BAF Review Package
NOTE: This review package does not cover all exam material. It is intended to give you a sample of topics from the course. Every student is expected to study beyond the scope of this package by reviewing ALL GAAPs, Accounting Cycle, Source documents, Financial Statements, etc. covered this year.
FILL IN THE BLANK
- The financial statement, reporting assets, liabilities, and owner’s equity at a specific date is called a(n) ________________________.
- A financial event changing the value of the items on the balance sheet is called a business __________________.
- The fact that a(n)____________________ is in balance does not necessarily mean that the books are completely accurate.
- After analyzing transactions, it is possible for several items to change, but never only _______________.
- After analyzing each transaction, the fundamental accounting equation must still _________________.
- When recording a journal entry, the accounts to be _________________ are indented.
- A group of accounts, is known as a(n) _______________.
- The difference between the total debits and total credits in an account is called the _________________.
- A listing of ledger accounts and their balances is referred to as a(n) ___________________________.
- The owner’s withdrawal of cash for personal use is called _________________.
- A(n) __________________ is used to record changes in assets, liabilities, and equity accounts.
- The financial statement on which the Drawings account appears is called the _____________________.
- The period of time over which earnings are measured is called the accounting period or the _______________ period.
- When the balance sheet is prepared vertically, it is said to be in _________________ form.
- The accounting equation is based on three fundamental parts: _____________, __________________, and ______________________.
- Listing assets in order of their ___________________ means that the assets are listed in order in which they can easily be converted to ________________.
- The basic feature of the double entry system of accounting is that, for each transaction, the amount of ___________ must equal the amount of _____________.
- A cash investment by the owner increases ____________ and _______________.
- When an expense is incurred but not yet paid for, the creditor’s account is ___________ and the expense account is _______________.
- The two types of businesses that we learned how to account for in this course are a(n) _____________ business and a(n) ________________ business.
- The accounting department learns of transactions from business papers called ________________.
- A _______________ is a business form prepared whenever goods or services are sold for cash.
- A _______________ is a business form prepared whenever goods or services are sold on account.
- The account debited for all sales on account is __________________.
- A _____________________ is a business form representing a purchase of goods on account.
- The account credited for all sales is ________________.
- The _____________________________ is the business paper that records payments coming in from customers.
- A bank _____________ memo, initiated by the bank, will decrease Cash for the business.
- Business debts owed to us by our customers are known as accounts payable.
- The third line of the balance sheet heading contains the name of the business.
- The term “debit” means increase, and the term “credit” means decrease.
- All creditors have a claim against the assets of a business.
- Debtor accounts are listed in the asset section of the balance sheet.
- The Capital account represents the Owner’s claim on the assets of his business.
- If the total on the left side of an account is greater than the total on the right side, the account has a debit balance.
- The cash purchase of an asset changes the capital of the business.
- If a trail balance is in balance, the account balances are correct.
- When cash is received from a debtor the debtor’s account is credited.
- When a cheque is issued to decrease the balance owed to a creditor, this money is said to be a payment on account.
- Which of the following equations cannot be derived from the basic accounting equation:
- Assets – Liabilities = Owner’s Equity
- Liabilities = Assets – Owner’s Equity
- Owner’s Equity – Liabilities – Assets
- Assets – Owner’s Equity = Liabilities
- Magic Forest Land Development Corporation sold a portion of land at a profit. This will cause:
- A decrease in assets and liabilities
- An increase in assets and liabilities
- An increase in assets and owner’s equity
- A decrease in assets and owner’s equity
- Arrowhead Lake Boat Shop bought a $700 electric hoist to lift engines out of boats. The boat shop paid $200 in cash and promised to pay the balance in 20 days. This transaction will cause:
- The boat shop’s assets to increase by $700 and liabilities to increase by $500
- Assets to increase by $500 and owner’s equity to decrease
- No change in total assets, but a $500 increase in liabilities and a similar decrease in owner’s equity
- No change in owner’s equity, but a $500 increase in both assets and liabilities
- The Holidex Company completed a transaction which caused both its total assets and its total liabilities to increase by $6 000. The transaction could have been:
- The purchase of a fork lift by paying $14 000 and acceptance of an account payable for $6 000
- The purchase of a drill, payment of $2 000 in cash and acceptance of an account payable for $4 000
- The sale of land costing $24 000 for $30 000 cash
- None of the above
- Which of the following errors would NOT be disclosed by the Trial Balance:
- The collection of a $520 accounts receivable was entered in T-accounts as a debit of $520 to Cash and a credit of $502 to Accounts Receivable
- The collection of $200 accounts receivable was entered as a $200 debit to Cash and a $200 debit to Accounts Receivable
- The collection of a $1 000 accounts receivable was entered in T-accounts as a debit to Land and a credit to Cash
- None of the above
- If the assets of a company are $10 000 and the liabilities are $7 000, then the correct figure for Owner’s Equity is:
- $17 000
- $10 000
- $3 000
- $5 000
- A business borrows $10 000 from the bank. The entry to record the transaction is:
- Debit Cash and Credit Capital
- Debit Cash and Credit Bank Loan
- Debit Bank Loan and Credit Capital
- Debit Bank Loan and Credit Cash
- A business buys land for $50 000 on credit. In recording the transaction, the effect on the accounting equation will be:
- Assets both increase and decrease
- Assets increase and liabilities increase
- Assets increase and liabilities decrease
- Assets increase and capital increases
- Equipment was sold to D. Malone for $1 000 and a down payment of $200 was made. The equipment had been listed in the books at $1 500. The entry to record this transaction is:
- Debit Cash, credit Equipment, credit Capital
- Debit Cash, debit D. Malone, credit Equipment
- Debit cash, debit D. Malone, debit Capital, credit Equipment
- Debit Cash, Debit D. Malone, credit Equipment, credit Capital
- If an entry involves a debit to an asset account, it may also involve a credit to:
- A liability account
- An asset account
- A capital account
- All of the above
- If the owner of a business pays cash to repair the company’s delivery truck:
- Cash is debited and delivery truck is credited
- Delivery truck is debited and cash is credited
- An expense account is debited and cash is credited
- The capital account is credited and delivery truck is credited
- A debit to an account may:
- Increase any asset
- Decrease any asset
- Increase any liability
- Increase capital
- In reviewing the books for his company, the owner noted that one transaction was recorded as a $500 debit to Cash and a $500 debit to Furniture & Fixtures. The result of this error will cause:
- The cash to be overstated by $500
- The trial balance to be understated by $500
- The furniture & fixtures account to be overstated by $500
- The cash account to be overstated by $1 000
- Which account would appear on the Trial Balance, Income Statement and Balance Sheet?
- None of the Above
- Complete the following table, showing which account will be debited or credited for each transaction:
16. Given the following Trial Balance for Playbill Cinema
a) Prepare an Income Statement for the month ended January 31, 2014
b) Prepare the Statement of Owner’s Equity as at January 31, 2014
17. Classify the accounts listed below, using the following abbreviations: CA (Current Assets); CL (Current Liabilities), FA (Fixed Assets), LTL (Long Term Liabilities), OE (Owner’s Equity), R (Revenue), E (Expenses)
a) Accounts Payable
c) Accounts Receivable
d) Bank Loan
e) Mortgage Payable
f) HST Payable
g) HST Refundable
h) Y. Sousa, Drawings
i) Salaries Expense
l) Unearned Revenue
18. In the chart below, write the numbers of the accounts that are debited and credited when the given adjustments are made. Assume that the accounting clerks debited asset accounts when they received the appropriate invoices.
19. Journalize the following transactions, given that these are the base prices (remember to include HST when necessary):
Jan 4 Sold $500 worth of merchandise on account, terms 2/10, n/30
Jan 7 Purchased $650 worth of merchandise on account, terms 1/10, n/30
Jan 9 Paid $30 for transportation charges on incoming goods, Chq #433
Jan 11 Customer returned $50 worth of merchandise from Jan 4 purchase
Jan 15 The balance in the HST Payable account is $450 and the balance in the HST Refundable account is $230. Remit the tax.
Jan 21 Customer paid account in full
Jan 28 Paid your account from purchase made on January 7
20. Complete the chart below to show the effect of errors on a trial balance: