Exam 2: The Accounting Information System

Which organization has the power to set accounting rules for companies whose stock is publicly-traded in the U.S. stock markets, but has delegated its power to another organization?

The conservatism principle is concerned with the possibility of understating assets or income.

Services are provided for customers who pay for their services immediately. What effect does this transaction have on the accounting equation?

A T-account for Cash cannot contain any credits.

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 -Any information that would make a difference to financial statement users should be reported.

Selected accounts at July 31 are provided below: -Refer to HVAC Service. The journal entry to record payment of the salaries will include a credit to

The purchase of office equipment on credit has what effect on the accounting equation?

Which of the following underlying assumptions for the conceptual framework is the reason the dollar is used in the preparation of financial statements?

What is the difference between comparability and consistency?

During March, Honeybaked Spam purchased supplies for cash. The supplies will be used in April. What effect does this transaction have on the accounting equation at the time the supplies are purchased?

Each of the situations in A through C below applies to one of the assumptions or principles included in the conceptual framework of accounting. Identify which assumption or principles applies and explain why that assumption or principle applies.

When the amount for a debit entry in a journal is transferred to a specific account in the general ledger, it must be posted as a

Which of the following statements best describes the effects of recognizing revenue earned by a business entity?

Several transactions are listed below, with an expanded accounting equation stated to the right side of each. Use the following identification codes to indicate the effects of each transaction on the accounting equation: I = Increase; D = Decrease; NE = No Effect. Write your answers in the space provided under the accounting equation, being sure to include an identification code for each element of the accounting equation.

-Refer to H&R Clock Company. Record each transaction in proper journal entry format in the journal provided. A written explanation for each journal entry is not required.

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 list of all active accounts and each account's debit or credit balance.

Several transactions are listed. Use the choices to identify the effect on the accounting equation for each transaction listed. (Choices may be used more than once.) a.Assets and liabilities increase b.Assets and contributed capital increase c.Assets and retained earnings increase d.Two asset accounts are impacted, but there is no net effect on total assets e.Assets and liabilities decrease f.Assets and retained earnings decrease g.Liabilities increase and retained earnings decrease h.Liabilities decrease and retained earnings increase -Providing services for customers for cash

Several transactions are listed. Use the choices to identify the effect on the accounting equation for each transaction listed. (Choices may be used more than once.) a.Assets and liabilities increase b.Assets and contributed capital increase c.Assets and retained earnings increase d.Two asset accounts are impacted, but there is no net effect on total assets e.Assets and liabilities decrease f.Assets and retained earnings decrease g.Liabilities increase and retained earnings decrease h.Liabilities decrease and retained earnings increase -Issuing common stock to investors

If a company made a payment on account, then assets and liabilities would both decrease.

The initial step in the recording process is sometimes referred to as journalizing.