HFT 2401 Final Exam Questions
and Answers All Correct
What is the equation for accumulated depreciation? - Answer-Expense=cost-salvage
life/periods of useful life
Why do we have deferral Adjustments/Unearned Wages? - Answer-Because something
has already been recorded and now we make adjustments
What is unearned revenue? - Answer-Liability
Why do we have accrual adjustments/accrued wages payable? - Answer-They were
never recorded; wages that haven't been paid or electrical bill.
What are examples of accruals? - Answer-utilities, wages, interest
If liabilities are understated, then net income is - Answer-overstated
If expenses are understated, then owners equity is - Answer-overstated
If liabilities are overstated, then owners equity is - Answer-understated
If expenses are overstated, then net income is - Answer-understated
*What are the steps in the accounting cycle? - Answer-1. Analyzing transactions
2. Journalizing transactions
3. Posting
4. Preparing trial balance
5. Preparing adjusting entries
6. Posting adjusting entries
7. Preparing an adjusted trial balance
8. Preparing the financial statements
9. Recording and posting closing entries
10. Preparing a post-closing trial balance
You should post something before you analyze TRUE OR FALSE - Answer-False
*The accounting cycle step that involves summarizing the ledger accounts to prove the
equality of debits and credits is called: - Answer-preparing a trial balance.
, What is the statement of owner's equity a link between? - Answer-income statement
and balance statement where we take net income and transfer to owners equity
*What should we remember about a "worksheet"? - Answer-It is much like a t-account in
that it is not published anywhere; pencil and paper
*Managers of the business who want detailed information are - Answer-internal users
Potential Investor, creditors, and owners not active in managing the enterprise who
want summary form are - Answer-external users
When is revenue from a sale is recorded? - Answer-After the service is provided
*What must happen before a sale is considered official? - Answer-1. Legal title to the
goods has passed from seller to buyer
2. The selling price has been established
3. The seller's obligation has been completed
*What are fixed charges? - Answer-Charges that do not change
*What are examples of fixed charges? - Answer-Rent and insurance
*What is the purpose of the balance sheet? - Answer-Shows financial condition of
company as of a certain date
What are the limitations of a balance sheet? - Answer-1. Cost principle: we put it on the
balance sheet as its cost for example 50,000 building is now worth 1 mil on market but
recorded on balance sheet for 50,000
2. Physical assets: we cannot put our human resources on the balance sheet
3. Timeliness: Balance sheet from a week ago is not worth anything; historical
4. Based on Judgment (estimates): Salvage value. Calculate depreciation, and
accumulated depreciation will show up on balance sheet which is based on salvage
value.
*Cecil, the general manager of a hotel, picks up a balance sheet from the end of the
previous fiscal year, which ended December 31. He is gathering information to prove to
creditors that the hotel is able to pay its debts. If the current date is July 14: - Answer-
the balance sheet is too outdated to be helpful
What accounts are on a balance sheet? - Answer-Assets, liabilities, and owners equity
Employee training expenses are listed on the balance sheet TRUE OR FALSE -
Answer-False
*Accounts receivable are listed on the balance sheet TRUE OR FALSE - Answer-True
and Answers All Correct
What is the equation for accumulated depreciation? - Answer-Expense=cost-salvage
life/periods of useful life
Why do we have deferral Adjustments/Unearned Wages? - Answer-Because something
has already been recorded and now we make adjustments
What is unearned revenue? - Answer-Liability
Why do we have accrual adjustments/accrued wages payable? - Answer-They were
never recorded; wages that haven't been paid or electrical bill.
What are examples of accruals? - Answer-utilities, wages, interest
If liabilities are understated, then net income is - Answer-overstated
If expenses are understated, then owners equity is - Answer-overstated
If liabilities are overstated, then owners equity is - Answer-understated
If expenses are overstated, then net income is - Answer-understated
*What are the steps in the accounting cycle? - Answer-1. Analyzing transactions
2. Journalizing transactions
3. Posting
4. Preparing trial balance
5. Preparing adjusting entries
6. Posting adjusting entries
7. Preparing an adjusted trial balance
8. Preparing the financial statements
9. Recording and posting closing entries
10. Preparing a post-closing trial balance
You should post something before you analyze TRUE OR FALSE - Answer-False
*The accounting cycle step that involves summarizing the ledger accounts to prove the
equality of debits and credits is called: - Answer-preparing a trial balance.
, What is the statement of owner's equity a link between? - Answer-income statement
and balance statement where we take net income and transfer to owners equity
*What should we remember about a "worksheet"? - Answer-It is much like a t-account in
that it is not published anywhere; pencil and paper
*Managers of the business who want detailed information are - Answer-internal users
Potential Investor, creditors, and owners not active in managing the enterprise who
want summary form are - Answer-external users
When is revenue from a sale is recorded? - Answer-After the service is provided
*What must happen before a sale is considered official? - Answer-1. Legal title to the
goods has passed from seller to buyer
2. The selling price has been established
3. The seller's obligation has been completed
*What are fixed charges? - Answer-Charges that do not change
*What are examples of fixed charges? - Answer-Rent and insurance
*What is the purpose of the balance sheet? - Answer-Shows financial condition of
company as of a certain date
What are the limitations of a balance sheet? - Answer-1. Cost principle: we put it on the
balance sheet as its cost for example 50,000 building is now worth 1 mil on market but
recorded on balance sheet for 50,000
2. Physical assets: we cannot put our human resources on the balance sheet
3. Timeliness: Balance sheet from a week ago is not worth anything; historical
4. Based on Judgment (estimates): Salvage value. Calculate depreciation, and
accumulated depreciation will show up on balance sheet which is based on salvage
value.
*Cecil, the general manager of a hotel, picks up a balance sheet from the end of the
previous fiscal year, which ended December 31. He is gathering information to prove to
creditors that the hotel is able to pay its debts. If the current date is July 14: - Answer-
the balance sheet is too outdated to be helpful
What accounts are on a balance sheet? - Answer-Assets, liabilities, and owners equity
Employee training expenses are listed on the balance sheet TRUE OR FALSE -
Answer-False
*Accounts receivable are listed on the balance sheet TRUE OR FALSE - Answer-True
