Quiz Topic 3

Once journal entries are recorded, they can be posted to:

• ledger

• income statement

• expenses account

Jeff's Construction, LLC bought a piece of equipment in 2001 for P 10,000. Today this piece of equipment is only worth P 2,000. Jeff would still report the equipment at its purchase price of P 10,000, less depreciation, even though its current fair market value is only P 2,000.

• Historical Principle
• Business Entity
• Accrual Principle
• Adequate Disclosure Principle

Concept: Financial information is reported for a specific period of time on financial statements.

• Matching Expenses with Revenue
• Accounting Period Cycle
• Business Entity

Concept: When a business activity is large enough to impact business decisions, it should be recorded clearly in the financial statements

• realization of revenue

• materiality

• unit of measurement

• consistent reporting

Concept: Financial statements are prepared with the expectation that business will remain in operation indefinately

• going concern

• materiality

• accounting period cycle

• matching revenue with expenses

Concept: The same accounting procedures must be followed in the same way each accounting period

• accounting period cycle

• objective evidence

• consistent reporting

• materiality

Concept: Revenue is recorded at the same time goods or services are sold.

• realization of revenue

• the revenue principle

• going concern

• historical cost

A return of merchandise to the vendor results in 

• debit to Purchases.
• credit to Purchases Returns and Allowances. 
• credit to Purchases.
• debit to Purchases Returns and Allowances.

A return of merchandise to the vendor results in 

• debit to Purchases.
• credit to Purchases Returns and Allowances. 
• credit to Purchases.
• debit to Purchases Returns and Allowances.

The contra account to Office Equipment is

• Allowance for Uncollectible Accounts
• Accumulated Depreciation Store Equipment
• Office Equipment Expense
• Accumulated Depreciation - Office Equipment