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College Accounting, Chapters 1-27, 22e James Heintz, Robert Parry (Test Bank All Chapters, 100% Original Verified, A+ Grade) Chapter 1—Introduction to Accounting 1. The purpose of accounting is to provide financial information about the current operations and financial conditions of a business to individuals and organizations. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.01 - LO 1-1 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Remembering NOTES: 1 min. 2. Since financial information is communicated in accounting terms, accounting is said to be the "language of business." a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.01 - LO 1-1 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Remembering NOTES: 1 min. 3. Interpreting refers to reviewing events that have taken place and determining how they affect a business. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.02 - LO 1-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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4. A partnership is owned by stockholders or shareholders and is managed by them. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.04 - LO 1-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-03-Business Forms KEYWORDS: Bloom's: Understanding NOTES: 1 min. 5. A business that makes a product to sell is called a manufacturing business. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.05 - LO 1-5 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-03-Business Forms KEYWORDS: Bloom's: Remembering NOTES: 1 min. 6. A public accountant can achieve professional recognition as a Certified Public Accountant by meeting certain educational and experience requirements as determined by each state. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.06 - LO 1-6 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Understanding NOTES: 1 min.

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7. The six major steps of the accounting process are analyzing, recording, classifying, summarizing, reporting, and interpreting. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.02 - LO 1-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Remembering NOTES: 1 min. 8. Generally accepted accounting principles are procedures and guidelines to be followed in the accounting/reporting process. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.03 - LO 1-3 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 9. Accountants design accounting information systems and analyze and interpret information. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.06 - LO 1-6 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Understanding NOTES: 1 min.

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10. Writing or using one of the latest technological advances to enter a transaction in the accounting records is called summarizing. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.02 - LO 1-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Remembering NOTES: 1 min. 11. The Financial Accounting Standards Board develops generally accepted accounting principles to provide some assurance that companies are reporting business activities in a similar manner. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.03 - LO 1-3 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 12. Stockholders may have very little influence on business decisions. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.04 - LO 1-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-03-Business Forms KEYWORDS: Bloom's: Understanding NOTES: 1 min.

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13. Cost accounting is used to develop a financial plan for a company. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.06 - LO 1-6 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 14. The principal accounting officer of a company is called a public accountant. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.06 - LO 1-6 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Understanding NOTES: 1 min. 15. A CMA is a Certified Marketing Auditor. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.06 - LO 1-6 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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16. Which of the following types of businesses is owned by stockholders? a. proprietorship b. corporation c. partnership with more than ten partners d. partnership with only two partners ANSWER: b POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.04 - LO 1-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-03-Business Forms KEYWORDS: Bloom's: Understanding NOTES: 1 min. 17. A business that purchases a product from another business to sell to customers is called a a. service business. b. manufacturing business. c. merchandising business. d. nonprofit business. ANSWER: c POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.05 - LO 1-5 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-03-Business Forms KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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18. A person who reviews the operating and accounting control procedures adopted by management to make sure the controls are adequate and are being followed may be referred to as a(n) a. bookkeeper. b. accountant. c. information processor. d. internal auditor. ANSWER: d POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.06 - LO 1-6 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Remembering NOTES: 1 min. 19. Since financial information is communicated in accounting terms and is the eyes and ears of management, accounting is said to be a. the language of business. b. public. c. private. d. nonprofit. ANSWER: a POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.01 - LO 1-1 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Understanding NOTES: 1 min.

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20. A corporation is usually managed by a. stockholders. b. a professional manager. c. a proprietor. d. two or more partners. ANSWER: b POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.04 - LO 1-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-03-Business Forms KEYWORDS: Bloom's: Understanding NOTES: 1 min. 21. A person who records, sorts, and files accounting information in accounting records may be referred to as a(n) a. budgeter. b. journalist. c. accounting clerk. d. scribe. ANSWER: c POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.06 - LO 1-6 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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22. An internal auditor can achieve professional recognition in internal auditing by receiving which of the following certificates? a. GAAP b. CIA c. CMA d. CLU ANSWER: b POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.06 - LO 1-6 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Understanding NOTES: 1 min. 23. The accounting function of classifying is a. thinking about how events affect the business. b. gathering similar events to provide information that is easy to understand. c. sorting and grouping similar items together. d. deciding the meaning and importance of the information in various reports. ANSWER: c POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.02 - LO 1-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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24. Bringing together various items of information to determine or explain a result is a. summarizing. b. interpreting. c. recording. d. classifying. ANSWER: a POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.02 - LO 1-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Remembering NOTES: 1 min. 25. Examining a transaction or event to determine its fundamental significance to the business so that the relevant information may be properly processed is called a. recording. b. analyzing. c. classifying. d. interpreting. ANSWER: b POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.02 - LO 1-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Understanding NOTES: 1 min.

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26. Which of the following does NOT use nonprofit accounting guidelines and procedures? a. proprietorships b. hospitals c. educational institutions d. churches ANSWER: a POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.06 - LO 1-6 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-03-Business Forms KEYWORDS: Bloom's: Remembering NOTES: 1 min. 27. Cost accountants provide a wide variety of services including a. designing and implementing accounting information systems. b. auditing reviews. c. performing general accounting services. d. analyzing the cost effectiveness of products produced and services provided. ANSWER: d POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.06 - LO 1-6 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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28. Public accountants do NOT offer which of the following services? a. auditing b. tax preparation c. management consulting d. marketing analysis ANSWER: d POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.06 - LO 1-6 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Remembering NOTES: 1 min. 29. Looking at events that have taken place and thinking about how they affect a business is called ____________________. ANSWER: analyzing POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.02 - LO 1-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Understanding NOTES: 1 min. 30. One who assumes all risks for the business and whose personal assets can be taken to pay creditors is called a(n) ____________________. ANSWER:

sole proprietor owner partner POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.04 - LO 1-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-03-Business Forms KEYWORDS: Bloom's: Understanding NOTES: 1 min.

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31. Rules that businesses must follow when preparing financial statements are called ____________________. ANSWER:

generally accepted accounting principles GAAP POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.03 - LO 1-3 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Understanding NOTES: 1 min. 32. The accountant who oversees the entire accounting process and is the principal accounting officer of the company is called the ____________________. ANSWER: controller POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.06 - LO 1-6 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Remembering NOTES: 1 min. 33. A business that buys a product from another business to sell to customers is called a(n) ____________________ business. ANSWER: merchandising POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.05 - LO 1-5 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-03-Business Forms KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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34. Entering financial information about events affecting the company into the accounting system is called ____________________. ANSWER: recording POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.02 - LO 1-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Remembering NOTES: 1 min. 35. ____________________ design the accounting information system and focus on analyzing and interpreting information by studying the impact of alternative decisions. ANSWER: Accountants POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.06 - LO 1-6 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Understanding NOTES: 1 min. 36. The owners of a corporation are called ____________________. ANSWER:

stockholders shareholders POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.04 - LO 1-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-03-Business Forms KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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37. ____________________ is the aggregation of many similar events to provide information that is easy to understand. ANSWER: Summarizing POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.02 - LO 1-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Understanding NOTES: 1 min. 38. ____________________ is the process by which accountants help managers develop a financial plan. ANSWER: Budgeting POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.06 - LO 1-6 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Understanding NOTES: 1 min. 39. A business that makes a product to sell is called a(n) ____________________ business. ANSWER: manufacturing POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.05 - LO 1-5 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Understanding NOTES: 1 min.

