in the same industry are using the same accounting principles. | comparability |
| imperative for providing comparisons of a company from period to period | comparability (consistency) |
| ignores the economic consequences of a standard or rule | neutrality |
| Requires a high degree of consensus among individuals on a given measurement | verifiability |
| Predictive value is an ingredient of this fundamental quality of information | relevance |
| Four qualitative characteristics that are related to both relevance and faithful representation | Comparability, Verifiability, Timeliness, and Understandability. |
| Two fundamental qualities that make accounting information useful for decision-making purposes. | Relevance and Faithful Representation |
| Intangible assets are amortized over periods benefited. | expense recognition |
| Rationale for accrual accounting | Expense recognition and revenue recognition principles. |
| The use of consolidated statements is justified. | Economic entity assumption. |
| An allowance for doubtful accounts is established. | Measurement principle, Expense recognition principle. |
| Goodwill is recorded only at time of purchase. | Measurement principle (historical cost) |
| which accounts are considered nominal (temporary) accounts. | Revenues, Expenses, Dividends |
| which accounts are considered real (permanent) accounts | . Assets, Liabilities, Common Stock, Retained Earnings |
| Journalize the purchase of an insurance policy, as well as the related adjusting journal entry as the policy is used | Dr. prepaid insurance, CR. Cash Dr Prepaid insurance expense Cr. prepaid insurance |
| journalize the receipt of cash in advance of providing services to a customer, as well as the related adjusting journal entry when services are provided to the customer | Dr. Cash, Cr. unearned revenue Dr. unearned revenue Cr. service revenue |
| Performed services for patients who had dental plan insurance. At January 31, $750 of such services was performed but not yet billed to the insurance companies | Dr. accounts receivable, Cr. service revenue |
| Utility expenses incurred but not paid prior to January 31 totaled $520. | Dr. Utility expense Cr. accounts payable |
| Purchased dental equipment on January 1 for $80,000, paying $20,000 in cash and signing a $60,000, 3-year note payable. The equipment depreciates $400 per month. Interest is $500 per month | Dr. supplies Cr. cash Cr. notes payable Dr. depreciation expense Cr. accumulated depreciation Dr. interest expense Cr. interest payable |
| Purchased a one-year malpractice insurance policy on January 1 for $12,000 | Dr. prepaid insurance Cr. cash Dr. insurance expense 1,000 Cr. prepaid insurance 1,000 |
Created by:
zieglermm144