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Exam 2: The Accounting Information System

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Question 101

True/False

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

A) True
B) False

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Question 102

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The time period assumption assumes that a company prepares its financial statements every month.

A) True
B) False

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Question 103

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For each transaction provided, choose the appropriate account from the list that would receive a debit entry as a result of the transaction. (Choices may be used more than once.) -purchasing supplies on credit

Which qualitative characteristic of useful information is materiality an aspect of?

Match the following principles with their correct definition. -This assumption states that each company will be accounted for separately from its owners.

Which of the following is NOT an external event?

What is an abbreviated version of an account,useful for analyzing the effects of business events,called?

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

What is the difference between comparability and consistency?

Which of the following accounts does NOT have a normal credit balance?

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

Under the double-entry system of accounting,every transaction is entered in at least two accounts on opposite sides of a T-account.

____________________ is the quality of accounting information that allows a user to analyze two or more companies and look for similarities and differences.

The following transactions were incurred during July Year 1: July 1 $\quad$ The company raised $\$ 30,000$ by issuing a note to the bank for $\$ 15,000$ and issuing $\$ 15,000$ of common shares. July 5 $\quad$ The company purchased $\$ 5,100$ of office supplies on credit; payment is due in: 30 days. July 12 $\quad$ The company performed $\$ 18,000$ of services for customers on credit; collection is due in 30 days. July 13 $\quad$ The company performed services for customers and collected $\$ 8,800$ . July 20 $\quad$ The company paid for the supplies purchased on July 5 . July 22 $\quad$ The company collected $\$ 15,000$ of the amounts due from customers. July 30 $\quad$ The company received and paid the utility bill for the month of July in the amount of $\$ 640$ . July 31 $\quad$ The company paid emplovee salaries of $\$ 3.800$ . -Refer to H&R Clock Company.Prepare a trial balance in proper format.Assume that the company had no additional accounts or balances other than those created from the July transactions.

Organizations important to accounting are listed. Select the organization that most closely achieves the role described. (Choices may be used more than once.) -requires that publicly traded companies file financial information on a timely basis

Hesson Properties, Inc.The following transactions occurred during June: $\begin{array}{ll}\text { June 1 } & \text { The company purchased two new maintenance carts on account at } \$ 750 \text { each. } \\&\text { Payment is due in } 30 \text { days. } \\\text { June } 8 &\text { The company accepted } \$ 500 \text { of advance payments from customers for service } \\&\text { to be provided next month. }\\\text { June } 15 & \text { The company received the utility bill for } \$ 300 \text {. Payment is due in } 30 \text { days. } \\\text { June } 20 & \text { The company billed customers } \$ 1,500 \text { for services provided. Payment is due in } \\&\text { 30 days. }\\\text { June } 30 & \text { The company received } \$ 500 \text { from customers who were billed earlier. }\end{array}$ -Refer to the figure Hesson Properties,Inc.Which journal entry is required to record the utility bill?

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

Match the following terms with their correct definition. -a list of all the accounts maintained by the business

Which of the following statements is characteristic of the accounting cycle?

Match the following principles with their correct definition. -This system is used by companies to record the effects of transactions on the accounting equation.