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40. ____________________ includes preparing various reports and financial statements and analyzing operating, investing, and financing decisions. ANSWER: Financial accounting POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.06 - LO 1-6 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Understanding 41. ____________________ involves the application of standard review and testing procedures to be certain that proper accounting policies and practices have been followed. ANSWER: Auditing POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.06 - LO 1-6 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Understanding NOTES: 1 min. 42. A(n) ____________________ is owned by two or more people who assume the risks for the business and whose assets may be taken to pay creditors. ANSWER: partnership POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.04 - LO 1-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-03-Business Forms KEYWORDS: Bloom's: Understanding NOTES: 1 min.

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43. ____________________ is deciding the meaning and importance in various reports, which may include ratio analysis to help explain how pieces of information relate to one another. ANSWER: Interpreting POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.02 - LO 1-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose KEYWORDS: Bloom's: Understanding NOTES: 1 min. Match the terms with the definitions. a. accountant b. accounting c. accounting clerk d. analyzing e. auditing f. bookkeeper g. budgeting h. Certified Public Accountant i. classifying j. controller k. corporation l. cost accounting m. financial accounting n. generally accepted accounting principles o. internal auditing p. interpreting q. manufacturing business r. merchandising business s. para-accountant t. partnership u. recording v. reporting w. service business x. sole proprietorship y. summarizing z. tax accounting DIFFICULTY: LEARNING OBJECTIVES:

Easy COLL.HEIN.17.02 - LO 1-2

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COLL.HEIN.17.03 - LO 1-3 COLL.HEIN.17.04 - LO 1-4 COLL.HEIN.17.05 - LO 1-5 COLL.HEIN.17.06 - LO 1-6 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-01-Purpose ACBSP: APC-02-GAAP ACBSP: APC-03-Business Forms KEYWORDS: Bloom's: Remembering | Bloom's: Understanding NOTES: 7 min. 44. Looking at events that have taken place and thinking about how they affect the business. ANSWER: d POINTS: 1 45. Specializes in cash, payroll, accounts receivable, accounts payable, inventory, or purchases. ANSWER: c POINTS: 1 46. A business that buys a product from another business to sell to customers. ANSWER: r POINTS: 1 47. Reviewing the operating and accounting control procedures adopted by management to make sure the controls are adequate and being followed; assuring that accurate and timely information is provided. ANSWER: o POINTS: 1 48. Deciding the meaning and importance of the information in various reports. ANSWER: p POINTS: 1 49. The rules that businesses must follow when preparing financial statements. ANSWER: n POINTS: 1 50. Includes preparing various reports and financial statements and analyzing operating, investing, and financing decisions. ANSWER: m POINTS: 1 51. Determining the cost of producing specific products or providing services and analyzing for cost effectiveness. ANSWER: l POINTS: 1

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52. A type of ownership structure in which there are many owners who usually employ professional managers. ANSWER: k POINTS: 1 53. Sorting and grouping similar items together rather than merely keeping a simple, diary-like record of numerous events. ANSWER: i POINTS: 1 54. The process in which accountants help managers develop a financial plan. ANSWER: g POINTS: 1 55. Reviewing and testing to be certain that proper accounting policies and practices have been followed. ANSWER: e POINTS: 1 56. A system of gathering financial information about a business and reporting this information to users. ANSWER: b POINTS: 1 57. A type of ownership structure in which one person owns the business. ANSWER: x POINTS: 1 58. A business that provides a service. ANSWER: w POINTS: 1 59. Bringing various items of information together to determine a result. ANSWER: y POINTS: 1 60. Entering financial information about events affecting the company into the accounting system. ANSWER: u POINTS: 1 61. A type of ownership structure in which more than one person owns the business. ANSWER: t POINTS: 1 62. Telling the results of the financial information. ANSWER: v POINTS: 1

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63. A business that makes products to sell. ANSWER: q POINTS: 1 64. Focusing on tax planning, preparing tax returns, and dealing with the Internal Revenue Service and other governmental agencies. ANSWER: z POINTS: 1 65. Generally supervises the work of accounting clerks, helps with daily accounting work, and summarizes accounting information. ANSWER: f POINTS: 1

