Exam (elaborations)
ACCT debits & credits (1).
- Institution
- 9.4.1 Transaction Processing Systems
ACCT debits & credits (1).
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ACCT debits & creditsIs prepaid expense an asset account or a liability account? - ANS-asset account
Is unearned revenue an asset account or a liability account? - ANS-liability account
Is accounts receivable an asset account or a liability account? - ANS-asset account
Is salaries payable an asset account or a liability account? - ANS-liability account
Which accounts have normal balances on the debit side? - ANS-Assets and Expenses
Which accounts have normal balances on the credit side? - ANS-Liabilities, Equity and
Revenues
Are decreases in assets recorded on the debit side or credit side? - ANS-credit side
Are decreases in liabilities recorded on the debit side or credit side? - ANS-debit side
Are increases in equity recorded on the debit side or credit side? - ANS-credit side
Are increases in revenues recorded on the debit side or credit side? - ANS-credit side
Are increases in expenses recorded on the debit side or credit side? - ANS-debit side
Under cash basis accounting, when are revenues recognized? - ANS-revenues are recognized
when cash is received
Under cash basis accounting, when are expenses recognized? - ANS-expenses are recognized
when cash is paid
When are revenues recognized under accrual basis accounting? - ANS-revenues are
recognized when it is earned and realized
Under accrual basis accounting, when are expenses recognized? - ANS-expenses are
recognized when related revenue is recognized
The market price of a bond is dependent on - ANS-the payments amounts.
the length of time until the amounts are paid.
the interest rate.
Does bonds payable have a debit or a credit balance? - ANS-debit
, Discount on Bonds Payable - ANS-is a contra account
Use of the double-declining balance methods results in
a. decreasing charge to depreciation expense.
b.means salvage value is not deducted in computing the depreciation base.
c.means the book value should not be reduced below salvage value.
d.all of these - ANS-d
Purchase of treasury stock - ANS-Purchase amount is recorded as treasury stock on debit side.
Treasury stock is not recorded as an asset, but subtracted from stockholders' equity (cash).
Accounts receivable turnover ratio - ANS-Accounts receivable turnover ratio = Credit (Net) sales
/ Average accounts receivable / 2
2. Days in accounts receivable (Average collection period) = 365 days / Accounts receivable
turnover ratio
- ANS-Allowance for doubtful accounts is subtracted from accounts receivable.
2. Allowance for doubtful accounts is a contra-asset account.
What are the examples of current liabilities? - ANS-Accounts payable
Notes payable due within a year
Salaries payable
Income taxes payable
Short-term borrowings
Current maturities of long-term borrowings
what are the examples of non-current liabilities? - ANS-Notes payable due after a year
Long-term borrowings
Bonds payable
What are the examples of stockholders' equity? - ANS-Preferred stock, par value
Common stock, par value
Paid-in capital in excess of par value, preferred stock
Paid-in capital in excess of par value, common stock
Retained earnings
Treasury stock (a contra-equity account)
What are the examples of current assets? - ANS-Cash and cash equivalents
Short-term marketable securities
Accounts receivable
Notes receivable due within a year
Inventory
Prepaid expenses
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