Herzing University - ACCOUNTING AC107 MIDTERM Exam Results. 91% Grade.

Herzing University - ACCOUNTING AC107 MIDTERM. 91% Grade Question 1 Generally accepted accounting principles (GAAP) are the procedures and guidelines to be followed in the process of preparing financial statement ...

Herzing University - ACCOUNTING AC107 MIDTERM. 91% Grade Question 1 Generally accepted accounting principles (GAAP) are the procedures and guidelines to be followed in the process of preparing financial statements. Question 2 The Financial Accounting Standards Board (FASB) is a non-governmental agency that creates the GAAP rules for accounting. Answer Question 3 Stockholders own which type of business? Response Feedback: Correct! Corporations are owned by stockholders. Question 4 If owner's equity and liabilities increased during the period, then assets must also have increased. Question 5 When the owner withdraws cash from the business it will result in an increase in owner's equity. Answer Question 6 3 out of 3 points The balance sheet reports assets, liabilities and owner's equity on a specific date. Answer Selected Answer: True Correct Answer: True Question 7 3 out of 3 points Stephen purchased office supplies for $800 in cash. This transaction would Answer 3 out of 3 points To debit an account is to enter an amount on the left column in the journal entry. Answer Question 9 3 out of 3 points Prepaid Insurance is an expense account. Answer Question 10 3 out of 3 points Mary's business has performed services on account. The journal entry to record this transaction would include a debit to Cash and a credit to Service Revenue. Answer Question 11 3 out of 3 points The normal balance of the Owner, Capital account Answer The normal balance of the Accounts Receivable account is Answer Question 13 3 out of 3 points The balance sheet Answer 3 out of 3 points The purpose of the general journal is to provide a chronological record of all transactions completed by the business. Answer 3 out of 3 points The purpose of the trial balance is to prove that the total of the debit balances and the total of the credit balances in the ledger accounts are equal. Answer Question 16 3 out of 3 points The journal provides the information needed to transfer debits and credits to the accounts in the general ledger. Answer 3 out of 3 points Jason's business has purchased a new delivery van on account. The journal entry to record this transaction includes Answer 3 out of 3 points The journal entry to record payment for Delivery Equipment that was previously purchased on account would include Answer Question 19 3 out of 3 points If the owner of a company invests cash in the business, the journal entry would include Answer 3 out of 3 points Service Revenue performed for cash received immediately is recorded in the journal by Answer 3 out of 3 points If cash is paid for office rent, the journal entry includes Answer Accounting for revenue using the cash basis of accounting means that no entry is made to the revenue account until the cash is received for the services performed. Answer 3 out of 3 points The book value of an asset is calculated by subtracting the accumulated depreciation from the cost of the plant asset. Answer If the total of expenses is greater than the total of revenue in the income statement, the business has a net loss. Answer Question 25 3 out of 3 points Question 26 3 out of 3 points Adjusting entries always affect both an income statement account and a balance sheet account. Answer A business records revenue when earned and records expenses when they are incurred regardless of whether the cash has been received or paid. This business is using which basis of accounting? Answer 3 out of 3 points Supplies are reported at $500 on the trial balance, but only $350 are still on hand as found during a physical count. The adjusting journal entry would be: Answer 3 out of 3 points The Income Summary account appears on the income statement at the end of the accounting period. Answer 3 out of 3 points The statement of owner's equity is a statement which summarizes all of the changes in the Owner, Capital account during the accounting period. Answer 3 out of 3 points Assets, liabilities, and Owner, Capital are permanent accounts. Answer 3 out of 3 points The total revenue for the month of June was $6,500. The total expenses for the month were $3,500. Withdrawals (Owner, Drawing) for the month were $600. The net income for the month was Answer Question 33 3 out of 3 points The order in which the financial statements should be prepared is Answer Question 35 The account to which the Owner, Drawing account is closed at the end of the accounting period is 3 out of 3 points The business entity concepts requires that non-business assets and liabilities are not included in the business' records. Question 37 A compound journal entry is one that records the transaction in three or more accounts. Answer Question 38 The Generally Accepted Accounting Principle (GAAP) rule which says that we record assets at their original cost is called the As of the end of the accounting period the employees have earned $1,000, but payday is not until the next period. The adjusting entry prepared at the end of the accounting period to record this includes Answer Response Feedback: Correct! Wages that have been earned but not yet paid are recorded in an adjusting entry that increases Wages Expense with a debit and increases Wages Payable with a credit. Question 40 Under which basis of accounting are plant assets such as buildings and equipment recorded as assets when purchased and then depreciated as they are used? Answer