ACCT 1A Lecture Notes - Lecture 5: Intangible Asset, Accounting, Current Liability

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amethysthyena724

15 Jun 2020

School

Irvine Valley College

Department

Accounting

Course

ACCT 1A

Professor

Urell

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Document Summary

Accounting is the process of identifying, measuring and communicating economic information to permit informed judgements and decisions. Generally accepted accounting principles: refers to a common set accounting principles, standards and procedures that company must follow when they compile their financial statements. Balance sheet: is a financial statement showing a company"s assets, liabilities and equity at a specific point in time. (the purpose is to show a company"s resources and claims against this resources at a specific point in time. ) Asset is a resource that a business controls as a result of past transaction and from which future economic benefits are expected to flow to the entity. Assets are recorded and reported according to the historical cost principle- assets should be recorded and reported at the cost paid to acquire them. Current assets: are any asset that is reasonably expected to be converted to cash or consumed within one year of the balance sheet date.

Related Questions

QUESTION 1

Accounting is an information and measurement system thatidentifies, records, and communicates relevant, reliable, andcomparable information about an organization's businessactivities.

True

False

QUESTION 2

We use the accounting equation to identify what a company ownsand owes. The accounting equation is:

Assets = Liabilities + Equity

Assets = Liabilities â Equity

Assets = Liabilities + Revenues

Equity = Liabilities + Revenues

QUESTION 3

______ are beliefs that distinguish right from wrong. Thesebeliefs are accepted standards of gauging good and dishonestbehavior.

Accounting Standards

Ethics

Generally Accepted Accounting Principles

FASB

QUESTION 4

The _____ is a collection of all accounts within a companyâsaccounting system.

We use the accounting equation to identify what a company ownsand owes. _____ are resources a company owns or controls, _____ areclaims creditors have against a companyâs assets, and _____ is theownerâs claim on a companyâs assets.

QUESTION 6

In double entry accounting a credit to an asset account willrepresent an increase in the asset account balance; and a debitwill represent a decrease in the asset account balance.

True

False

QUESTION 7

The purchase of supplies on credit will ____ assets and ____liabilities.

During the accounting cycle, we analyze transactions toprepare statements.

True

False

QUESTION 9

The supplies account for a company has a $1,000 debit balanceat the beginning of the year. Supplies of $2,000 were purchasedduring the year and debited to the Supplies account. A December 31physical count shows $500 of supplies remaining at the end of theyear. Assume no other adjusting entries are made during the year.Using the 3-step process for creating adjusting entries, calculatethe adjustment amount for supplies (no journal entry isrequired).

During the accounting cycle, to complete step 7 youwould:

Prepare post-closing trial balance--Test clerical accuracy ofthe closing procedures.

Prepare adjusted trial balance--Summarize adjusted ledgeraccounts and amounts.

Prepare statements--Use adjusted trial balance to preparefinancial statements.

Close--Journalize and post entries to close temporaryaccounts.

QUESTION 11

The three financial statements that should be prepared duringthe accounting cycle are the:

Balance sheet, adjusted trial balance, income statement

Balance sheet, unadjusted trial balance, Statement of OwnerâsEquity

Income statement, adjusted trial balance, Statement of OwnerâsEquity

Balance sheet, Income statement, Statement of OwnerâsEquity

QUESTION 12

An optional working paper, which is not a required report oran accounting record, but is used to prepare a company's unadjustedtrial balance, adjusting entries, adjusted trial balance, andfinancial statements is a(n):

Adjusted trial balance

Worksheet

Post-closing trial balance

Unadjusted trial balance

General ledger

QUESTION 13

The two goals for completing the closing process are:

To identify accounts for closing and record the closingentries

To journalize and post transactions

To post transactions and prepare post-closing trialbalance

To reset revenues, expenses, and withdrawal account balancesto zero at the end of each period, and help summarize an accountingperiodâs revenues and expenses.

QUESTION 14

Fill in the Blank: The _____ describes a companyâs financialposition â by the types and amounts of assets, liabilities, andequity -- at a point in time.

QUESTION 15

Return on Assets is useful in evaluating management, analyzingand forecasting profits, and planning activities.

True

False

QUESTION 16

The Income Statement:

Identifies cash inflows (receipts) and cash outflows(payments) over a period-of-time.

Summarize adjusted ledger accounts and amounts

Describes a companyâs revenues and expenses along with theresulting net income or net loss -- over a period-of-time due toearnings activities

Resets revenues, expenses, and withdrawal account balances tozero at the end of each period.

QUESTION 17

An internal control system consists of the policies andprocedures used to:

Protect assets and Ensure reliable accounting

Urge adherence to company policies and Promote efficientoperations

All of the above

None of the above.

QUESTION 18

The cost-benefit principle is the second limitation of_______.

Bank reconciliations

Petty cash controls

Voucher system of controls

Internal controls

QUESTION 19

The Unadjusted Trial Balance columns of a company's work sheetshows the Store Supplies account with a balance of $750. TheAdjustments columns shows a credit of $425 for supplies used duringthe period. The amount shown as Store Supplies in the Balance Sheetcolumns of the work sheet is:

A company shows a $600 balance in Prepaid Rent in theUnadjusted Trial Balance columns of the work sheet. The Adjustmentscolumns show expired rent of $200. This adjusting entry resultsin:

$200 decrease to net income

$200 increase to net income

$200 different between the debit and credit columns of theUnadjusted Trial Balance

An error in the Balance Sheet

QUESTION 21

This semester we have discussed four major financialstatements. List the 4 financial statements and describe them. Makesure to include how they flow together.

QUESTION 22

Explain the purpose of adjusting entries at the end of aperiod.

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1 Which of the following is an advantage of having a single set of accounting standards used worldwide?

A. Reduced accounting costs for multinational corporations

B. Increased power of the FASB

C. Reduced number of multinational corporations on the NYSE

D. Increased diversity of accounting methods used by multinational corporations

2 The accounting standards in code law countries tend to be:

A. very detailed.

B. formulated by organizations such as the FASB.

C. stated generally without much guidance on accounting procedures.

D. very conservative.

3 What is the likely result when accounting rules are left up to professional associations

rather than being legislated by governmental bodies?

A. Very general accounting rules are created, as in code law countries.

B. Very detailed rules for practice are created, as in common law countries.

C. Very general accounting rules are created, as in common law countries.

D. Very detailed rules for practice are created, as in code law countries.

4Historical cost is the primary basis for asset valuation under U.S. GAAP.

Why is historical cost NOT as important in the accounting systems of Latin America as in the U.S.?

A. Historical costs are too difficult to calculate in the currencies used in Central and South America.

B. The countries of Latin America have experienced very high rates of inflation,

which would make historical costs meaningless to readers of financial statements.

C. There is very little foreign direct investment in the countries of Latin America,

so few assets need to be accounted for.

D. In Latin America, asset prices are very stable, making historical costs ,

so it doesn't matter which valuation basis is used.

5Which of the following statements is true about accounting convergence?

A. Convergence is a synonym for harmonization.

B. Convergence is the opposite of standardization.

C. Convergence, unlike harmonization, takes place over a period of time.

D. Convergence means developing high-quality standards in partnership with national standards.

6 Which of the following statements is believed to be true about accounting convergence

by proponents of convergence?

A. Convergence would not affect the feelings of nationalism.

B. Convergence is desirable because there is very little difference among capital markets

in different countries.

C. Convergence would help to raise the quality of accounting practices internationally.

D. None of the above statements is true.

7Why does the IASB believe that a principles-based approach to standard setting

is superior to a rules-based approach?

A. Detailed guidance or rules encourage accountants to look for ways around the rules

rather than trying to provide useful information.

B. Principles-based standard setting is less costly to undertake than rules

-based standard formulation.

C. It is desirable to have all corporations in all countries using the same accounting practice.

D. A conceptual framework for standard setting has demonstrated to encourage

the greatest economic development.

8 If a company chooses the revaluation model permitted in IAS 16 for fixed asset measurement:

A. annual revaluations must be performed on each class of assets.

B. it must update the valuation so that the balance sheet represents fair value

on the balance sheet date.