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Chapter 2—Analyzing Transactions: The Accounting Equation 1. A business entity is an individual, association, or organization with control over economic resources and which engages in economic activities. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.1 - LO: 2-1 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-03-Business Forms KEYWORDS: Bloom's: Remembering NOTES: 1 min. 2. Liabilities represent an "inside" interest in a business. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.1 - LO: 2-1 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-03-Business Forms KEYWORDS: Bloom's: Remembering NOTES: 1 min. 3. The accounting equation shows the relationship among the three basic accounting elements—assets, expenses, and owner's equity. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.2 - LO: 2-2 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 4. If owner's equity and liabilities increased during the period, then assets must also have increased. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.2 - LO: 2-2 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 5. An accounts payable is an unwritten promise to pay a supplier for assets purchased or services rendered. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.1 - LO: 2-1 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 6. If the revenue of a period exceeds the expenses, the excess represents a net loss. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.3 - LO: 2-5 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-09-Financial Statements KEYWORDS: Bloom's: Evaluating NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 7. Any accounting period of twelve months' duration is usually referred to as a fiscal year. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.3 - LO: 2-5 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 8. Revenues received during an accounting period increase owner's equity. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-09-Financial Statements KEYWORDS: Bloom's: Remembering NOTES: 1 min. 9. Since supplies last for several months, they are recorded as assets. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 10. Since insurance lasts for several months, it is recorded as owner's equity. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 11. The income statement provides information about events over a period of a month, year, or other period of time. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.3 - LO: 2-5 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-09-Financial Statements KEYWORDS: Bloom's: Remembering NOTES: 1 min. 12. The terms "profit and loss statement" or "operating statement" are sometimes used as synonyms for the balance sheet. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.3 - LO: 2-5 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-09-Financial Statements KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 13. Other terms used for owner's equity include net worth and capital. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.1 - LO: 2-1 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 14. Any item a business owns that will provide future benefits is called owner's equity. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.1 - LO: 2-1 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 15. It is not necessary to measure a business transaction in dollars. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.5 - LO: 2-3 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 16. The accounting equation may be expressed as assets − liabilities = owner's equity. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.2 - LO: 2-2 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 17. According to the business entity concept, a proprietor may include nonbusiness assets and liabilities in the business entity's accounting records. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.1 - LO: 2-1 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 18. Recognizing the effects of transactions on assets, liabilities, owner's equity, revenue, and expenses of a business is the processing function. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.6 - LO: 2-6 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Understanding NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 19. Expenses represent a decrease in liabilities. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 20. Expenses that are incurred in operating the enterprise increase owner's equity. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Understanding NOTES: 1 min. 21. Withdrawing cash from a business entity will result in an increase in owner's equity. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Understanding NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 22. An increase in a revenue account may also result in an increase in the accounts receivable account. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-09-Financial Statements KEYWORDS: Bloom's: Understanding NOTES: 1 min. 23. Financial statements commonly prepared by businesses include an income statement, a statement of owner's equity, and a balance sheet. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.3 - LO: 2-5 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-09-Financial Statements KEYWORDS: Bloom's: Remembering NOTES: 1 min. 24. The statement of owner's equity shows the state of the business on a specific date. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.3 - LO: 2-5 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-09-Financial Statements KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 25. The balance sheet reports assets, liabilities, and owner's equity on a specific date. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.3 - LO: 2-5 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-09-Financial Statements KEYWORDS: Bloom's: Remembering NOTES: 1 min. 26. The income statement and statement of owner's equity provide information covering a period of time. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.3 - LO: 2-5 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-09-Financial Statements KEYWORDS: Bloom's: Remembering NOTES: 1 min. 27. The accounting equation may be expressed as a. owner's equity = assets − liabilities. b. revenue − expenses = net income. c. revenue = net income − expenses. d. liabilities − owner's equity = assets. ANSWER: a POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.2 - LO: 2-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 28. Jason purchased office equipment for $4,800 in cash. This transaction would a. increase assets and increase owner's equity. b. increase assets and increase liabilities. c. increase one asset and decrease another asset. d. decrease assets and decrease liabilities. ANSWER: c POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 29. Stephen purchased office supplies for $800 on account. This transaction would a. increase assets and increase owner's equity. b. increase one asset and decrease another asset. c. increase assets and increase liabilities. d. decrease assets and decrease liabilities. ANSWER: c POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 30. Meghan started her business by investing $30,000 in cash. This transaction would a. increase assets and increase owner's equity. b. increase assets and increase liabilities. c. increase one asset and decrease another asset. d. decrease assets and decrease liabilities. ANSWER: a POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 31. Any accounting period of twelve months' duration is usually referred to as a(n) a. fiscal year. b. calendar year. c. physical year. d. operational year. ANSWER: a POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 32. Increases to owner's equity may be from a. expenses that are incurred. b. expenses exceeding revenue for the period. c. withdrawals of cash from the business by the owner. d. revenue that is derived from sales of goods or services. ANSWER: d POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA BB-Critical thinking BUSPROG: Communication TOPICS: ACBSP: APC-09-Financial Statements KEYWORDS: Bloom's: Understanding NOTES: 1 min. 33. Tyler paid $3,700 on account to the company from which equipment was purchased on credit. This transaction would a. decrease assets and decrease liabilities. b. increase assets and increase owner's equity. c. increase assets and increase liabilities. d. increase one asset and decrease another asset. ANSWER: a POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 34. An example of an expense is a. investments. b. supplies consumed. c. prepaid insurance. d. withdrawals by the owner. ANSWER: b POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 35. A decrease in owner's equity may result from a(n) a. purchase of office supplies for cash. b. withdrawal of cash from the business by the owner. c. revenue that is derived from sales of goods or services. d. investment of cash in the business by the owner. ANSWER: b POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA BB-Critical thinking BUSPROG: Analytic TOPICS: ACBSP: APC-09-Financial Statements KEYWORDS: Bloom's: Understanding NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 36. Which phase of the accounting process involves recognizing the effect of transactions on assets, liabilities, owner's equity, revenue, and expenses of a business? a. input b. processing c. output d. summarizing ANSWER: b POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.6 - LO: 2-6 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min. 37. The financial statement that should be completed first is the a. balance sheet. b. statement of financial position. c. statement of financial condition. d. income statement. ANSWER: d POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.3 - LO: 2-5 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-09-Financial Statements KEYWORDS: Bloom's: Analyzing NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 38. Falana received $7,000 in cash from a client for professional services rendered. This transaction would a. increase assets and increase owner's equity. b. decrease assets and increase owner's equity. c. increase liabilities and decrease owner's equity. d. decrease assets and decrease owner's equity. ANSWER: a POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 39. The financial statement that shows the state of the firm's assets, liabilities, and owner's equity on a specific date is called a(n) a. balance sheet. b. statement of operations. c. statement of owner's equity. d. income statement. ANSWER: a POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.3 - LO: 2-5 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-09-Financial Statements KEYWORDS: Bloom's: Analyzing NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 40. Sue Lee paid $1,200 for her employees' salaries. This transaction would a. increase assets and decrease owner's equity. b. increase assets and increase liabilities. c. decrease assets and decrease liabilities. d. decrease assets and decrease owner's equity. ANSWER: d POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 41. Match the letter corresponding to one of the basic elements of accounting to each of the accounts below. A = Asset L = Liability OE = Owner's Equity R = Revenue E = Expense 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Utility Expense Accounts Payable Prepaid Rent Supplies P. Coyote, Drawing Wages Expense P. Coyote, Capital Cash Advertising Expense Fees Earned

1. E 2. L 3. A 4. A 5. OE 6. E 7. OE 8. A 9. E 10. R POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 5 min. ANSWER:

42. Show the effect of each transaction on the three basic accounting elements by indicating the dollar amount of the increase or decrease under the proper element heading. Compute the resulting accounting equation. a. b. c. d. e. f.

Owner invested $16,500 cash in the business. Paid premium for two-year insurance policy, $1,500. Purchased a van valued at $35,000 with $5,000 down payment; the balance to be paid over three years. Paid the rent for the month, $900. Purchased $470 of supplies for cash. Cash sales for the month, $8,750.

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Chapter 2—Analyzing Transactions: The Accounting Equation g. h. i. j.

Billed credit customers $14,200 for monthly services. Paid monthly utility bill, $210. Owner withdrew $2,200 for personal use. Received payments of $3,300 from credit customers. ASSETS Cash

a. b. c. d. e. f. g. h. i. j.

____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

< < < < < < < < < < < < < <

____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

LIAB. Notes Payable

a. b. c. d. e. f. g. h. i. j.

Accounts Rec.

Supplies

____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

> >

= Prepaid Ins.

____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

Van

> > > > > > > > > > > >

____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

OWNER'S EQUITY Capital

Drawing

–

____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

PROOF Cash Accounts Receivable Supplies Prepaid Insurance Van

____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

____ ____ ____ ____ ____ ____

Revenues ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

Notes Payable Capital Drawing Revenues Expenses

–

Expenses ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

____ ____ ____ ____ ____ ____

ASSETS

ANSWER: Cash

Accounts + Rec.

Supplies

= +

Prepaid Ins.

Van

> >

= >

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Chapter 2—Analyzing Transactions: The Accounting Equation a. 16,500 b. (1,500) c. (5,000) d. (900) e. (470) f. 8,750 g. h. (210) i. (2,200) j. 3,300

1,500 35,000 470 14,200

18,270

< < < < < < < < < < < < < <

LIAB. Note Payable a. b. c. d. e. f. g. h. i. j.

___ 470

(3,300) 10,900

+ +

_____ 1,500

______ 35,000

> > > > > > > > > > >

OWNER'S EQUITY Capital

–

Drawing

Revenues –

Expenses

16,500 30,000 900 8,750 14,200 210 ______ 30,000

PROOF Cash Accounts Receivable Supplies Prepaid Insurance Van

______ 16,500

2,200 _____ 2,200

18,270 10,900 470 1,500 35,000 66,140

______ 22,950

Notes Payable Capital Drawing Revenues Expenses

_____ 1,110

30,000 16,500 (2,200) 22,950 (1,110 66,140

POINTS: DIFFICULTY: LEARNING OBJECTIVES:

1 Easy COLL.HEIN.17.2 - LO: 2-2 COLL.HEIN.17.4 - LO: 2-4 COLL.HEIN.17.5 - LO: 2-3 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Applying NOTES: 15 min. Cengage Learning Testing, Powered by Cognero

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Chapter 2—Analyzing Transactions: The Accounting Equation 43. Show the effects of each transaction on the accounting equation by indicating under the proper heading the dollar amount of increase or decrease for each transaction listed below. Compute the resulting accounting equation. a. b. c. d. e. f. g.

Owner deposited $20,000 in his new business checking account. Supplies were purchased for $300 on account. Paid a $1,200 premium for six months of liability insurance. Purchased supplies for $200 cash. Purchased equipment for $4,000 by paying $1,000; the rest to be paid in six months. Paid the $300 bill outstanding (from transaction b). Owner withdrew $700 from the business for personal use. ASSETS

= LIAB. +

Prep. Accts. Cash + Supp. + Insur. + Equip = Pay. a. b. c. d. e. f. g.

____ ____ ____ ____ ____ ____ ____ ____

a. b. c. d. e. f. g.

____ ____ ____ ____ ____ ____ ____ ____

= LIAB. +

Prep. Cash + Supp. + Insur. + Equip = 20,000 300 (1,200) 1,200 (200) 200 (1,000) 4,000 (300) (700) ___ _____ _____ 16,600 500 1,200 4,000

PROOF Cash Supplies Prepaid Insurance Equipment POINTS: DIFFICULTY: LEARNING OBJECTIVES:

+ Capital – Drawing

____ ____ ____ ____ ____ ____ ____ ____

ASSETS

ANSWER:

OWNER'S EQUITY

16,600 Accounts Payable 500 Capital 1,200 Drawing 4,000 22,300

Accts. Pay.

OWNER'S EQUIT

Capital 20,000

300

3,000 (300) _____ 3,000

______ 20,000

3,000 20,000 (700) _____ 22,300

1 Easy COLL.HEIN.17.2 - LO: 2-2 COLL.HEIN.17.4 - LO: 2-4 COLL.HEIN.17.5 - LO: 2-3

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Chapter 2—Analyzing Transactions: The Accounting Equation ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Applying NOTES: 15 min. 44. Madame Shira began a fortune telling business on May 1. The following transactions occurred: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

Owner Madame Shira invested $5,000 cash in the business. Purchased $2,000 of furniture with a down payment of $500; the rest by issuing an account payable to be paid in three monthly installments. Paid $700 rent. Purchased a crystal ball for $300. Paid $1,700 for a 12-month insurance policy. During the first month received $2,500 from cash customers. Sent billings of $2,000 for services rendered to credit customers. Paid assistant $1,500 wages for the month. Received $600 in payments from credit customers. Borrowed $3,200 by signing a note. Made a $500 payment on the furniture bill (from transaction 2). Owner withdrew $300 cash for personal use. Paid bills for advertising $60, utilities $39, and repairs $52.

Required: 1. Enter the above transactions in an accounting equation work sheet. 2. Prepare an income statement for Madame Shira for the month of May. 3. Prepare a statement of owner's equity for the month of May. ANSWER:

Cash 5,000 (500) (700) (300) (1,700) 2,500

1. 2. 3. 4. 5. 6. 7. 8. (1,500) 9. 600 10. 3,200 11. (500) 12. (300) 13. (60) (39) (52) 5,649 Cengage Learning Testing, Powered by Cognero

ASSETS = LIABILIT Crystal Accounts Prepaid Accounts + Furniture + + + = Ball Rec. Ins. 2,000 300 1,700 2,000 (600)

____ 2,000

___ 300

_____ 1,400

_____ 1,700 Page 21

Chapter 2—Analyzing Transactions: The Accounting Equation <

+ EQUITY < Shira, + Capital 5,000 < < < < < < < < < < < < < < _____ < 5,000 <

OWNER'S

–

Shira, Drawing

Revenues

–

Expenses

Desc.

700 Rent

2,500 2,000 1,500 Wages

300

___ 300

_____ 4,500

60 Advertising 39 Utilities 52 Repairs 2,351

2. Madame Shira Fortune Telling Income Statement For Month Ended May 31, 20-Revenues: Fortune telling fees Expenses: Rent expense Wages expense Advertising expense Utilities expense Repairs expense Total expenses Net income

$4,500 $ 700 1,500 60 39 52 2,351 $2,149

POINTS:

Madame Shira Fortune Telling Statement of Owner's Equity For Month Ended May 31, 20-Madame Shira, capital May 1, 20-Investment by owner Net income for May Less withdrawals for May Increase in capital Madame Shira, capital May 31, 20-1

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$ 0 5,000 $2,149 300 1,849 $6,849

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Chapter 2—Analyzing Transactions: The Accounting Equation DIFFICULTY: LEARNING OBJECTIVES:

Moderate COLL.HEIN.17.3 - LO: 2-5 COLL.HEIN.17.4 - LO: 2-4 COLL.HEIN.17.5 - LO: 2-3 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Applying NOTES: 15 min. 45. From the following list of accounts, prepare an income statement, statement of owner's equity, and balance sheet for the year ended or at December 31, 20--, for Milner's Star Express Cleaning Service. Cash Fees Earned Accounts Payable D. Milner, Capital January 1, 20-D. Milner, Drawing Utilities Expense Prepaid Insurance Rent Expense Accounts Receivable Equipment Wages Expense

$ 2,026 13,835 7,530 6,000 1,750 153 1,216 1,200 4,080 15,290 1,650

ANSWER: Milner's Star Express Cleaning Service Income Statement For the Year Ended December 31, 20-Revenues: Fees earned Expenses: Utilities expense Rent expense Wages expense Total expenses Net income

$13,835 $ 153 1,200 1,650 3,003 $10,832

Milner's Star Express Cleaning Service Statement of Owner's Equity For the Year Ended December 31, 20-D. Milner, capital January 1, 20-Net income for the year $10,832 Less withdrawals for the year 1,750 Increase in capital D. Milner, capital December 31, 20--

$ 6,000

9,082 $15,082

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Chapter 2—Analyzing Transactions: The Accounting Equation December 31, 20-Assets Cash Prepaid insurance Accounts receivable Equipment

$ 2,026 1,216 4,080 15,290

Total assets

$22,612

Liabilities Accounts payable

$ 7,530

Owner's Equity D. Milner, capital 15,082 Total liab. & owner's $22,612 equity

POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: COLL.HEIN.17.3 - LO: 2-5 ACCREDITING STANDARDS: AICPA FN-Reporting BUSPROG: Analytic TOPICS: ACBSP: APC-09-Financial Statements KEYWORDS: Bloom's: Applying NOTES: 15 min. 46. From the following list of accounts, prepare an income statement, statement of owner's equity, and balance sheet for the year ended or at December 31, 20--, for J. Carr's Delivery Service. Cash Accounts Payable Fees Earned J. Carr, Capital January 1, 20-J. Carr, Drawing Office Supplies Rent Expense Accounts Receivable Equipment Wages Expense Repairs Expense Furniture

$11,450 4,450 41,500 14,500 7,000 250 10,000 7,000 6,000 14,000 250 4,500

ANSWER: J. Carr's Delivery Service Income Statement For the Year Ended December 31, 20-Revenues: Fees earned Expenses: Rent expense Wages expense Repairs expense Total expenses Net income

$41,500 $10,000 14,000 250 24,250 $17,250 J. Carr's Delivery Service Statement of Owner's Equity

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Chapter 2—Analyzing Transactions: The Accounting Equation For the Year Ended December 31, 20-J. Carr, capital January 1, 20-Net income for the year $17,250 Less withdrawals for the year 7,000 Increase in capital J. Carr, capital December 31, 20--

Assets Cash Accounts receivable Office supplies Equipment Furniture Total assets

J. Carr's Delivery Service Balance Sheet December 31, 20-Liabilities $11,450 Accounts Payable 7,000 250 6,000 Owner's Equity 4,500 J. Carr, capital Total liab. & owner's $29,200 equity

$14,500

10,250 $24,750

$ 4,450

24,750 $29,200

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Chapter 2—Analyzing Transactions: The Accounting Equation 47. Dr. Etana Jenson is a podiatrist. As of December 31, Jenson owned the following assets related to the professional practice: Cash Office Equipment

$6,600 3,500

X-ray Equipment Laboratory Equipment

$9,000 3,000

As of that date, Jenson owed business suppliers as follows: Top Flight Office Equipment Co. Dunhill Medical Supplies Company Island Gas Company

$3,000 1,000 2,200

Required: Compute the amount of assets, liabilities, and owners' equity as of December 31.

a. Assets

Liabilities

Owner's Equity

_______________

_______________ _______________ Assuming that during January there is an increase of $4,600 in Dr. Jenson's business assets and an increase of $2,500 in the business liabilities, compute the resulting equation as of January 31.

