ACC 101 Final Study Guide with
Complete Solutions
What is an information system that provides reports to users regarding economic
activities and condition of a business> - ANSWER-accounting
All of the following are general-purpose financial statements except:
a. balance sheet
b. retained earnings statement
c. cash budget
d. income statement - ANSWER-c. cash budget
The following are examples of external users of financial information except:
a. customers
b. creditors
c. managers
d. government entities - ANSWER-c. managers
Which of the terms below is not a business entity?
a. corporation
b. proprietorship
c. entrepreneurship
d. partnership - ANSWER-d. partnership
Within the US, the dominant body in the primary development of accounting principles is
the: - ANSWER-Financial Accounting Standards Board (FASB)
What concept relates to separating the reporting of business and personal economic
transactions - ANSWER-business entity concept
Which of the following is not an asset?
a. cash
b. investments
c. stockholders' equity
d. inventory - ANSWER-c. stockholders' equity
A business paid $7,000 to a creditor in payment of an amount owed. The effect of the
transacion on the accounting equation was to - ANSWER-decrease an asset, decrease
a liability
,The monetary value charged to customers for the performance of services sold is called
a(n) - ANSWER-revenue
How does receiving a bill to be paid next month for services received affect the
accounting equation? - ANSWER-assets increase, liabilities increase
Gomez Service Company paid its first installment on a note payable in the amount of
$2000. How will this transaction affect the accounting equation? - ANSWER-increase
liabilities (notes payable) and decrease assets (cash)
A financial statement user would determine if a company was profitable or not during a
specific period by reviewing the - ANSWER-income statement
In what order are financial statements prepared in? - ANSWER-Income Stmnt, Retained
Earnings Stmnt, Balance Sheet
Given the following data compute the ratio of liabilites to stockholders' equity for each
year (round 2 decimal places).
Total Liabilities: $128,250 (yr 2); $120,000 (yr 1)
Total SE: $95,000 (yr 2); $80,000 (yr 1) - ANSWER-1.35 and 1.50, respectively
The ending balance of retained earnings appears in: - ANSWER-both the retained
earnings statement and the balance sheet
The debit side of an account is... - ANSWER-the left side of the account
What is a listing of accounts in financial statement order? - ANSWER-chart of accounts
What are records of increases and decreases in individual financial statement items? -
ANSWER-accounts
A cash payment is recorded in the cash account as a: - ANSWER-credit
Which are the parts of the T accounts - ANSWER-title, debit side, credit side
Which group of accounts is comprised of only assets?
a. accounts receivable, revenue, cash
b. cash, accounts payable, buildings
c. unearned revenues, prepaid expenses, cash
d. prepaid expenses, buildings, patents - ANSWER-d. prepaid expenses, buildings,
patents
Which of the following statements is not true about liabilities?
a. liabilities are debts owed to outsiders
b. Liabilities don't include wages owed to employees
,c. cash recieved before a service performed is a liability
d. account titles of liabilites include term "payable" - ANSWER-b. liabilities don't include
wages owed to employees
The balance of an account is determined by: - ANSWER-adding all debits, adding all
credits, and the subtracting the smaller sum from the larger
Which of the following types of accounts have a normal credit balance? (DEAL,GIRLS)
a. liabilities and expenses
b. revenues and common stock
c. common stock and dividends
d. assets and liabilities - ANSWER-b. revenues and common stock
The classification and normal balance of the accounts payable account is - ANSWER-
liability w/ credit balance
The process of initially recording a business transaction is called: - ANSWER-
journalizing
Which of the following entries records the collection of cash from cash customers
a. fees earned, debit; cash, credit
b. cash, debit; fees earned, credit
c. accounts receivable, debit; fees earned, credit
d. fees earned, debit; accounts receivable, credit - ANSWER-b. cash, debit; fees
earned, credit
A client has a massage and asks the company bookkeeper to mail her the bill. What
entry should the bookkeeper make to record the invoice? - ANSWER-debit accounts
receivable, credit fees earned
Net income will result when:
a. revenues (credits) = expenses (debits)
b. revenues (debits) > expenses (credits)
c. expenses (credits) = revenues (credits)
d. revenues (credits) > expenses (debits) - ANSWER-d. revenues (credits) > expenses
(debits)
The process of transferring the debits and credits from the journal entries to the
accounts is called: - ANSWER-posting
That the total dollar amount of the debits equals the total dollar amount of the credits in
the ledger accounts can be verified through a(n): - ANSWER-trial balance
Which of the following groups of accounts are increased with a debit?
a. assets, dividends, expenses
b. assets liabilities, revenues
, c. assets, liabilities, stockholders' equity
d. assets, revenues, expenses - ANSWER-a. assets, dividends, expenses
Which of the following groups of accounts increase with a credit?
a. common stock, revenues, expenses
b. assets, common stock, revenues
c. liabilities, common stock, revenues
d. none of the above - ANSWER-c. liabilities, common stock, revenues
What concept states that the revenues and related expenses should be reported in the
same period - ANSWER-the matching concept
Using accrual accounting, revenue is recorded and reported only... - ANSWER-when
the services are rendered, without regard to when cash is received
Deferred expenses have... - ANSWER-not yet been recorded as expenses
Deferred revenue is revenue that is - ANSWER-not earned, but the cash has been
received
The term used to describe an expense that has not been paid and has not yet been
recognized in the accounts by a routine entry is: - ANSWER-accrued
Generally accepted accounting principles require that the companies use the ___ of
accounting - ANSWER-accrual basis
Prepaid expenses are eventually expected to become: - ANSWER-expenses when their
future economic value expires
Theater tickets sold for next month's performance would be what type of revenue? -
ANSWER-unearned revenue
A computer technician has installed the latest software udates, but you have not
recieved and invoice or made payment, what type of expense is this? - ANSWER-
accrued expense
Which account would not normally require an adjusting entry?
a. wages expense
b. accounts receivable
c. cash
d. accumulated depreciation - ANSWER-c. cash
The difference between the balance of a fixed asset account and the related
accumulated depreciation account is termed... - ANSWER-book value
Complete Solutions
What is an information system that provides reports to users regarding economic
activities and condition of a business> - ANSWER-accounting
All of the following are general-purpose financial statements except:
a. balance sheet
b. retained earnings statement
c. cash budget
d. income statement - ANSWER-c. cash budget
The following are examples of external users of financial information except:
a. customers
b. creditors
c. managers
d. government entities - ANSWER-c. managers
Which of the terms below is not a business entity?
a. corporation
b. proprietorship
c. entrepreneurship
d. partnership - ANSWER-d. partnership
Within the US, the dominant body in the primary development of accounting principles is
the: - ANSWER-Financial Accounting Standards Board (FASB)
What concept relates to separating the reporting of business and personal economic
transactions - ANSWER-business entity concept
Which of the following is not an asset?
a. cash
b. investments
c. stockholders' equity
d. inventory - ANSWER-c. stockholders' equity
A business paid $7,000 to a creditor in payment of an amount owed. The effect of the
transacion on the accounting equation was to - ANSWER-decrease an asset, decrease
a liability
,The monetary value charged to customers for the performance of services sold is called
a(n) - ANSWER-revenue
How does receiving a bill to be paid next month for services received affect the
accounting equation? - ANSWER-assets increase, liabilities increase
Gomez Service Company paid its first installment on a note payable in the amount of
$2000. How will this transaction affect the accounting equation? - ANSWER-increase
liabilities (notes payable) and decrease assets (cash)
A financial statement user would determine if a company was profitable or not during a
specific period by reviewing the - ANSWER-income statement
In what order are financial statements prepared in? - ANSWER-Income Stmnt, Retained
Earnings Stmnt, Balance Sheet
Given the following data compute the ratio of liabilites to stockholders' equity for each
year (round 2 decimal places).
