Exam 2: The Accounting Information System

Selected accounts at July 31 are provided below: -Refer to HVAC Service. The journal entry to record the bills sent to clients will include a debit of $12,000 to

According to the historical cost principle, assets are always carried at their current market value.

Several accounts from the financial records of Wynn Linders, Inc. are listed. Indicate its normal balance and the debit/credit rules for increasing the account. (Choices may be used more than once.) a.Debit b.Credit -Retained Earnings

The ____________________ is the private sector group with authority to set accounting standards in the United States.

Match the following principles with their correct definition. a.Comparability g.Historical cost b.Conservatism h.Matching c.Double-entry accounting i.Monetary unit d.Economic entity j.Revenue recognition e.Going concern k.Time period f.Full disclosure -This principle divides the life of a company into artificial time periods such as quarters and years.

Match the following terms with their correct definition. a.Account f.Debit b.Accounting cycle g.Event c.Chart of accounts h.General ledger d.Cost vs. benefit i.Journal e.Credit j.Trial balance -A device used to record increases and decreases in each of the basic elements of the financial statements.

The general ledger is an example of a book of original entry.

Selected accounts at July 31 are provided below: -Refer to Happy Heights Country Club. Assuming that there are no other transactions, how much was owed to the country club by its members at the end of the month?

Match the following principles with their correct definition. a.Comparability g.Historical cost b.Conservatism h.Matching c.Double-entry accounting i.Monetary unit d.Economic entity j.Revenue recognition e.Going concern k.Time period f.Full disclosure -This principle requires that an expense be recorded and reported in the same period as the revenue it helped generate.

For assets, expenses, and dividend accounts, a credit will _______ the balance in the account.

In order for an internal or external event to be recognized in an accounting system, the items making up the event must impact the financial statements and they must be sufficiently reliable and ____________________.

Select the choice that describes the type of transaction and whether it should be recorded in the accounting system. (Choices may be used more than once.) a.External event to be recorded as a transaction b.Internal event to be recorded as a transaction c.Event which should not be recognized in the accounting system -Common stock is issued to investors.

Four journal entries are presented below. Write an explanation for each entry.

The correct term for the entry made on the left side of a T-account is

Hunsinger Enterprises purchases many small pieces of office furniture, such as trash cans, that cost less than $100 each. The company accounts for these items as expenses when acquired rather than reporting them as property, plant, and equipment on its balance sheet. The company's accountant states that no accounting principle has been violated. Justification for expensing these furniture items is based on cost vs. benefit considerations as well as the accounting constraint of

A company's current ratio is 2.00. If the company makes a payment on account, what is the effect on the current ratio?

Which of the following is an internal event for a business entity?

Match the following terms with their correct definition. a.Account f.Debit b.Accounting cycle g.Event c.Chart of accounts h.General ledger d.Cost vs. benefit i.Journal e.Credit j.Trial balance -A chronological record showing the debit and credit effects of transactions on a company.

____________________ is the quality of accounting information that makes it dependable in representing the events that it purports to represent.

If an investor can use accounting information for two different companies to evaluate the types and amounts of expenses, the information is said to have the quality of