_______________

_______________ _______________ Assuming that during February there is a decrease of $1,500 in assets and a decrease of $1,200 in liabilities, compute the resulting accounting equation as of February 28.

_______________

________________

Assets = a. $22,100 = b. 26,700 = c. 25,200 = POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 COLL.HEIN.17.5 - LO: 2-3 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Understanding NOTES: 3 min. ANSWER:

Liabilities $6,200 8,700 7,500

+ + + +

Owner's Equity $15,900 18,000 17,700

48. Kristin Holden started her own consulting business in July, 20--. During the first month, the following transactions Cengage Learning Testing, Powered by Cognero

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Chapter 2—Analyzing Transactions: The Accounting Equation occurred: a. b. c. d. e. f. g. h.

Owner invested $12,000 cash in the business. Purchased office equipment for $7,500 cash. Purchased computer equipment costing $11,500 on account. Paid $1,100 office rent for the month. Received $1,700 cash from a client for services rendered. Paid water bill for the month, $170. Paid $2,400 on account for computer equipment purchased in transaction (c). Paid the electric bill for the month, $200.

Required: Record the effects of these transactions in an accounting equation worksheet. ASSETS Office Cash + Equip. + a. Bal. b. Bal. c. Bal. d. Bal. e. Bal. f. Bal. g. Bal. h. Bal.

____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

< <

Computer Equip.

= LIABILITIES Accounts = Payable +

____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

+ + < < < < < < < < < <

a. Bal. b. Bal. c. Bal. d. Bal. e. Bal.

K. Holden, Capital ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

> >

> > > > > > > > > > > > > > > >

OWNER'S EQUITY Client Fees ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

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Rent Expense ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

Utilities Expense ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ Page 27

Chapter 2—Analyzing Transactions: The Accounting Equation < < < < < <

f. Bal. g. Bal. h. Bal.

____ ____ ____ ____ ____ ____

a. 12,000 Bal. 12,000 b. (7,500) Bal. 4,500 c. ______ Bal. 4,500 d. (1,100) Bal. 3,400 e. 1,700 Bal. 5,100 f. (170) Bal. 4,930 g. (2,400) Bal. 2,530 h. (200) Bal. 2,330

ASSETS = LIABILITIES Office Computer Accounts K. + Equip. + = Payable + Holden, Equip. Capital 12,000 12,000 7,500 ______ 7,500 12,000 _____ 11,500 11,500 ______ 7,500 11,500 11,500 12,000 _____ ______ _______ ______ 7,500 11,500 11,500 12,000 _____ ______ ______ ______ 7,500 11,500 11,500 12,000 _____ ______ ______ ______ 7,500 11,500 11,500 12,000 _____ ______ (2,400) ______ 7,500 11,500 9,100 12,000 _____ ______ ______ ______ 7,500 11,500 9,100 12,000

< < < < < < < < < < < < < < < < <

ANSWER: Cash

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____ ____ ____ ____ ____ ____

a. Bal. b. Bal. c. Bal. d. Bal. e. Bal. f. Bal. g. Bal. h. Bal.

> >

> > > > > > > > > > > > > > > >

OWNER'S EQUITY Client Fees

Rent Expense

Utilities Expense

1,100 1,700 1,700 _____ 1,700 _____ 1,700 _____ 1,700

1,100 1,100 _____ 1,100 _____ 1,100 _____ 1,100

170 170 ___ 170 200 370

Page 28

Chapter 2—Analyzing Transactions: The Accounting Equation POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 10 min. 49. Most businesses recognize ____________________ when earned, even if cash has not yet been received. ANSWER: revenue POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-04-Cash vs. Accrual KEYWORDS: Bloom's: Remembering NOTES: 1 min. 50. ____________________ represent the decrease in assets (or increase in liabilities) as a result of efforts made to produce revenues. ANSWER: Expenses POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA FN-Reporting BUSPROG: Communication TOPICS: ACBSP: APC-09-Financial Statements KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 51. The ____________________, sometimes called the profit and loss statement, reports the profitability of business operations for a specific period of time. ANSWER: income statement POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.3 - LO: 2-5 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 52. ____________________ represent the amount a business charges customers for products sold or services performed. ANSWER: Revenues POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 53. The relationship between the three basic accounting elements: ____________________, ____________________, and ____________________, can be expressed in the form of a simple equation known as the accounting equation. assets, liabilities, owner's equity assets, owner's equity, liabilities liabilities, assets, owner's equity liabilities, owner's equity, assets owner's equity, assets, liabilities owner's equity, liabilities, assets POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.2 - LO: 2-2 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. ANSWER:

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Chapter 2—Analyzing Transactions: The Accounting Equation 54. ____________________ represent probable future benefits. ANSWER: Assets POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.1 - LO: 2-1 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 55. A(n) ____________________ is an unwritten promise to pay a supplier for assets purchased or services received. ANSWER: accounts payable POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.1 - LO: 2-1 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 56. The report which shows a firm's assets, liabilities, and owner's equity as of a specific date is called the ____________________. ANSWER: balance sheet POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.3 - LO: 2-5 ACCREDITING STANDARDS: AICPA FN-Reporting BUSPROG: Communication TOPICS: ACBSP: APC-09-Financial Statements KEYWORDS: Bloom's: Understanding NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 57. The ____________________ reports the investments and withdrawals by the owner, the profits and losses generated through operations, and how they have affected the capital account. ANSWER: statement of owner's equity POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.3 - LO: 2-5 ACCREDITING STANDARDS: AICPA FN-Reporting BUSPROG: Communication TOPICS: ACBSP: APC-09-Financial Statements KEYWORDS: Bloom's: Understanding NOTES: 1 min. 58. A(n) ____________________ is a reduction in owner's equity as a result of the owner taking cash or other assets out of the business for personal use. ANSWER: withdrawal POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.4 - LO: 2-4 ACCREDITING STANDARDS: AICPA FN-Reporting BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 59. ____________________ is the amount by which business assets exceed the business liabilities. ANSWER: Owner's equity POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.1 - LO: 2-1 ACCREDITING STANDARDS: AICPA FN-Reporting BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 60. Amounts owed to the business by its customers are called ____________________. ANSWER: accounts receivable POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.1 - LO: 2-1 ACCREDITING STANDARDS: AICPA FN-Reporting BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 61. A(n) ____________________ is an economic event that has a direct impact on the business. ANSWER: business transaction POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.5 - LO: 2-3 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 62. A(n) ____________________ is a separate record used to summarize changes in assets, liabilities, and owner's equity of a business. ANSWER: account POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.5 - LO: 2-3 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 2—Analyzing Transactions: The Accounting Equation 63. According to the ____________________, nonbusiness assets and liabilities are not included in the business entity's accounting records. ANSWER: business entity concept POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.1 - LO: 2-1 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. 64. ____________________ is a measure of the ease with which an asset will be converted to cash. ANSWER: Liquidity POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.1 - LO: 2-1 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP KEYWORDS: Bloom's: Remembering NOTES: 1 min. Match the terms with the definitions. a. account b. accounts payable c. accounts receivable d. accounting equation e. assets f. balance sheet g. business entity h. business entity concept i. business transaction j. drawing k. expenses l. income statement m. liability n. net income o. net loss p. notes payable q. owner's equity r. revenues Cengage Learning Testing, Powered by Cognero