C. appraisals must be performed by an official of the IASB.

D. the depreciated replacement cost must be used as the fair value of the fixed asset.

12. For the purpose of government-wide financial statements, thecost of cleaning up a government-owned landfill and closing thelandfill

A) Is not recognized until the costs are actually incurred
B) Is accrued and amortized over the expected useful life of thelandfill
C) Is accrued on a pro-rated basis each period based on how fullthe landfill is
D) Is accrued in full at the time the costs become estimable
E) Is treated as an encumbrance at the time it become estimable andas an expenditure when it is actually paid

13. Drye Township has received adonation of a rare painting worth $1,000,000. For Drye'sgovernment-wide financial statements, three criteria must be metbefore Drye can opt not to recognize the painting as an asset.Which of the following is not one of the three criteria?(1.) Thepainting is held for public exhibition, education, or research infurtherance of public service, rather than financial gain.(2.) Thepainting is scheduled to be sold immediately at auction.(3.) Thepainting is protected, kept unencumbered, cared for, andpreserved.

A) Item 1 is not one of the three criteria
B) Item 2 is not one of the three criteria
C) Item 3 is not one of the three criteria
D) All three items are required criteria
E) None of the three items are required criteria

14. Which of the following is nota criterion of a capital lease?

A) The lease transfers ownership of the property to the lesseeby the end of the lease term
B) The present value of the minimum lease payments equals orexceeds 90 percent of the fair value of the leased property, net oflessor's investment tax credit
C) The lease contains an option to purchase the leased property ata bargain price
D) The lease contains an option to renew
E) The lease term is equal to or greater than 75 percent of theestimated economic life of the leased property

15. Which statement is falseregarding the government-wide Statement of Net Assets?

A) The purpose of the Statement of Net Assets is to report theeconomic resources of the government as a whole
B) Assets are reported excluding capital assets
C) Capital assets are reported net of depreciation
D) Investments are reported at fair value rather than historicalcost
E) Business-type activities include Enterprise Funds

16. Which statement is falseregarding the Balance Sheet for Fund-Based Statements?

A) The Balance Sheet for Fund-Based Statements measures onlycurrent financial resources of the governmental entity
B) The Balance Sheet for Fund-Based Statements uses the modifiedaccrual method for timing purposes
C) Capital assets are not reported on the Balance Sheet forFund-Based Statements
D) The Balance Sheet for Fund-Based Statements measures onlylong-term financial resources of the governmental entity
E) Long-term debts are not reported on the Balance Sheet forFund-Based Statements

17. The city operates a publicpool where each person is assessed a $2 entrance fee. Which fund ismost appropriate to record these revenues?

A) General Fund
B) Enterprise Fund
C) Special Revenue Fund
D) Internal Service Fund
E) Capital Projects Fund

18. Which of the following typesof health care organizations follow FASB Accounting StandardsCodification for GAAP?

	Investor-Owned Health Care Enterprises	Not-for-Profit Organizations	Governmental Health Care Organizations
A)	Yes	Yes	No
B)	Yes	Yes	Yes
C)	No	No	Yes
D)	Yes	No	Yes
E)	Yes	No	No

A) Entry A
B) Entry B
C) Entry C
D) Entry D
E) Entry E

19. In accruing patient chargesfor the current month, which one of the following accounts should ahospital credit?

A) Accounts Payable
B) Deferred Revenue
C) Unearned Revenue
D) Patient Service Revenues
E) Accounts Receivable

20. Which account would becredited in recording a gift of medicine to a nursing home from anoutside party?

A) Nonoperating Gain - Contributions
B) Contractual Adjustments
C) Patient Service Revenues
D) Drugs and Medicines
E) Nonoperating Revenues - Contribution

21. Unconditional transfers ofcash or other resources to an entity in a voluntary nonreciprocaltransaction is the GAAP definition for

A) miscellaneous revenues
B) contributions
C) unconditional promises to give
D) exchange transactions
E) pledges

22. On a statement of functionalexpenses for a voluntary health and welfare organization, how areexpenses classified?

A) Health services expenses and operating expenses
B) Program services expenses and administrative servicesexpenses
C) Program services expenses and supporting services expenses
D) Operating expenses and supporting services expenses
E) Operating expenses and administrative expenses

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ACCT 1A Lecture Notes - Lecture 5: Intangible Asset, Accounting, Current Liability

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