Total Liabilities: $128,250 (yr 2); $120,000 (yr 1)
Total SE: $95,000 (yr 2); $80,000 (yr 1) - ANSWER-1.35 and 1.50, respectively
The ending balance of retained earnings appears in: - ANSWER-both the retained
earnings statement and the balance sheet
The debit side of an account is... - ANSWER-the left side of the account
What is a listing of accounts in financial statement order? - ANSWER-chart of accounts
What are records of increases and decreases in individual financial statement items? -
ANSWER-accounts
A cash payment is recorded in the cash account as a: - ANSWER-credit
Which are the parts of the T accounts - ANSWER-title, debit side, credit side
Which group of accounts is comprised of only assets?
a. accounts receivable, revenue, cash
b. cash, accounts payable, buildings
c. unearned revenues, prepaid expenses, cash
d. prepaid expenses, buildings, patents - ANSWER-d. prepaid expenses, buildings,
patents
Which of the following statements is not true about liabilities?
a. liabilities are debts owed to outsiders
b. Liabilities don't include wages owed to employees
,c. cash recieved before a service performed is a liability
d. account titles of liabilites include term "payable" - ANSWER-b. liabilities don't include
wages owed to employees
The balance of an account is determined by: - ANSWER-adding all debits, adding all
credits, and the subtracting the smaller sum from the larger
Which of the following types of accounts have a normal credit balance? (DEAL,GIRLS)
a. liabilities and expenses
b. revenues and common stock
c. common stock and dividends
d. assets and liabilities - ANSWER-b. revenues and common stock
The classification and normal balance of the accounts payable account is - ANSWER-
liability w/ credit balance
The process of initially recording a business transaction is called: - ANSWER-
journalizing
Which of the following entries records the collection of cash from cash customers
a. fees earned, debit; cash, credit
b. cash, debit; fees earned, credit
c. accounts receivable, debit; fees earned, credit
d. fees earned, debit; accounts receivable, credit - ANSWER-b. cash, debit; fees
earned, credit
A client has a massage and asks the company bookkeeper to mail her the bill. What
entry should the bookkeeper make to record the invoice? - ANSWER-debit accounts
receivable, credit fees earned
Net income will result when:
a. revenues (credits) = expenses (debits)
b. revenues (debits) > expenses (credits)
c. expenses (credits) = revenues (credits)
d. revenues (credits) > expenses (debits) - ANSWER-d. revenues (credits) > expenses
(debits)
The process of transferring the debits and credits from the journal entries to the
accounts is called: - ANSWER-posting
That the total dollar amount of the debits equals the total dollar amount of the credits in
the ledger accounts can be verified through a(n): - ANSWER-trial balance
Which of the following groups of accounts are increased with a debit?
a. assets, dividends, expenses
b. assets liabilities, revenues
, c. assets, liabilities, stockholders' equity
d. assets, revenues, expenses - ANSWER-a. assets, dividends, expenses
Which of the following groups of accounts increase with a credit?
a. common stock, revenues, expenses
b. assets, common stock, revenues
c. liabilities, common stock, revenues
d. none of the above - ANSWER-c. liabilities, common stock, revenues
What concept states that the revenues and related expenses should be reported in the
same period - ANSWER-the matching concept
Using accrual accounting, revenue is recorded and reported only... - ANSWER-when
the services are rendered, without regard to when cash is received
Deferred expenses have... - ANSWER-not yet been recorded as expenses
Deferred revenue is revenue that is - ANSWER-not earned, but the cash has been
received
The term used to describe an expense that has not been paid and has not yet been
recognized in the accounts by a routine entry is: - ANSWER-accrued
Generally accepted accounting principles require that the companies use the ___ of
accounting - ANSWER-accrual basis
Prepaid expenses are eventually expected to become: - ANSWER-expenses when their
future economic value expires
Theater tickets sold for next month's performance would be what type of revenue? -
ANSWER-unearned revenue
A computer technician has installed the latest software udates, but you have not
recieved and invoice or made payment, what type of expense is this? - ANSWER-
accrued expense
Which account would not normally require an adjusting entry?
a. wages expense
b. accounts receivable
c. cash
d. accumulated depreciation - ANSWER-c. cash
The difference between the balance of a fixed asset account and the related
accumulated depreciation account is termed... - ANSWER-book value
