Exam 15: Basic Accounting: Concepts, Techniques, and Conventions

Laguna Company paid $16,000 for January, February, March, and April rent in advance.The balance in the Prepaid Rent account as of January 31 is: _____.

An approach that implicitly underlies the decisions about the design of accounting systems, that the potential benefits should exceed the additional costs

Accounts receivable is omitted when using the cash basis of accounting

The accounting convention of _____ ignores the effects of price level changes.

The excess of revenues over expenses

Mr.Bryant invested $50,000 cash in a new corporation.The new corporation will record this transaction with a debit to_____.

Retained earnings are a specific claim against particular assets.

Cash collected from customers before goods are delivered will increase_____.

Companies must write off research costs as expenses immediately.

An example of an implicit transaction is cash received on account.

The use of acquisition cost less depreciation in valuing an asset on the balance sheet is the logical result of the _____ accounting convention.

Revenues and expenses are associated with stockholders' equity, therefore, revenues and expenses appear on the balance sheet.

The accrual basis of accounting recognizes the impact of transactions on the financial statements in the period when _____.

The Financial Accounting Standards Board FASB) has the ultimate responsibility for specifying generally accepted accounting principles GAAP) for United States companies.

The principle that states that a company record revenue in its accounts only when it has earned and realized the revenue

Each item in a financial statement is an account.

Dividends must be paid in cash.

A "multiple-step" income statement includes a subtotal for gross profit.

The accounting convention that justifies the omission of insignificant information when its omission or misstatement would not mislead a user of the financial statements

_____ are ownership claims from delivering goods or services.