Accounting Final

Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and withdrawals accounts for the upcoming period and to update the owners capital account for the events of the period just finished are referred to as:

Closing entries

The right side of a T-account is a:

Credit

The assets section of a classified balance sheet usually includes:

Current assets, long-term investments, plant assets, and intangible assets.

Costs included in the Merchandise Inventory account can include all of the following except:

Damaged inventory that cannot be sold.

On January 1 a company purchased a five-year insurance policy for $1800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:

Debit Insurance Expense, $360; credit Prepaid Insurance, $360

What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $7,750 before adjustment, and the unexpired amount per analysis of policies is, $3,250?

Debit Insurance Expense, $4,500; credit Prepaid Insurance, $4,500

The current period's ending inventory is:

The next period's beginning inventory.

The income summary account is used to clsoe:

The revenue and expense accounts.

Cash receipts journal. (Definition)

The special journal used to record all receipts of cash.

The balance in the unadjusted columns of a work sheet will agree with:

The balances reflected in the company's unadjusted trial balance

A debit is on the ___ of the T-account:

left-hand side

Sales returns refer to:

merchandise that customers return to the seller after the sale.

Herald Company had sales of $135,000, sales discounts of $2,000, and sales returns of $3,200. Herald Company's net sales equals:

$129,800.

A company had no office supplies available at the beginning of the year. During the year, the company purchased $250 worth of office supplies. On December 31, $75 worth of office supplies remained. How much should the company report as office supplies expense for the year?

$175

A company had sales of $375,000 and its gross profit was $157,500. Its cost of goods sold equals:

$217,500.

The Unadjusted Trial Balance columns of a company's work sheet show the balance in the Office Supplies account as $750. The Adjustments columns show that $425 of these supplies were used during the period. The amount shown as Office Supplies in the Balance Sheet columns of the work sheet is:

$325 debit.

A company had sales of $695,000 and cost of goods sold of $278,000. Its gross margin equals:

$417,000.

The credit terms 2/10, n/30 are interpreted as:

2% cash discount if the amount is paid within 10 days, or the balance due in 30 days.

A classified balance sheet differs from an unclassified balance sheet in that

A classified balance sheet presents information in a manner that makes it easier to calculate a company's current ratio.

After preparing and posting the closing entries to close revenues (and gains) and expenses (and losses), the income summary account has a debit balance of $33,000. The entry to close the income summary account will include:

A debit of $33,000 to owner capital.

On June 30 of the current calendar year, Apricot Co. paid $7500 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The adjusting entry on December 31 for Apricot would include:

A debit to a prepaid expense for $1,875

Controlling account. (Definition)

A general ledger account,t he balance of which, after posting, equals the sum of the balances of the accounts in its related subsidiary ledger.

Purchases Journal. (Definition)

A journal used to record all purchases on credit.

Sales Journal. (Definition)

A journal used to record sales of merchandise on credit.

Unearned revenue is reported in the financial statements as:

A liability on the balance sheet.

Schedule of accounts payable. (Definition)

A list of each customer from the accounts payable ledger with their balances and the total.

Account receivable ledger. (Definition)

A record of the separate accounts of each credit customer that is controlled by a general ledger account.

Cash disbursements journal. (Definition)

A special journal used to record all payments of cash.

A record of the increases and decreases in an asset, liability, equity, revenue, or expense is a:

Account

The recurring steps performed each reporting period, starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance, is referred to as the:

Accounting cycle

Assets created by selling goods and services on credit are:

Accounts receivable

The approach to preparing financial statements based on recognizing revenus when they are earned and matching expenses to those revenues is:

Accrual basis accounting:

A trial balance prepared after adjustments have been recorded is called an:

Adjusted trial balance.

Special journal. (Definition)

Any journal used for recording and posting transactions of a similar type.

A classified balance sheet organizes:

Assets and liabilities into important subgroup

Accumulated Depreciation, Accounts Receivable, and Service Fees Earned would be sorted to which respective columns in completing a work sheet?

Balance Sheet and Statement of Owner's Equity; Balance Sheet and Statement of Owner's Equity Debit; and income statement-credit.

Which financial statement reports an organization's financial position at a point in time?

Balance sheet

The accounting assumption that requires every business to be accounted for separately from other business entities, including its owner or owners is known as the:

Business entity assumption

To include the personal assets and transactions of a business's owner in the records and reports of the business could be in conflict with the:

Business entity assumption

An account used to record the owner's investments in the business is called a

Capital account

A list of all accounts and the identification number assigned to each account used by a company is called a:

Chart of accounts

A report that lists accounts and their balances, in which the total debit balances should equal the total credit balances, is called a:

Chart of accounts.

J. Awn, the proprietor of Awn Services, withdrew $8,700 from the business during the current year. The entry to close the withdrawals account at the end of the year is:

Debit J. Awn, Capital $8,700; credit J. Awn, Withdrawals $8,700

Prior to recording adjusting entries, the Office Supplies account had a$359 debit balance. A physical count of the supplies showed $105 of unused supplies available. The required adjusting entry is:

Debit Office Supplies Expense $254 and credit Office Supplies $254

The adjusting entry to record the earned but unpaid salaries of employees at the end of an accounting period:

Debit Salaries Expense and credit Salaries Payable

Alex Company has 10 employees, who earn a total of $1,800 in salaries each working day. They are paid on Monday for the five-day workweek ending on the previous Friday. Assume that year ended December 31, is a Wednesday and all employees will be paid salaries for five full days on the following Monday. The adjusting entry needed on December 31 is:

Debit Salaries Expense, $5,400; credit Salaries Payable, $5400

Regardless of the inventory costing system used, cost of goods available for sale must be allocated at the end of the period between

Ending inventory and cost of goods sold.

The difference between a company's assets and its liabilities, or net assets is:

Equity

The inventory valuation method that has the advantages of assigning an amount to inventory on the balance sheet that approximated its current cost, and also mimics the actual flow of goods for most businesses is:

FIFO

The amount recorded for merchandise inventory includes all of the following except:

Freight costs paid by the seller.

The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the owner's capital account is the:

Income Summary account

Adjusting entries affect both

Income statement and balance sheet accounts

The financial statement that reports whether the business earned a profit and also lists the revenues and expenses is called the:

Income statement.

Merchandise inventory:

Is a current asset.

The record in which transactions are first recorded is the:

Journal.

The inventory valuation method that results in the lowest taxable income in a period of inflation is:

LIFO method.

A collection of all accounts and their balances used by a business is called a:

Ledger

Source documents include all of the following except:

Ledgers

Creditors' claims on the assets of a company are called:

Liabilities

Unearned revenues are ______ created when a customer pays in advance for ________ before the _______ is earned

Liabilities. products or services. revenue.

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

Matching principle

Which of the following accounting principles prescribes that a company record its expenses incurred to generate the revenue reported?

Matching principle

Beginning inventory plus net purchases is:

Merchandise available for sale.

The excess of expenses over revenues for a period is:

Net loss

Sales less sales discounts less sales returns and allowances equals:

Net sales.

Another name for temporary accounts is:

Nominal accounts

The company uses the perpetual inventory system and recorded the following entry: Accounts Payable........ 2,500 Merchandise Inventory..... 50 Cash....... 2,450 The entry reflects a:

Payment of the account payable and recognition of a 2% cash discount taken.

Assets, liabilities, and equity accounts are not closed, these accounts are called:

Permanent accounts

A trial balance prepared after the closing entries have been journalized and posted is the:

Post-closing trial balance.

The process of transferring general journal information to the ledger is:

Posting

What is the final step in the accounting cycle?

Preparing a post-closing trial balance.

The operating cycle for a merchandiser that sells only for cash move from:

Purchases of merchandise to inventory to cash sales.

A debit to Sales Returns and Allowances and a credit to Accounts Receivable:

Recognizes that a customer returned merchandise and. or received an allowance.

Acceptable methods of assigning specific costs to inventory and cost of goods sold include all of the following except:

Retail method

The accounting principle that requires revenue to be recorded when earned is the:

Revenue recognition principle

Increases in equity from a company's earnings activities are:

Revenues

Which of the following accounts would be closed with a debit?

Sales.

Which of the following inventory costing methods will always result in the same values for ending inventory and cost of goods sold regardless of whether a perpetual or periodic inventory is used?

Specific identification and FIFO

A record in which the effects of transactions are first recorded and from which transaction amounts are posted to the ledger is a

T account

Revenues, Expenses, and withdrawals accounts, which are closed at the end of each accounting period are:

Temporary Accounts

Goods in transit are included in a purchaser's inventory

When the purchaser is responsible for paying freight charges.

A payment to an owner is called a

Withdrawal

A columnar working paper used to prepared a company's unadjusted trial balance, adjusting entries, adjusted trial balance, and financial statements, and which is an optional tools in the accounting process is a:

Work sheet.

The total amount of depreciation recorded against an asset or group of assets during the entire time the asset or assets have been owned:

accumulated depreciation.

Physical counts of inventory are necessary to:

adjust the inventory account to the actual inventory available.

A balance sheet lists the types and amounts of:

assets, liabilities, and equity of a business.

Revenue is properly recognized upon:

completion of the sale or when services have been performed and the business obtains the right to collect the sales price.

Cost of goods sold is the term used for:

cost of buying and preparing merchandise for sale.

A corporation is ____ subject to double taxation

not

Merchandise inventory includes all goods:

owned by a company and held for sale

Net income is the excess of ____ over ____.

revenues over expenses

When closing entries are made, all ____ _____ are closed but not the ______ _____

temporary accounts. permanent accounts.

A partnership has _____ liability for its partners.

unlimited