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FINANCIAL ACCOUNTING PRE ASSESSMENT, FINANCIAL ACCOUNTING IVY SOFTWARE FINAL
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FINANCIAL ACCOUNTING PRE ASSESSMENT, FINANCIAL ACCOUNTING IVY SOFTWARE FINAL
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FINANCIALACCOUNTING PRE
ASSESSMENT, FINANCIAL
ACCOUNTING IVY
SOFTWARE FINAL
Why is the accounting cycle important? - Answers-It results in the creation of the
financial accounting statement
What is an example of recurring income? - Answers-Bank Account Interest
What should be considered when deciding on a time period for a budget? - Answers-
Amount of financial activity
What should be included in a short-term budget? - Answers-Monthly water bill expenses
Which item is a living expense? - Answers-Healthcare Premium
What is an example of a macro factor in planning a budget? - Answers-Interest rates
Jim made a budget and tracked his expenses in the month of June.
Expected Actual
Rent $1,200 $1,200
Gas and Travel $150 $220
Groceries $400 $310
Eating at restaurants $100 $180
,Contributions to savings $40 $40
What can Jim do in July to make his expected budget align more closely with his actual
budget? - Answers-Eat at restaurants less, and get more groceries to cook at home.
Marcus collected this data in his budget for the month of March:
Cash from handyman work $70
Paycheck income $1,500
Rent and bills -$800
Purchase of lawnmower -$150
Total income $1570
Total Expenses -$950
Which description matches Marcus' March budget? - Answers-He ran a surplus of $620.
How would an employee labor union use financial accounting information? - Answers-To
determine ability to pay an increase in wages
Which statement is a financial accounting statement? - Answers-Income statement
Which financial statement shows all of the expenses of doing business over a specific
period of time? - Answers-Income statement
What is a benefit of adopting a single set of international accounting standards? -
Answers-More uniform financial reporting among international companies
What is a drawback of the United States using International Financial Reporting
Standards (IFRS)? - Answers-It would cost US companies time and money in the short
term to adopt
Which step should an accountant perform next after analyzing source documents to
determine their effects on the basic accounting equation? - Answers-Journalize the
transactions
What should be done if the trial balance debit and credit columns are not equal? -
Answers-Analyze the trial balance and financial records to find the error
How is a worksheet used? - Answers-To help prepare adjusting entries and financial
statements
Which accounts do closing entries move to retained earnings? - Answers-Expense and
revenue
Why is financial accounting information valuable to consumers? - Answers-External
users can evaluate the financial health of a business.
,How would a bank use financial accounting information? - Answers-To approve lines of
credit
What information does a balance sheet show? - Answers-Financial position of a
business at a specific date
Which group should make use of financial accounting information when determining
whether to open an additional store location? - Answers-Owners and managers
Which organization is focused on developing generally accepted accounting principles
(GAAP) within the United States? - Answers-Financial Accounting Standards Board
(FASB)
Why does a stockholder's equity need to be completed prior to preparing a balance
sheet? - Answers-The amount of ending balance from the statement of stockholder's
equity must be presented on the balance sheet.
An accountant for a firm is preparing a post-closing trial balance and has the following
figures that represent all debit and credit accounts:
Cash: 100,000
Accounts Receivable: 20,000
Accounts Payable: 50,000
Accumulated Depreciation: 20,000
Prepaid Rent: 10,000
Equipment: 40,000
Capital Stock: 80,000
Retained Earnings: 20,000
What should the matching totals in the debit and credit columns be when the trial
balance is prepared? - Answers-170,000
Which account appears on a post-closing trial balance? - Answers-Capital stock
Why are special journals used in accounting information systems? - Answers-To group
together transactions of a similar type
How can accounting technology affect small businesses? - Answers-By simplifying the
daily posting of routine transactions with accounting packages
What must an accountant record when journalizing a transaction? - Answers-
Description of the transaction
What does double-entry accounting refer to? - Answers-Recording equal debits and
credits for each transaction
, What are the key components of every double-entry accounting record? - Answers-At
least one debit entry and at least one credit entry
What is a characteristic of an asset account? - Answers-Increases with a debit
Which financial statement is used to ensure that all debits and credits balance? -
Answers-Trial balance
Which account balance is entered in the balance sheet columns from the adjusted trial
balance? - Answers-Accounts receivable
A company writes a check to purchase a case of printer cartridges.
Which account would be debited in the journal entry to record this purchase? - Answers-
Office supplies
An accounting supervisor is reviewing a junior accountant's journal entries prior to
posting to the general ledger.
Which journal entry would cause the trial balance to be imbalanced? - Answers-$600
insurance bill received and paid in the same month; $600 debit to insurance expense
and $60 credit to cash
A company has a lease that requires the company to pay its annual office space rent in
advance on December 31 of each year. On a quarterly basis, this expense totals
$10,000.
How should the rent expense be recorded on the firm's books in the following year to
account for this transaction? - Answers-It should be recorded as a decrease of $40,000
in the asset accounts under prepaid rent.
When are revenue and expenses recognized in accrual basis accounting? - Answers-
Revenue is recognized when earned, and expenses are recognized when incurred.
A corporation had not yet received the monthly electric bill, so it decides to accrue an
estimate of $1,000.
What would appear in the appropriate journal entry? - Answers-Credit to utilities payable
Which account will be a part of the adjusting journal entry to record the interest that has
been incurred, but not paid, on a note payable? - Answers-Interest payable
What information is contained in the balance sheet and the income statement? -
Answers-The balance sheet contains assets, liabilities, and stockholder's equity, and the
income statement contains revenues and expenses.
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