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Business Flashcards

Chapter 2

Which of the following is NOT a business transaction?A) The company sells goods for cash.B) The company buys land for cash.C) The company hires a new president.D) The company pays a dividend to its stockholders C – The company hires a new president
A business transaction has occurred when:A) an event affects the entity’s financial position.B) the event can be reliably measured.C) the accountant determines that the event is important enough to be a business transaction.D) both A and B occur D – Both A and B
A record of all the changes in a particular asset, liability, or stockholders’ equity during a period is called a (n):A) transaction.B) trial balance.C) journalD) account D – account
Which of the following is NOT an asset account?A) Accounts ReceivableB) Prepaid RentC) Common StockD) All of these are asset accounts C – Common stock
Any event that has a financial impact on the business and can be measured reliably is a(n): A) income statement.B) transaction.C) asset.D) journal B – transaction
The rules for recording accounting transactions do NOT include which of the following? A) Every transaction’s net amount on the left side of the equation must equal the net amount on the right side.B) Both sides of the accounting equation must be affected.C) Every transaction affects the financial statements of the business.D) Total assets must always equal total liabilities plus total equity B – both sides of the accounting equation must be affected
Prepaid expense accounts appear on: A) the Income Statement.B) the Balance Sheet.C) the Statement of Retained Earnings and on the Income Statement.D) both the Income Statement and Balance Sheet B – the balance sheet
Revenues are recorded when:A) the company signs a contract.B)work is begun on the job.C) cash is received from the customer.D) the work is completed on the job, whether or not the cash is received D – the work is completed on the job, whether or not the cash is received
Goods purchased on account for future use in the business, such as Office Supplies, are called:A) Accrued liabilities.B) Prepaid expenses.C) Revenues.D) Expenses B – prepaid expenses
A company received cash in exchange for issuing stock. This transaction increased assets and:A) increased expenses.B) increased revenues.C) increased liabilities.D) increased equity D – increased equity
When a business makes a sale on account, the asset created is a(n):A) revenue.B) expense.C) account receivable.D) account payable C – account receivable
The debt created by a business when it makes a purchase on account is a(n):A. account receivable.B. revenue.C. prepaid expense.D. account payable D – account payable
Transactions affecting Stockholders’ Equity include:A) sale of common stock and payment of expenses.B) revenues and purchase of supplies on account.C) purchase of land and a sale on account.D) payment of a liability and payment of expenses A – sale of the common stock on payment of expenses
A company purchased Office Supplies for cash. This transaction increased assets and:A) increased equity.B) increased liabilities.C) increased revenues.D) decreased assets D – decreased assets
A company performed services for a customer on account. This transaction increased assets and:A) decreased equity.B) increased liabilities.C) increased expenses.D) increased revenues D – increased revenues
A company paid cash for employee wages. This transaction:A) increased cash and increased expenses.B) increased cash and decreased expenses.C) decreased cash and increased expenses.D) decreased cash and decreased revenues C – decreased cash and increased expenses
A company paid cash for an amount owed to a creditor. This transaction decreased cash and:A) decreased revenues.B) decreased liabilities.C) decreased expenses.D) increased expenses B – decreased liabilities
The owner of a business paid cash from his personal checking account to purchase an automobile for his personal use. This transaction: A) increased a liability account and increased liabilities. B) decreased cash and increased expenses. C) increased assets and increased owners’ equity. D) is not a transaction recognized by the business D – not a transaction recognized by the business
Which type of account is increased when a company records an increase in debt?A) Expense B) Retained earnings C) Liability D) None of the above C – liability
All of the following accounts would be considered assets EXCEPT for:A) Cash.B) Retained earnings.C) Prepaid expenses.D) Notes receivable B – retained earnings
What type of account is prepaid insurance?A) A liabilityB) An expenseC) Stockholders’ equityD) An asset D – an asset
Which of the following accounts are a standard component of stockholders’ equity?A) Prepaid ExpensesB) DividendsC) Additional Paid In StockD) Unearned Income B – dividends
Notes payable, accounts payable, taxes payable and salaries payable are all examples of:A) liabilities.B) revenues.C) expenses.D) assets A – liabilities
Which type of account is decreased when a company pays its employees with cash?A) A liabilityB) A prepaid assetC) An assetD) Owners’ equity C – an asset
Which of the following business events would NOT be recorded in a company’s accounting records?A) The company paid a monthly utility bill of $1,000.B) The company issued 100 shares of common stock for $75,000.C) The company purchased two acres of land for future plant expansion for $600,000.D) The company signed a contract to provide services in the next accounting period for $125,000 D – the company signed a contract to provide services in the next accounting period for $125000
Which of the following transactions would increase total assets? I. Borrowed cash on a note payable, $80,000 II. Provided services on account, $10,000 III. Received cash from a customer as payment on account, $8,000 IV. Received a utility bill, $1,200A) I and IIB) I and III C) I, II, and III D) All of these answers are correct A – I and III
Consider the following transactions: I. Borrowed cash on a note payable, $80,000 II. Provided services on account, $10,000 III. Received cash from a customer as payment on account, $8,000 IV. Received a utility bill, $1,200 Total assets would be: A) $96,800. B) $88,000. C) $90,000. D) $98,000 C – $90000
The payment of an amount owed to a creditor would:A) decrease assets.B) increase net income. C) decrease liabilities. D) both decrease assets and decrease liabilities D – both decrease assets and liabilities
The payment of salaries to employees would: A) increase assets and increase liabilities. B) decrease net income and decrease assets. C) increase liabilities and increase net income. D) decrease assets and increase liabilities B – decrease net income and decrease assets
When a company performs a service and immediately collects the cash from the customer, which of the following would occur? A) Stockholders’ equity would decrease. B) Assets would decrease. C) Expenses would decrease. D) Net income would increase D – net income would increase
Purchasing supplies on account would: A) increase total assets and decrease total liabilities. B) increase total liabilities and decrease total assets. C) increase total assets and increase total liabilities. D) increase total liabilities and increase stockholders’ equity C – increase total assets and increate total liabilities
Paying a utility bill as soon as it was received would: A) increase expenses.B) increase liabilities. C) increase owners’ equity.D) decrease revenues A – increase expenses
Borrowing money from the bank by signing a note payable would: A) increase stockholders’ equity. B) have no effect on stockholders’ equity. C) decrease liabilities. D) increase net income B – have no effect on stockholders’ equity
Receiving a payment from a customer on account would:A) increase stockholders’ equity.B) have no effect on total assets.C) increase stockholders’ equity. D) decrease liabilities B – have no affect on total assets
The purchase of land for cash would:A) increase total assets. B) decrease stockholders’ equity. C) increase the total debits on the trial balance. D) have no effect on total assets D – have no effect on total assets
If a person starting a business had an investment of a building, valued at $300,000 with an $180,000 outstanding mortgage and issued stock for the balance, the effect would be to:A) increase assets by $120,000. B) increase assets by $180,000. C) increase stockholders’ equity by $120,000. D) increase stockholders’ equity by $300,000 C – increase stockholders equity by $120000
Performing services on account would: A) decrease both assets and liabilities. B) increase assets and decrease stockholders’ equity. C) decrease revenues and decrease stockholders’ equity. D) increase net income and stockholders’ equity D – increase net income and stockholders equity
The collection of cash from a cash sale would: A) increase assets and stockholders’ equity. B) increase assets and decrease liabilities. C) decrease assets and increase net income.D) have no effect on net income or stockholders’ equity A – increase assets and stockholders equity
Cash dividends paid to the stockholders will: A) increase assets and decrease liabilities. B) increase assets and increase liabilities. C) have no effect on stockholders’ equity or revenues. D) decrease assets and decrease stockholders’ equity D – decrease assets and decrease stockhodlers equity
Consider the following transactions: I. Borrowed cash on a note payable, $80,000 II. Provided services on account, $10,000 III. Received cash from a customer as payment on account, $8,000 IV. Received a utility bill, $1,200 Total liabilities would be: A) $1,200. B) $81,200. C) $98,000. D) $80,000. B – $81200
Consider the following transactions: I. Owners invested $8,000 cash to begin the business II. Provided services for cash, $6,000 III. Provided services on account, $4,000 IV. Paid cash for expenses, $7,500 How much cash does the business have? A) $ 2,500 B) $ 4,500 C) $ 6,500 D) $10,500 C – $6500
Consider the following transactions: I. Owners invested $8,000 cash to begin the business II. Provided services for cash, $6,000 III. Provided services on account, $4,000 IV. Paid cash for expenses, $7,500 How much net income did the business have? A) $ 2,500 B) $ 4,500 C) $ 6,500 D) $10,500 A – $2500
All of the statements are true about the income statement EXCEPT the income statement:A) data appears as revenues and expenses under Retained Earnings.B) reports revenues and expenses.C) reports a net income or a net loss.D) is as of a specific date and not a period of time D – is as of a specific date and not a period of time
To compute ending retained earnings on the Statement of Retained Earnings:A) net income is added to the beginning retained earnings and dividends are subtracted from the beginning retained earnings.B) net income and dividends are both added to beginning retained earningsC) net loss and dividends are both added to beginning retained earningsD) net income or net loss does not affect retained earnings A – net income is added to the beginning earnings and dividends are subtracted from the beginning retained earnings
The Balance Sheet lists:A) assets, liabilities, and revenues.B) revenues and expenses.C) assets, liabilities, and stockholders’ equity.D) dividends and assets C – assets, liabilities, and stockholders equity
If Joe Donaldson deposited $80,000 in a bank account, purchased a company for $60,000 cash (Building $40,000 and Inventory $20,000), performed services for clients for $10,000 cash, purchased supplies for $5,000 cash, and paid utilities of $2,000 cash, what is the company’s net income for the month? A) $8,000 B) $5,000 C) $3,000 D) None of the above A – $8000
Joe Donaldson deposited $80,000 in a bank account, purchased a company for $60,000 cash (Building $40,000 and Inventory $20,000), performed services for clients for $10,000 cash, purchased supplies for $5,000 cash, and paid utilities of $2,000 cash. What is the amount of total assets? A) $80,000 B) $78,000 C) $88,000 D None of the above C – $88000
Joe Donaldson deposited $80,000 in a bank account, purchased a company for $60,000 cash (Building $40,000 and Inventory $20,000), performed services for clients for $10,000 cash, purchased supplies for $5,000 cash, and paid utilities of $2,000 cash. The amount of stockholders’ equity at the end of the period is: A) $60,000. B) $80,000. C) $140,000. D) none of the above D – none of the above
The left side of a T-account is always the:A) increase side.B) decrease side.C) debit side. D) credit side C – debit side
Which of the following statements regarding T accounts is FALSE?A) The account title appears at the top of the T account.B) The right side is the debit side.C) The right side is the credit side. D) T accounts are a useful tool in accounting B – the right side is the debit side
The credit side of an account:A) is the left side of the account.B) depends on whether the account is an asset or liability.C) is the right side of the account. D) can change as needed C – is the right side of the account
Which of the following statements regarding accounts is TRUE? A) An asset is increased by a debit and decreased by a credit. B) Dividends are decreased by debits and increased by credits. C) A liability is increased by a debit and decreased by a credit. D) Revenue is increased by a debit; an expense is increased by a credit A – an asset is increased by a debit and decreased by a credit
Transactions affecting stockholders’ equity include: A) common stock, revenues, expenses and collection of an account receivable. B) retained earnings, revenues, expenses, and liabilities. C) common stock, revenues, expenses, dividends and retained earnings. D) common stock, retained earnings, revenues and assets C – common stock, revenues, expenses, dividends and retained earnings
Increases in stockholders’ equity that result from delivering goods or services to customers are: A) assets. B) revenues. C) expenses. D) liabilities B – revenues
Decreases in stockholders’ equity that are due to the cost of operating the business are: A) assets. B) revenues. C) expenses. D) liabilities C – expenses
Which statement is NOT true? A) A credit increases a liability account. B) A debit increases an asset account C) Revenues are increased by a debit. D) Expenses are increased by a debit C – Revenues are increased by a debit
Which accounts are increased by debits? A) Assets and owners’ equity B) Expenses and owners’ equity C) Assets, expenses and dividends D) Assets, expenses and owners’ equity C – assets, expenses and dividends
An account is increased by a debit and has a normal balance of a debit. This account is: A) an expense account. B) a liability account. C) an asset account. D) both an expense account and an asset account D – both an expense account and an asset account
A business purchases a truck by signing a note payable to the seller. This transaction would include a: A) credit to Truck. B) debit to Note Payable. C) credit to Note Payable. D) debit to Prepaid Maintenance C – credit to Note Payable
The accounting transaction to record a loan would include a credit to: A) Cash.B) Notes Payable. C) Utilities Expense. D) Accounts Receivable B – Notes Payable
Accounting transactions are initially recorded in the: A) T-account.B) ledger. C) journal. D) financial statements C – journal
The process of recording a transaction in the journal is called: A) posting.B) summarizing. C) journalizing. D) preparing the financial statements C – journalizing
The process of copying the information from the journal to the ledger is called: A) posting.B) summarizing. C) journalizing. D) preparing the financial statements A – posting
A listing of all of the accounts that make up the ledger is called the: A) T-account.B) ledger. C) journal. D) chart of accounts D – chart of accounts
A chronological record (or history) of an entity’s transactions is called a: A) T-account.B) ledger. C) journal. D) financial statements C – journal
Which statement about the journal is NOT true? A) The journal lists transactions in chronological order.B) The journal entry lists debits before credits. C) The journal entry shows a complete transaction in one place. D) The journal entry shows the balance in each account D – the journal entry shows the balance in each account
Accounts are listed in the ledger: A) alphabetically.B) chronologically. C) in random order. D) in the same order as they appear on the financial statements D – in the same order as they appear on the financial statement
An account will have a debit balance if: A) the amount of the credits exceeds the amount of the debits.B) the amount of the debits exceeds the amount of the credits. C) the account has more debit entries than credit entries. D) it is a liability account B – the amount
What is the first step in the journalizing process? A) Record the transaction in the journal.B) Post the transaction to the ledger. C) Determine whether each account is increased or decreased by the transaction. D) Specify each account affected by the transaction and classify each account by type D – Specify each account affected by the transaction and classify each account by type
Which of the following items would NOT be included in the journal entry for a transaction? A) The source documents initiating the transaction B) The date the accounting transaction was entered C) The titles of the accounts debited D) The dollar amount credited A – the source documents initiating the transaction
The proper order for the accounting process is: A) posting, transaction occurs, journalizing. B) transaction occurs, posting, journalizing. C) transaction occurs, transaction analyzed, journalizing, and posting. D) transaction occurs, posting, transaction analyzed, journalizing C – transaction occurs, transaction analyzed, journalizing, and posting
In accounting, the process of posting involves transferring data from the: A) ledger to the journal. B) journal to the ledger. C) source documents to the ledger. D) source documents to the journal B – journal to the ledger
A grouping of all the T-accounts with their balances is called the: A) accounting equation. B) trial balance. C) journal. D) ledger D – ledger
Double-entry accounting means that each transaction: A) increases at least one account and decreases at least one account.B) debits at least one account and credits at least one account. C) is recorded in both the journal and in the ledger. D) affects both an income statement account and a balance sheet account B – debits at least one account and credits at least one account
Which element(s) of an accounting system provide(s) information about the balance in each account? A) Source documents B) Journals C) Ledgers D) Accrual record C – ledgers
The normal balance of an account: A) is always a debit. B) is always a credit. C) is the side that increases the account balance. D) can be determined from the journal C – is the side that increases the account balance
Credits to revenue accounts ultimately result in a(n): A) decrease in stockholders’ equity and assets. B) increase in stockholders’ equity and assets. C) decrease in assets and liabilities.D) increase in liabilities and assets B – increase in stockholders equity and assets
The entry to record the purchase of supplies on account would include a debit to: A) Supplies. B) Accounts Payable. C) Supplies Expense.D) Retained Earnings A – supplies
The entry to record the payment of salaries to employees would include a: A) credit to Salary Expense. B) debit to Accounts Payable. C) debit to Salary Expense. D) debit to Accounts Receivable C – debit to salary expense
The journal entry to record performing a service on account would include a debit to: A) Cash. B) Service Revenue Expense. C) Accounts Receivable. D) Retained Earnings C – accounts receivable
The payment for monthly rent of an office building would include a: A) debit to Cash.B) debit to Prepaid Rent.C) debit to Rent Expense. D) credit to Revenue C – debit to rent expense
The purchase of office furniture for cash would include a debit to: A) Accounts Payable. B) Office Furniture. C) Office Furniture Expense. D) Cash. B – office furniture
An owner makes an investment of cash into the business. This transaction would include a: A) debit to Common Stock and a credit to Common Stock.B) debit to Cash and a credit to Common Stock. C) debit to Retained Earnings and a credit to Cash. D) debit to Common Stock and a credit to Retained Earnings B – debit to cash and a credit to common stock
A stockholder’s investment of land and a building into the business would include a debit to: A) Land and Building and a credit to Common Stock. B) Land and a credit to Building. C) Common Stock and a credit to Building. D) Building and a credit to Retained Earnings A – land and building and a credit to common stock
The purchase of an automobile involving a cash down payment and a promise to pay the balance in the future would include a debit to: A) Note Payable and a credit to Cash. B) Cash and a credit to Automobile. C) Cash and a debit to Note Payable. D) none of the above D – none of the above
The purchase of office computers for cash would include a debit to: A) Cash and a credit to Office Equipment.B) Office Equipment and a credit to Accounts Payable. C) Accounts Receivable and credit to Office Equipment. D) Office Equipment and a credit to Cash D – accounts payable and a credit to retained earnings
Paying a previous dividend due to the company’s stockholders would include a debit to: A) Cash and a credit to Dividends. B) Dividends Payable and a credit to Cash. C) Retained Earnings and a credit to Cash. D) Accounts Payable and a credit to Retained Earnings B – dividends payable and a credit to cash
Receiving a check from a customer on account would include a credit to: A) Cash.B) Accounts Payable.C) Sales Revenue. D) Accounts Receivable D – accounts receivable
Making a cash payment to settle a debt would include a: A) debit to Cash. B) credit to Cash. C) credit to Accounts Payable. D) debit to Accounts Receivable B – credit to cash
The entry to record the purchase of office supplies on account for $400 would be: C – Office Supplies 400, Accounts Payable 400
The entry to record an owner investment of $600 into the business would be: D – Cash 600, Common Stock 600
The entry to record the payment of $925 to a supplier for office supplies previously purchased on account would be: B – Accounts Payable 925, Cash 925
The entry to record the payment of the monthly salaries of $1,000 would be: C – Salaries Expense 1,000, Cash 1,000
The entry to record $1,000 received from a customer for services previously rendered would be: A – Cash 1,000, Accounts Receivable 1,000
The normal balance of an expense account is a __________ because expenses decrease __________. A) debit, assets B) debit, expenses C) debit, stockholders’ equity D) credit, stockholders’ equity C – debit, stockholders equity
The normal balance of the Dividends account is a ___________ because it decreases __________. A) debit, assets B) debit, expenses C) debit, stockholders’ equity D) credit, stockholders’ equity C – debit, stockholders equity
The normal balance of a revenue account is a __________ because revenues increase __________. A) debit, assets B) debit, expenses C) debit, stockholders’ equity D) credit, stockholders’ equity D – credit, stockholders equity
The classification and normal balance of the cash account is: A) an expense account with a debit balance. B) an expense account with a credit balance. C) an asset account with a credit balance. D) an asset account with a debit balance D – an asset account with a debit balance
Joe Donaldson deposited $80,000 in a bank account, purchased a company for $60,000 cash (Building $40,000 and Inventory $20,000), performed services for clients for $10,000 cash, purchased supplies for $5,000 cash, and paid utilities of $2,000 cash. The journal entry to record the purchase of the company includes a: A) credit to Building for $40,000. B) debit to Common Stock for $60,000. C) debit to Inventory for $20,000. D) credit to Cash for $40,000. C – debit to inventory for $20000
George P. Smythe Co. purchased equipment from Chester Grahame Co for $200,000, paying 10% as a down payment and financing the remainder. The proper journal entry for this event is C – Equipment 1000, Cash 20000 and Notes Payable 180000
The trial balance is used to determine whether: A) total assets equal total liabilities. B) total debits equal total credits. C) total revenues plus gains equal total expenses plus losses.D) total increases in accounts equal total decreases in accounts B – total debits equal total credits
If the debit amount of an entry to record the purchase of supplies on account was not posted: A) assets would be understated. B) assets would be overstated. C) liabilities would be understated. D) liabilities would be overstated A – assets would be understated
If a posting error has occurred when recording a transaction by posting a debit as a credit, then the out-of-balance amount will be evenly divisible by: A) 11. B) 9. C) 2. D) 5 C – 2
A trial balance showed total debits of $360,000 and total credits of $36,000. This discrepancy is most likely due to which type of error? A) Slide B) Transposition C) Mislabeling D) Failure to post a transaction A – slide
A trial balance showed total debits of $540,000 and total credits of $450,000. This discrepancy is most likely due to which type of error? A) Slide B) Transposition C) Mislabeling D) Failure to post a transaction B – transportation
If the credit amount of an entry to record the payment of salaries was not posted: A) assets would be overstated and owners’ equity would be overstated. B) liabilities would be understated and owners’ equity would be overstated.C) expenses would be understated and owners’ equity would be understated. D) there would be no effect on stockholders’ equity D – there would be no effect on stockholders equity
If the total debits and the total credits of a trial balance are not equal, the error could be due to: A) recording the same transaction twice. B) recording both the debit and credit of the journal entry for the same incorrect amount.C) an error in determining an account balance. D) forgetting to record a transaction C – an error in determining an account balance
Which of the following statements regarding a trial balance is TRUE? A) A trial balance may be taken at any time during the accounting period. B) A trial balance is a list of all accounts with their balances. C) A trial balance shows that total debits equals total credits. D) All of the above are true D – all of the above are true
A trial balance has which of the following features? A) Totals for balance sheet accounts only B) Totals for income statement accounts only C) Totals for all accounts listed in the ledger D) Both A and B are correct C – totals for all accounts listed in the ledger
A trial balance is: A) prepared before the posting process is completed. B) a list of all accounts with their balances. C) a list of balance sheet accounts with their balances.D) a list of income statement accounts with their balances B – a list of all accounts with their balances
Which statement about a trial balance is NOT true? A) The trial balance can be prepared at any time, but is generally prepared at the end of the accounting period. B) The trial balance is a list of all accounts with their balances. C) The trial balance lists the income statement accounts and their balances first and then the balance sheet accounts and their balances.D) The trial balance lists asset accounts and their balances first, then liability accounts and their balances, and then stockholders’ equity accounts and their balances C – the trial balance lists the income statement accounts and their balances first and then the balance sheet accounts and their balances
A trial balance has total debits of $720,000 and total credits of $850,000, with a debit balance of $65,000 for notes payable. This situation indicates: A) a slide. B) an incorrect posting. C) a transposition. D) that none of the above are correct B – an incorrect posting
The normal balance of Accounts Receivable is a __________because it is a(n) _________ account.A) credit, liability B) debit, asset C) credit, stockholders’ equity D) debit, expense B – debit, asset
The normal balance of the Supplies account is a __________ because it is a(n) __________ account. A) credit, liability B) debit, stockholders’ equity C) credit, expense D) debit, asset D – debit, asset
The normal balance of the Accounts Payable account is a __________ because it is a(n) __________ account. A) credit, liability B) debit, stockholders’ equity C) credit, expense D) debit, asset A – credit, liability
The normal balance of the Common Stock account is a __________ because it increases __________. A) debit, assets B) debit, expenses C) debit, stockholders’ equity D) credit, stockholders’ equity D – debit, expenses
ABC Company had a beginning cash balance of $10,000, received cash of $8,000 and ended the month with a cash balance of $6,000. Cash payments for the month A) were $6,000. B) were $24,000. C) were $12,000. D) cannot be determined from the information given C – were $12000
ABC Company had a beginning Accounts Receivable balance of $10,000, and had $12,000 of sales on account for the month. The ending Accounts Receivable balance was $14,000. Collections on Accounts Receivable for the month: A) were $12,000. B) were $36,000. C) were $8,000. D) can’t be determined from the information given C – were $8000
The accounts receivable account for James Rivers Inc. had a beginning balance of $6,000. During the month, the company received payments of $8,000 and additional accounts of $11,000. The ending balance in accounts receivable is _____ and is a ______. A) $9,000, credit B) $9,000, debit C) $3,000, debit D) $3,000, credit B – $9000, debit
A chart of accounts is: A) prepared as the first step in analyzing transactions. B) a source document. C) a list of all of the accounts of the organization. D) a list of all of the accounts of the organization and their related account numbers. D – a list of all the accounts of the organization and their related account numbers
When using a four-column ledger account format, the pair of columns on the far right is used to show the: A) names of the accounts being debited and credited. B) transaction dates and journal reference. C) account balance. D) debit and credit amounts posted from journal entries C – account balance
Joe Donaldson deposited $80,000 in a bank account, purchased a company for $60,000 cash (Building $40,000 and Inventory $20,000), performed services for clients for $10,000 cash, purchased supplies for $5,000 cash, and paid utilities of $2,000 cash. What is the amount of credits in the trial balance for the month? A) $78,000 B) $88,000 C) $80,000 D) $90,000 D – $90000
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Business Flashcards

Business Law: FINAL EXAM Study Guide

constitution The document that sets forth the framework of a government and its relationship to the people it governs.
Common law based upon the current standards or customs of the people.
positive law Law that is dictated from above by a sovereign or other central authority
business ethics Ethical principles used in making business decisions
Guidelines Laws made by administrative agencies
stare decisis Doctrine that requires lower courts to adhere to existing case law in making decisions
ordinances Legislative actions taken by city or town councils
statutes Laws enacted by state or federal legislative bodies
case law The type of law made when an appellate court endorses a rule to be used in deciding court cases
ethics A collection of standards of conduct and moral judgment forming the basis for a reasoned, impartial decision as to what is right and what is wrong
Thomas Jefferson author of the Declaration of Independence
the preamble to the U.S. Constitution (quote it) We, the people, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our prosperity…..
Bill of Rights The first 10 amendments to the constitution
5th amendment the right to life, liberty and property
Executive, Judicial, and Legislative The three branches of the government
procedural law Filing proper motions and completing everything required legally in the proper order
criminal law an offence against society
Standard of proof in a criminal case beyond a reasonable doubt
unanimous Jury’s verdict in a criminal case must be _______________.
civil law an offense against an individual
Standard of proof in a civil case preponderance of the evidence (more than 50%)
majority Jury’s verdict in a civil case must be _______________.
population House of Representatives membership by state is based on ________________.
statehood Senate membership is based on _______________.
Small claims court for claims under $2,500
Juvenile court for those under 18
Probate court for wills and estates
Appellate court court of appeals.
1. duty2. breach of duty3. injury4. causation Elements of a tort (4 things)
Strict liability Dealing with what a reasonable person would consider to be dangerous.
Unilateral contract one person makes the contract
Bilateral contract two parties involved in contract
1. Business and contract law2. intrastate commerce name 2 areas of law that are of concern for states
1. Interstate commerce2. import/export law3. military and national defense name 3 areas of law that are of concern for the federal government
option Making a down payment on an offer in order for the offer to remain open for a certain period of time
capacity to contract One has the ability, according to law, to understand their actions and the effect of those actions
unilateral mistake a mistake about a contract that one person makes
bilateral mistake a mistake that both parties to the contract makes
contracts between merchants covered by the Uniform Commercial Code and, as such, are held to a higher and much tougher standard than contracts between consumers
consideration for contracts Each person to the contract must receive something of value that changes their legal position.
Liquidated debt the parties agree to the amount owed.
Unliquidated debt the parties do not agree on the amount of the debt.
output contract a vendor agrees to purchase all of the “output:–all of the production that a supplier is able to make.
requirements contract a supplier agrees to supply all of the “requirements”—what the vendor needs—for production.
promissory estoppel Prevents promisors from stating in court that no consideration was received in exchange for the promise
1. Promisor should be able to foresee that the promisee would reasonably rely on the promise2. Promisee does act in reliance on the promise3. Promise would suffer substantial economic loss if the promise was not fulfilled4. Injustice can be avoided only by enforcement of the promise name 4 conditions that must be met for promissory estoppel
composition with creditors Creditor agree to accept less than what they are entitled to in satisfaction for the claims against a debtor in exchange for bankruptcy not being filed
statute of frauds Statutes that require that certain contracts must be in writing in order for them to be enforceable
1. Contracts for the sale of goods for over $5002. Contract to sell an interest in real property3. Contract that requires more than one year to complete4. Contract to take over the debts of another or the debts of an estate.5. Contract for which the consideration is marriage. Name 5 contracts that fall under statute of frauds
In pari lecto of equal guilt
Lassiz faire hands off
Caveat emptor let the buyer beware
blue-sky law Prohibits the selling of worthless stocks and bonds
Allocation of markets competitors agree to divide up the market and not to compete in each other’s territory
Price fixing competitors agree to set the same price
Bid rigging competitors agree to take turns submitting the lowest bids on projects.
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Social Studies Chapter 11 Vocabulary

Laissez Faire Economic theory that promotes leaving business unregulated
Isolationist One opponent to U.S. involvement in foreign affairs
Kellog-Briand Pact International agreement in which nations agreed to refrain from war
Assembly Line Process of assembling a Pratik whereby workers at various stations add parts to it
Installment Buying Buying on credit and be paying the amount in monthly payments
Flapper Flapper symbol of the 1920s American women
Al Capone Famous Chicago crime boss
NAACP Organization aimed at protecting the rights of an African-American
Marcus Garvey Black nationalist leader
Fundamentalism Believe in a literal interpretation of the Bible
Ku Klux Klan Organization that preached racism and white superiority
Harlem Renaissance Flourishing of African-American cultural activity center it in the Harlem district of New York City
Lost Generation Name given to the artist who lost faith in humankind because of the war and who feft alienated by the values of the 1920s
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Trusts and Big Business

A government is laissez-faire when itfairly regulates workers.fairly regulates businesses.does not interfere with business affairs and does not regulate its actions.leaves workers alone and doesn’t regulate unions. c
Why was Carnegie Steel able to offer its product more cheaply than its competitors? Carnegie introduced the Bessemer process, which decreased the cost of production.Carnegie cut corners in his production, lowering his costs.Carnegie could cut his costs because he owned the supply of raw materials and the means of production and distribution.Carnegie made an inferior product, so it was less expensive to produce. c
What is the main reason that the American public turned against monopolies?They saw the price of goods rise as their wages decreased.They saw the price of goods rise as their wages increased.They resented the wealth of the big business owners. They were concerned about smaller businesses. a
Why did government officials allow monopolies to operate without strong regulations during the Gilded Age? They believed monopolies would keep competition alive.They believed monopolies were responsible for the growth of the economy.They believed monopolies would treat their workers well.They believed monopolies were the most successful way for businesses to make a profit. b
How did John D. Rockefeller vertically integrate his monopoly in 1882?He created a trust that controlled oil wells, refineries, and distribution networks.He created a trust that controlled ninety percent of the nation’s oil refineries.He purchased coal plants around the country to add to his business.He purchased iron mines around the country to add to his business. a
Which company was a monopoly during the Gilded Age?MicrosoftAT&TAllegheny SteelCarnegie Steel d
What was the main reason that Carnegie invested in the Frick Coke Company?He wanted to make sure he could always get fuel for his steel plant.He thought he could help the company become profitable.He wanted to invest in new technology.He was interested in the coal business. a
Why was the Cleveland Massacre significant in the formation of Standard Oil?Standard Oil significantly improved its business practices after the Cleveland Massacre.Standard Oil was bought out by other Cleveland companies after the Massacre.Standard Oil closed down after the Cleveland Massacre.Standard Oil became a monopoly in the Cleveland oil market after the Massacre. d
How did the Carnegie’s purchase of Allegheny Steel contribute to the formation of his monopoly?The purchase gave Carnegie new access to the raw materials he needed.The purchase enabled Carnegie to discover a more efficient production method.The purchase enabled Carnegie to control most of the rail lines.The purchase gave Carnegie control of coke production. b
The Cleveland Massacre wasa takeover by Standard Oil of the refineries in Cleveland.a labor dispute at Standard Oil in Cleveland that turned violent. an attempt to stop Standard Oil from becoming a monopoly.a failed attempt by Standard Oil to take over other refineries. a
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Chapter 6 HW Business

Leveling the playing field for home-based businesses, ___________ has (have) made starting a home-based business much more affordable. broadband Internet connections and other technologies
The primary concerns when first starting your business are: financing and planning.
A business plan for a new business does not need to include: the names of the prospective lending companies.
According to the textbook, one of the drawbacks of using venture capital is that: venture capital firms may ask for a high stake in your business.
For a market to exist there must be potential buyers: who have a willingness and the resources to buy.
Why do incubator facilities continue to remain very popular with start-up businesses? By providing essential services to entrepreneurs, they have a very strong success rate.
Why do experts agree that small-business management and large-business management are similar in practice? Similar to large businesses, small business have concerns about obtaining capital and good marketing and management practices.
Which of the following is a false statement about small business? The first job for most Americans is unlikely to be in a small business.
Although the business plan has a great amount of detail and requires thoroughness, a well-explained business idea will come to life almost immediately in which part of this document? The executive summary
A small business advantage is ________. the ability to quickly adapt to customer needs