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Chapter 2—Analyzing Transactions: The Accounting Equation s. statement of owner's equity DIFFICULTY: LEARNING OBJECTIVES:

Easy COLL.HEIN.17.1 - LO: 2-1 COLL.HEIN.17.2 - LO: 2-2 COLL.HEIN.17.3 - LO: 2-5 COLL.HEIN.17.4 - LO: 2-4 COLL.HEIN.17.5 - LO: 2-3 ACCREDITING STANDARDS: AICPA BB-Industry BUSPROG: Communication TOPICS: ACBSP: APC-02-GAAP ACBSP: APC-09-Financial Statements KEYWORDS: Bloom's: Remembering NOTES: 1 min. 65. The amount by which the business assets exceed the business liabilities. ANSWER: q POINTS: 1 66. Reports assets, liabilities, and owner's equity on a specific date. ANSWER: f POINTS: 1 67. Withdrawals that reduce owner's equity as a result of the owner taking cash or other assets out of the business for personal use. ANSWER: j POINTS: 1 68. The decrease in assets (or increase in liabilities) as a result of efforts to produce revenues. ANSWER: k POINTS: 1 69. A formal written promise to pay a supplier or lender a specified sum of money at a definite future time. ANSWER: p POINTS: 1 70. The excess of total revenues over total expenses for the period. ANSWER: n POINTS: 1 71. Reports the profitability of business operations for a specific period of time. ANSWER: l POINTS: 1

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Chapter 2—Analyzing Transactions: The Accounting Equation 72. Reports beginning capital, plus net income, less withdrawals to compute ending capital. ANSWER: s POINTS: 1 73. An economic event that has a direct impact on the business. ANSWER: i POINTS: 1 74. The concept that nonbusiness assets and liabilities are not included in the business' accounting records. ANSWER: h POINTS: 1 75. Consists of the three basic accounting elements: assets = liabilities + owner's equity. ANSWER: d POINTS: 1 76. Items a business owns that will provide future benefits. ANSWER: e POINTS: 1 77. An unwritten promise to pay a supplier for assets purchased or services rendered. ANSWER: b POINTS: 1 78. A separate record used to summarize changes in each asset, liability, and owner's equity of a business. ANSWER: a POINTS: 1 79. An amount owed to a business by its customers as a result of the sale of goods or services. ANSWER: c POINTS: 1 80. An individual, association, or organization that engages in economic activities and controls specific economic resources. ANSWER: g POINTS: 1

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Chapter 3—The DoubleEntry Framework 1. An increase or decrease in any asset, liability, owner's equity, revenue, or expense is always accompanied by an offsetting change within the basic accounting elements. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.7 - LO: 3-1 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min. 2. A T account has three parts: the title, the debit side, and the credit side. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.7 - LO: 3-1 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min. 3. To debit an account is to enter an amount on the left side of the account. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.8 - LO: 3-3 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 3—The DoubleEntry Framework 4. Liability accounts normally have debit balances. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.8 - LO: 3-3 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min. 5. Expense accounts normally have debit balances. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.8 - LO: 3-3 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min. 6. Prepaid Insurance is an asset account. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.9 - LO: 3-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 3—The DoubleEntry Framework 7. At least two accounts are affected by every transaction. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.9 - LO: 3-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min. 8. The fact that each transaction has a dual effect on the accounting elements provides the basis for what is called complex-entry accounting. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.7 - LO: 3-1 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min. 9. The sum of the debits must equal the sum of the credits on the trial balance. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.10 - LO: 3-5 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 3—The DoubleEntry Framework 10. Prepaid insurance and supplies are assets because they will provide benefits for more than one month. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.9 - LO: 3-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min. 11. The difference between the footings of an account is called the balance. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.11 - LO: 3-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min. 12. The trial balance is used in preparing financial statements. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.10 - LO: 3-5 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-05-Accounting Cycle KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 3—The DoubleEntry Framework 13. A credit increases liabilities and owner's equity. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.8 - LO: 3-3 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min. 14. Equity accounts normally have debit balances. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.8 - LO: 3-3 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min. 15. Revenues decrease owner's equity. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.8 - LO: 3-3 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 3—The DoubleEntry Framework 16. Payment of rent on account decreases the Cash account. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.9 - LO: 3-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min. 17. Withdrawals of cash and other assets by the owner for personal reasons decrease owner's equity. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.8 - LO: 3-3 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min. 18. If services for the month total $7,000 in cash and $1,500 on account, the revenue account increases $5,500. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.9 - LO: 3-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 3—The DoubleEntry Framework 19. When services are performed for which payment will be received later, accounts receivable increases. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.9 - LO: 3-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min. 20. When debits equal credits for a transaction, the accounting equation is in balance. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.9 - LO: 3-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min. 21. Connie made a purchase on account of printer paper to last for about three months; this transaction increased Supplies and decreased Accounts Payable. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.9 - LO: 3-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 3—The DoubleEntry Framework 22. The balance of a T account is on the side with the larger footing. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.11 - LO: 3-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min. 23. An account is a form or record used to keep track of the increases or decreases in the individual assets, liabilities, owner's equity, revenues, and expenses of a business entity. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.7 - LO: 3-1 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min. 24. Owner's equity includes four types of accounts: Owner's Capital, Revenues, Expenses, and Owner's Drawing. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.8 - LO: 3-3 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-06-Recording Transactions KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 7—Accounting for Cash 68. A special multi-column record that supplements the regular accounting records and from which no posting is done is called a a. bank reconciliation form. b. petty cash payment record. c. journal. d. ledger. ANSWER: b POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.30 - LO: 7-3 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-10-Internal Control KEYWORDS: Bloom's: Remembering NOTES: 1 min. 69. Cash Sales from the cash register tapes totaled $882. There is a change fund of $100. The cash count indicates that $984 is in the cash drawer. What journal entry would be required? a. debit Miscellaneous Expense for $2; credit Cash Short and Over for $2 b. debit Cash for $982, Cash Short and Over for $2; credit Revenues for $984 c. debit Cash Short and Over for $2; credit Miscellaneous Expense $2 d. debit Cash for $884; credit Revenues for $882, and Cash Short and Over for $2 ANSWER: d POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: COLL.HEIN.17.29 - LO: 7-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-10-Internal Control KEYWORDS: Bloom's: Understanding NOTES: 1 min.

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Chapter 7—Accounting for Cash 70. The following information relates to the bank account of Doug's Sky Diving Supply Store on June 30. Balance per bank statement Balance per books as of June 30 Outstanding checks: #1007 #1008 #1009 Deposits in transit

$5,327 9,265 $ 241 67 597 229 4,111 98 412 16

Bank service charges NSF check Credit memo for interest earned

Error: Check written and recorded by bank as $454 was subtracted from the checkbook as $445. The check was used to pay the telephone bill. Required: Prepare a bank reconciliation as of June 30. ANSWER:

Bank statement balance Add deposits in transit

Deduct outstanding checks: #1007 #1008 #1009 Adjusted bank statement balance

$5,327 $ 229 4,111

$ 241 67 597

Book balance Add interest earned Deduct: Bank service charge NSF check Error Adjusted book balance POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: COLL.HEIN.17.28 - LO: 7-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-11-Bank Reconciliation KEYWORDS: Bloom's: Understanding NOTES: 5 min.

4,340 $9,667

905 $8,762 $9,265 16 $9,281

$ 98 412 9

519 $8,762

71. Sal's Surf Shop deposits all receipts in the bank and makes all payments by check. On July 31 the cash account had a balance of $6,105.42. The bank statement on July 31 reported a balance of $4,146.46. Upon comparing the bank Cengage Learning Testing, Powered by Cognero

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Chapter 7—Accounting for Cash statement to the books, the following items were found. a. b. c. d. e. f.

g. h.

A bank debit memo issued for an NSF check from a customer of $21.25. A bank credit memo issued for interest of $8.50 earned during the month. During the evening of July 31, a deposit of $1,948.25 was made, which is not shown on the bank statement. A bank debit memo issued for $18.50 for bank service charges. Checks for the amounts of $34.00, $17.85, and $93.25 were written during July but have not yet been received by the bank. The reconciliation from the previous month, June, showed outstanding checks of $260.80. One of these checks in the amount of $7.38 has not yet been received by the bank. After comparing the canceled checks to the bank statement, it was discovered that a check written for the amount of $18.90 was deducted as $19.80 by the bank. It was discovered that a check written to a creditor in the amount of $145.60 was recorded in the books as $14.56.

Required: 1. Prepare a bank reconciliation as of July 31. 2. Prepare the necessary general journal entries from the bank reconciliation. ANSWER:

Bank statement balance Add: Deposit in transit Error

$4,146.46 $1,948.25 0.90

Deduct outstanding checks:

$ 34.00 17.85 93.25 7.38

Adjusted bank statement balance Book balance Add interest earned

152.48 $5,943.13 $6,105.42 8.50 $6,113.92

Deduct: Bank service charges NSF check Error Adjusted book balance

$ 18.50 21.25 131.04

GENERAL JOURNAL

Date Description July 31 Cash Interest Revenue Cengage Learning Testing, Powered by Cognero

1,949.15 $6,095.61

170.79 $5,943.13

Page 1 Post Ref.

Debit 8.50

Credit 8.50 Page 30

Chapter 7—Accounting for Cash Bank Service Charges Accounts Receivable Accounts Payable Cash

18.50 21.25 131.04 170.79

POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: COLL.HEIN.17.28 - LO: 7-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-11-Bank Reconciliation KEYWORDS: Bloom's: Remembering NOTES: 10 min.

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Chapter 7—Accounting for Cash 72. Using the following information, prepare the journal entries to: a. b.

Establish a $200 petty cash fund on January 2. Reimburse the petty cash fund at the end of the month. Date Jan. 2 6 7 7 8 12 23 28

Voucher No. 1 2 3 4 5 6 7 8

Purpose Office supplies Withdrawal by owner Lunch with client Postage Donation to United Way Telephone repair Office supplies Lunch with client

ANSWER:

Amount $15 20 35 12 25 32 15 40

GENERAL JOURNAL

Date Jan 2 Petty Cash Cash

Description

31 Postage Expense Owner, Drawing Entertainment Expense Office Supplies Charitable Contribution Expense Repair Expense Cash

Page 1 Post Ref.

Debit 200.00

Credit 200.00

12.00 20.00 75.00 30.00 25.00 32.00 194.00

POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.30 - LO: 7-3 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-10-Internal Control KEYWORDS: Bloom's: Understanding NOTES: 5 min.

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Chapter 7—Accounting for Cash 73. Post the differences between the cash count and the cash register tape to the Cash Short and Over T account. Assume a change fund of $100. Date Sept. 7 8 9 10 11

Cash Register Tape $1,295.89 1,678.55 941.76 1,446.62 1,614.13

Cash Count $1,402.89 1,787.55 1,044.76 1,545.62 1,714.13

Cash Short and Over

What is the amount of cash sales for the week?

$___________

What is the balance in the cash short and over account?

$___________

Does the balance in the cash short and over account represent a shortage or overage?

$___________

How much cash was deposited?

$___________

ANSWER:

Cash Short and Over 9/10 1.00 9/7 9/8 9/9

7.00 9.00 3.00 19.00

Bal. 18.00

1. $6,976.95 2. $18.00 credit 3. an overage 4. $6,994.95 POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.29 - LO: 7-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-10-Internal Control KEYWORDS: Bloom's: Understanding NOTES: 10 min. Cengage Learning Testing, Powered by Cognero

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Chapter 7—Accounting for Cash 74. On May 1, a petty cash fund was established for $200. The following vouchers were issued during May. Date Voucher Purpose May 1 1 Office supplies 3 2 Birthday gift for office worker (misc.) 5 3 Mileage reimbursement 7 4 Postage due 8 5 Office supplies 11 6 Donation—Goodwill (contribution exp.) 15 7 Telephone call (telephone exp.) 21 8 Mileage reimbursement 23 9 Withdrawal by owner (Carla Sanchez) 25 10 Postage due 26 11 Office supplies 28 12 Copier repair (misc.)

Amount $ 3.00 15.00 5.00 2.00 4.00 10.00 5.00 11.00 20.00 3.50 17.00 18.50

Required: 1. Prepare the journal entry to establish the petty cash fund on May 1. 2. Record the vouchers in the petty cash record. Total and rule the petty cash record. 3. Prepare the journal entry to replenish the petty cash fund. Make the appropriate entry in the petty cash record. GENERAL JOURNAL Date

Debit

Credit

PETTY CASH PAYMENTS FOR THE MONTH OF May, 20->

Page 1

Day

Description

Page 1 Post Ref.

Description Received in fund…

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Voucher No.

Total Amount

> > > > > > Page 34

Chapter 7—Accounting for Cash > > > > > > > > > > > > > >

PETTY CASH PAYMENTS FOR THE MONTH OF May, 20Page 1 Distribution of Payments

Supplies

Postage Exp.

Travel Exp.

Misc. Exp.

Account

Amount

< < < < < < < < < < < < < < < < < < < ANSWER: PETTY CASH PAYMENTS FOR THE MONTH OF May, 20-Page 1

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Chapter 7—Accounting for Cash Day

Description

Voucher No.

Total Amount

Received in fund…200 1 Office supplies 3 Birthday gift 5 Mileage 7 Postage due 8 Office supplies 11 Goodwill donation 15 Telephone call 21 Mileage 23 Personal withdrawal 25 Postage 26 Office supplies 28 Copier repair

1 2 3 4 5 6 7 8 9 10 11 12

3.00 15.00 5.00 2.00 4.00 10.00 5.00 11.00 20.00 3.50 17.00 18.50 114.00

Balance Replenish

86.00 114.00

Total

200.00

PETTY CASH PAYMENTS FOR THE MONTH OF May, 20-Page 1 < < < < < < < < < < < < < < < < Cengage Learning Testing, Powered by Cognero

Distribution of Payments Supplies

Postage Exp.

Travel Exp.

Misc. Exp.

Account

Amount

Contribution Exp. Telephone Exp.

