VYC1 Principles of Accounting- Chapters 1-15
Sabrina Duncan had gross earnings for the pay period ending 10/15/13 of $5,785. Her total gross earnings as of 9/30/13 were $104,500. If Social Security taxes are 6.2% on a maximum earnings of $106,800 per year, Sabrina's Social Security withheld from her 10/15/13 paycheck would be:
$142.60
Samantha Rodriguez had gross earnings for the pay period ending 10/15/13 of $4,785. Her total gross earnings as of 9/30/13 were $104,500. Social Security taxes are 6.2% on a maximum earnings of $106,800 per year. The Social Security tax due by her employer from her 10/15/13 paychecks is:
$142.60
Hour Place Clock Shop sold a grandfather clock for $2,250 subject to a 9% sales tax. The entry in the sales journal will include a debit to Accounts Receivable for
$2,452.50
During March a firm purchased $22,650 of merchandise and paid freight charges of $1,720. If the net delivered cost of purchases for the March is $21,900, what is the total purchase returns for March?
$2,470
An employee whose regular hourly rate is $9 and whose overtime rate is 1.5 times the regular rate worked 44 hours one week. The employee's gross pay was
$414.
Tune Tones Instrument Tuning Company owes Mandy Lynn's Music Studio $4,856 as of November 1. During November Tune Tones purchased merchandise from Mandy Lynn totaling $8,495 and made payments on account to Mandy Lynn in the amount of $7,250. The amount Tune Tones owes Mandy Lynn on November 30 is:
$6,101
Equipment cost $36,000 and is expected to be useful for 5 years and have no salvage value. Under the straight-line method, monthly depreciation will be
$600
Jason McCurdy has a regular hourly rate of $10.75. During a two week period, he worked 80 hours and had deductions of $110 for federal income tax, $53.50 for social security tax, and $12.50 for Medicare tax. His net pay was
$684.
Merchandise is sold for $8,820, terms 1/10, n/30. Prior to payment, the customer returned $560 of the merchandise. If the invoice is paid within the discount period the amount of the sales discount is:
$82.60
Beckett Co. sold merchandise on account for $10,600, terms 2/10, n/30. Freight charges of $250 were prepaid by the seller and added to the invoice. The customer returned $800 of merchandise before making the payment then paid the invoice within the discount period. What is the amount Beckett Co. received?
$9,854
If the trial balance totals are not equal, the error may have been caused by a transposition if the difference is divisible by
9
Which of the following describes Sales Returns and Allowances?
A contra revenue account with a normal debit balance.
Which of the following statements is not correct? Cash purchases of merchandise are not recorded in the purchases journal.
A credit purchase of equipment for use in the business would be recorded in the purchases journal.
Which of the following statements is correct? The FUTA tax provides benefits for employees who become unemployed. The federal unemployment tax rate can be reduced by the rate charged by state for the state unemployment tax. The earnings base for the federal and state unemployment taxes are the same, the first $7,000 of an employee's earnings for the year. All of the above are correct.
All of the above are correct.
The rent paid for future months is a(n)
Asset
When the owner invests cash in a business,
Assets and Owner Equity Increase
The statement of financial position is another term for which financial statement?
Balance Sheet
The owner's investment or equity in a business is called:
Capital
Owners are not personally responsible for the debts of the business if the form of business organization is:
Corporation
The journal entry to record the payment of salaries for the month is:
Debit Salaries Expense; Credit Cash
T/F A journal entry can consist of no more than one account to be debited and one account to be credited.
False
T/F An accounting system is designed to accumulate and classify data about a firm's financial affairs and summarize it in the general journal.
False
T/F Another name for temporary accounts is real accounts.
False
T/F FUTA tax, like social security tax, is levied on both the employer and the employee and, therefore, is withheld from employee's pay.
False
T/F For the purpose of internal control, only the person who prepares payroll checks should distribute them.
False
T/F If an employee whose regular hourly rate is $9 and whose overtime rate is 1.5 times the regular rate works 42 hours in one week, the employee's gross pay is $378.
False
T/F If assets are $8,000 and liabilities are $2,000, owner's equity is $10,000.
False
T/F If cash is over, it is entered in the Other Account Credit column of the cash receipts journal and the figure is circled.
False
T/F Public accountants work on the staff of federal, state, or local governmental units.
False
T/F The employer must issue each employee a Form W-2 by January 15 of the next year.
False
T/F The normal balance side of a liability account is the debit side.
False
T/F The owner's capital account is closed at the end of each accounting period.
False
T/F The statement of owner's equity is prepared from the data in the Income Statement section of the worksheet.
False
T/F To arrive at the accurate balance on a bank reconciliation statement, it is necessary to deduct an NSF check from the bank statement balance.
False
T/F When a business is organized as a sole proprietorship, the owner may combine his/her personal financial information with the business financial information.
False
T/F When an owner invests assets in a business, the capital account is debited.
False
T/F Withdrawals by the owner are reported on the income statement.
False
The Payroll Tax Expense account is used to record which of the following taxes?
Federal unemployment compensation tax
Which of the following represents the proper sequence for preparing the financial statements.
Income statement, statement of owner's equity, balance sheet.
Ginger Yale Ice Company receives money from a customer on account. Recording this transaction will:
Increase Cash
Owners and managers need financial information in order to:
Make Decisions
The area of accounting that involves the preparation of internal reports for a firm's executives and the analysis of the data in these reports to aid in decision making is known as:
Managerial Accounting
For which of the following is there no limit to the amount of wages subject to the tax?
Medicare tax
Managerial accounting is:
Private Accounting
Which of the following increase owner's equity?
Revenue
Tax accounting involves tax compliance and:
Tax Planning
Owner's equity is:
The financial interest of the owner of a business
T/F "Closing" is written in the Description column of the individual revenue and expense accounts in the general ledger.
True
T/F A double line drawn under the figures in a money column shows that the computation is complete.
True
T/F Account names are written in the general journal exactly as they appear in the chart of accounts.
True
T/F Accounting is defined as the process by which financial information about a business is recorded, classified, summarized, interpreted, and communicated to owners, managers, and other interested parties.
True
T/F Another name for permanent accounts is real accounts.
True
T/F If a journal entry that contains an error has already been posted, a correcting entry should be journalized and posted.
True
T/F If an adjustment is not recorded for supplies used, the firm's assets will be overstated.
True
T/F If an amount recorded in the general journal requires two postings, a diagonal line is used to separate the two posting references in the posting reference column.
True
T/F In a small business, the customer accounts are usually kept in alphabetical order.
True
T/F Interpreting the financial statements is the last step in the accounting cycle.
True
T/F Land is a long-term asset that is not subject to depreciation.
True
T/F No end-of-month posting is required for the total of the Other Accounts Debit column of the cash payments journal.
True
T/F One of the purposes of closing entries is to transfer net income or net loss for the period to the owner's capital account.
True
T/F Publication 15, Circular E contains federal income tax withholding tables.
True
T/F The abbreviation S1 in the Posting Reference column of an account shows that the data was posted from page 1 of the sales journal.
True
T/F The balance of a liability account is extended to the Balance Sheet Credit column of the worksheet.
True
T/F The cash accounts is not closed?
True
T/F The death or withdrawal of one partner ends the partnership.
True
T/F The general ledger contains the accounts that are used to prepare the financial statements.
True
T/F The heading "Closing Entries" is usually written in the Description column of the general journal above the first closing entry.
True
T/F The income statement is also known as the profit and loss statement.
True
T/F The reduction of state unemployment taxes because of favorable experience ratings reduces the credit allowable against the federal unemployment tax.
True
T/F The use of a purchases journal strengthens the audit trail.
True
T/F Time sheets or time cards are used to keep a record of hours worked each day by each employee paid on an hourly basis.
True
T/F When an accounts payable subsidiary ledger is used, the entry to Accounts Payable requires two posting references in the general journal.
True
The Accounts Payable account has a $3,000 credit balance. An entry for the payment of $1,000 on the amount owed is recorded and posted. The new balance of the Accounts Payable account is
a $2,000 credit balance.
Assuming a Medicare tax rate of 1.45% and monthly gross wages of $2,500, the amount recorded in Medicare Tax Payable for one quarter for the employee's payroll deduction is
a credit for $108.75.
The entry in a firm's accounting records for a credit customer's check that was returned by the bank marked "NSF" would include
a debit to Accounts Receivable and a credit to Cash.
The adjusting entry to account for the expiration of prepaid insurance consists of
a debit to Insurance Expense and a credit to Prepaid Insurance.
If at the end of the year the firm owes a balance for workers' compensation insurance, the adjusting entry includes a
a debit to Workers' