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an increase in liabilities and a decrease in owner's equity

A business receives its bill for utilities for the current month that it plans to pay next month. This transaction causes

decrease assets and decrease liabilities

The payment of an account payable would

balance sheet

The financial statement that presents a summary of the assets, liabilities, and owner's equity as of a specific date is the

increases assets

Earning revenue on account

increase owner's equity and have no effect on liabilities

Receiving cash for services performed would


Refer to Table 1. Total liabilities at December 31, 20X5 were

Assets - Liabilities = Owner's Equity

The accounting equation can be stated as

the business entity is considered a separate entity apart from the owner or owners

The business entity concept means that


Determine cash withdrawals for the period if net income is $34,000, beginning owner's equity is $29,000, and ending owner's equity is $55,000.

current market value

The relevant measure of value of the assets of a company that is going out of business is their

debit to the owner's withdrawals account

The withdrawal of cash by the owner for personal use would include a

accounts receivable

The account credited when cash is received from a customer on account is

have no effect on total assets or owner's equity

Receiving a payment from a customer on account would

the left side of an account

Debit is a term representing

cash to be overstated

Recording service revenue on account as a cash transaction will cause

debit to cash and a credit to accounts receivable for $1,200

Receiving a check for $1,200 from a customer with an account balance of $2,000 would include a

Accounts Payable 300
Supplies 300

The entry to record the return of $300 of supplies purchased on account would be

accounts payable

The account debited when payment is made for equipment purchased previously on account is

accounts receivable

All of the following are liabilities except

cash to be understated by $800

$300 receipt of cash on account was recorded as a $500 debit to accounts payable and a $500 credit to cash. This error will cause

overstate assets

At the end of the fiscal period, Burton Company omitted the adjusting entry for depreciation on equipment. The effect of this error on the financial statements is to

before the cash is paid or received

Accruals involve the recording of an expense or a revenue account

debit to salary expense for $20,000

A business pays weekly salaries on Friday of $25,000 for a five-day week ending on Friday. Assuming the fiscal period ends on a Thursday, the adjusting entry for accrued salaries would involve a

revenue decreases and owner's equity decreases

When an unearned revenue is initially recorded as a revenue, the adjusting entry has the following effect on the financial statements

debit to service revenue for $3,750

On April 1 of the current year, Jamie Company received $15,000 for services to be performed evenly over the next 12 months. Jamie Company initially recorded the $15,000 as service revenue. The adjusting entry on December 31 of the current year will includ


Net income is reported on the income statement at $80,000. Adjusting entries for accrued revenues of $6,000 and deferred revenue earned during the current period of $2,500 were accidentally omitted. The correct net income is

an asset on the balance sheet

The balance in prepaid rent after adjustment represents


When a prepaid expense is initially recorded as an expense, the adjusting entry has the following effect on net income

a liability on the balance sheet

The balance in unearned revenue after adjustment represents


An accountant records a transaction when cash is paid or received under which basis of accounting?


When creating a financial statement in order of reverse liquidity, which type of asset is listed first?

Operating cycle

Which of the following is the time span during which cash is paid for goods and services, which are then sold to customers from whom the business collects cash?

debt ratio

The _______ is the total liabilities divided by total assets. This ratio reveals the proportion of a company's assets that it has financed with debt

Income statement

Which columns of the worksheet show net income?

a multicolumn document used by accountants to aid in the preparation of the financial statements

A work sheet is a


Assets and liabilities are listed on the balance sheet in order of their:

$2,900 credit

Revenues total $10,200, expenses total $7,300, and the owner's withdrawals account has a balance of $2,600. What is the balance in the income summary account prior to closing net income or net loss?

Reversing entries

Which of the following are the special journal entries that ease the burden of accounting for transactions in the next period?

Total debits exceed total credits

Which situation indicates a net loss on the income statement?

revenue accounts

Which of the following accounts are not closed to the owner's capital account?

LIFO is not allowed under IFRS, but it can be used under other reporting methods

How is accounting for merchandise operations under international financial reporting standards significantly different from when a company follows accounting standards for private enterprises?

sales returns and allowances

Which of the following accounts should be closed to income summary?

Multi-step income statement

An income statement that contains subtotals to highlight significant relationships. In addition to net income, it reports gross profit and operating income

owner's capital account

The income summary account has a $25,000 debit balance after closing the revenue and expense accounts. This balance is closed to the

rapidly inventory is sold

Inventory turnover indicates how

debit to inventory

Using a perpetual inventory system, the entry to record the purchase of merchandise on account involves a

net income

The income summary account has a $25,000 credit balance after closing the revenue and expense accounts. This balance represents

debit to inventory for $400

The inventory account shows an ending balance of $20,800. An actual count of inventory reveals $21,200 of inventory on hand. The adjusting entry involves

cost of goods sold divided by average inventory

Inventory turnover is calculated as

sales discounts, sales returns and allowances and cost of goods sold

Under a perpetual inventory system, which accounts would be closed to income summary with credits?