Question

17. Accounts is created when a sale is made to a customer on account. Accounts is created when a company makes a purchase on account from their vendor. A) Payable; Receivable B) Receivable; Payable 18. The accounting equation is defined as: A) Assets = Liabilities + Common Stock + Retained Earnings B) Assets = Liabilities + Stockholders' Equity C) Assets - Liabilities + Common Stock + Revenues - Expenses - Dividends D) All of the above 19. U.S. GAAP requires the accrual method of accounting. Under the accrual method, expenses are recorded and reported only: A) If they are paid before they are incurred. B) When they are incurred and paid at the same time. C) If they are paid after they are incurred. D) When they are incurred whether or not cash is paid. 20. U.S. GAAP requires the accrual method of accounting. Under the accrual method, revenues are recorded and reported only: A) If the funds are received by the last day of the reporting period. B) If earned by the last day of the reporting period even if payment has not been received. C) If earned AND payment received by the last day of the reporting period. D) None of the above 21. The traditional accounting T-Account records increases and decreases in account balances. In its most simple form, it has the following parts: A) A chart of accounts, trial balance, and post close trial balance B) An account name and tabular summary C) An account name, left or debit side and a right or credit side D) Journal, ledger and trial balance 22. A credit is the normal balance for the following accounts EXCEPT: A) Common Stock account B) Dividends account C) Revenue-aceount D) Liability account

Answer 1

(17 a Account Receivable is created when a sale is made and a Accounts payable is created when a purchase is made (18 Answes D All of the above and Assets = liabilities & Equity. where equity = common stock + Retained Cornings + current Income. Accrual conupt states that all the expenses and revenues are recorded when they are incurred and earned respectively, irrespective of its payment and recept 19 Answer (20) Answer B explaination is same as in (19 2 T account creards an increase on decrease in an individual balance. It have a debit on left side and a credit on cright. Answer ) 22 Answer is B . Generally all of common stock, Revenue we habitoties will have credit balance * Dividend is an expense it will have debit balance.