10.00 5.00

C. Sanchez, Drawing

20.00

3.00 15.00 5.00 2.00 4.00

11.00 3.50 17.00 _____ 24.00

____ 5.50

_____ 16.00

18.50 33.50

_____ 35.00 Page 36

Chapter 7—Accounting for Cash < < < < <

GENERAL JOURNAL Date May

Description 1 Petty Cash Cash Establish petty cash fund 31 Supplies Postage Expense Travel Expense Miscellaneous Expense Contribution Expense Telephone Expense Carla Sanchez, Drawing Cash Replenish petty cash fund

Page 1 Post Ref.

Debit Credit 200.00 200.00

24.00 5.50 16.00 33.50 10.00 5.00 20.00 114.00

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Chapter 7—Accounting for Cash 75. The balance in the checking account of York Company as of July 31 is $5,852.16. The bank statement shows an ending balance of $4,870.00. The following information is discovered by comparing checks deposited and written and noting service charges and other debit and credit memos shown on the bank statement. Deposits in transit: 7/23 7/27

$220.00 615.00

Outstanding checks: No. 530 No. 531 No. 532

$120.00 36.00 278.30

Unrecorded ATM withdrawal: 7/30

$540.00

Bank service charge

$ 42.00

Error on check no. 954

Recorded in checkbook as $83.82, but was actually written for $83.28, and cleared the bank correctly.

Required: Determine the ending balances to reconcile the bank statement and checkbook. ANSWER:

Bank Statement Balance Deposit in transit Outstanding checks Adjusted Bank Statement Balance

$4,870.00 + 835.00 − 434.30 _________ $5,270.70

Book Balance *Correct err/Ck 954 Bank service charge Unrecorded ATM Adjusted Book Balance

$5,852.16 + 0.54 − 42.00 − 540.00 $5,270.70

*$83.82 − $83.28 = $0.54 (too much subtracted from checkbook) POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.28 - LO: 7-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-11-Bank Reconciliation KEYWORDS: Bloom's: Understanding NOTES: 5 min.

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Chapter 7—Accounting for Cash 76. Post the differences between the cash count and the cash register tape to the Cash Short and Over T account. Assume a change fund of $100. Date March 3 4 5 6 7

Cash Register Tape $1,495.89 1,878.55 741.76 1,646.62 1,714.13

Cash Count $1,601.89 1,986.55 843.76 1,744.62 1,814.13

Cash Short and Over

What is the amount of cash sales for the week?

$__________

What is the balance in the cash short and over account?

$__________

Does the balance in the cash short and over account represent a shortage or overage?

$__________

How much cash was deposited?

$__________

ANSWER: Cash Short and Over 3/6 2.00 3/3 3/4 3/5

Bal.

6.00 8.00 2.00 16.00 14.00

1. $7,476.95 2. $14.00 credit 3. an overage 4. $7,490.95 POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.29 - LO: 7-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Analytic TOPICS: ACBSP: APC-10-Internal Control KEYWORDS: Bloom's: Understanding NOTES: 10 min. Cengage Learning Testing, Powered by Cognero

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Chapter 7—Accounting for Cash 77. The person presenting the check for payment is called the ____________________. ANSWER: payee POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.27 - LO: 7-1 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-10-Internal Control KEYWORDS: Bloom's: Remembering NOTES: 1 min. 78. ____________________ represent items that the bank deducts from the depositor's account. ANSWER: Debit memos POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.28 - LO: 7-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-11-Bank Reconciliation KEYWORDS: Bloom's: Remembering NOTES: 1 min. 79. Checks deposited by the depositor that are not paid because the drawer did not have sufficient funds are called ____________________. ANSWER:

not sufficient fund checks NSF checks POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.28 - LO: 7-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-11-Bank Reconciliation KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 7—Accounting for Cash 80. Bringing the book and bank balances into agreement is called ____________________. ANSWER: bank reconciliation POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.28 - LO: 7-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-11-Bank Reconciliation KEYWORDS: Bloom's: Remembering NOTES: 1 min. 81. A(n) ____________________ consists of a stamp or written signature and in some cases other important information on the back of the check. ANSWER: endorsement POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.27 - LO: 7-1 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-11-Bank Reconciliation KEYWORDS: Bloom's: Remembering NOTES: 1 min. 82. (Appendix) The set of procedures designed to ensure proper accounting for transactions is known as ____________________. ANSWER: internal controls POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.27 - LO: 7-1 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-10-Internal Control KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 7—Accounting for Cash 83. ____________________ are provided by many banks to allow depositors to make deposits and withdrawals at all times by using a plastic card and a personal identification number. ANSWER:

Automated teller machines ATMs POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.27 - LO: 7-1 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-10-Internal Control KEYWORDS: Bloom's: Remembering NOTES: 1 min. 84. The ____________________ is generally established to pay for small items with cash. ANSWER: petty cash fund POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.30 - LO: 7-3 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-10-Internal Control KEYWORDS: Bloom's: Remembering NOTES: 1 min. 85. ____________________ are deposits that have not reached or been recorded by the bank before the bank statement is prepared. ANSWER: Deposits in transit POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.28 - LO: 7-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-11-Bank Reconciliation KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 7—Accounting for Cash 86. A(n) ____________________ contains a listing of all items being deposited. ANSWER: deposit ticket POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.27 - LO: 7-1 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-10-Internal Control KEYWORDS: Bloom's: Remembering NOTES: 1 min. 87. A statement of account issued by a bank to each depositor once a month is known as a(n) ____________________. ANSWER: bank statement POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.27 - LO: 7-1 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-10-Internal Control KEYWORDS: Bloom's: Remembering NOTES: 1 min. 88. A(n) ____________________ is a special multi-column record used to keep track of payments from the petty cash fund as a supplement to the accounting records. ANSWER: petty cash payments record POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.30 - LO: 7-3 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-10-Internal Control KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 7—Accounting for Cash 89. Each person authorized to sign checks must sign a(n) ____________________. ANSWER: signature card POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.27 - LO: 7-1 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-10-Internal Control KEYWORDS: Bloom's: Remembering NOTES: 1 min. 90. ____________________ are checks that have been issued during the period, but have not been presented to the bank for payment before the bank statement is prepared. ANSWER: Outstanding checks POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.28 - LO: 7-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-11-Bank Reconciliation KEYWORDS: Bloom's: Remembering NOTES: 1 min. 91. When words such as "for deposit only" or "pay to the order of" are added to a blank endorsement, it becomes a(n) ____________________. ANSWER: restrictive endorsement POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.27 - LO: 7-1 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-10-Internal Control KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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Chapter 7—Accounting for Cash 92. Banks providing check printing and processing will typically assess fees known as ____________________. ANSWER: service charges POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.28 - LO: 7-2 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-11-Bank Reconciliation KEYWORDS: Bloom's: Remembering NOTES: 1 min. 93. To a business, ____________________ includes currency, coins, checks received from customers, money orders, and bank cashier's checks. ANSWER: cash POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.27 - LO: 7-1 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-10-Internal Control KEYWORDS: Bloom's: Remembering NOTES: 1 min. 94. The ____________________ is a supply of currency and coins kept in a cash drawer for use in handling cash transactions. ANSWER: change fund POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: COLL.HEIN.17.29 - LO: 7-4 ACCREDITING STANDARDS: AICPA FN-Measurement BUSPROG: Communication TOPICS: ACBSP: APC-10-Internal Control KEYWORDS: Bloom's: Remembering NOTES: 1 min.

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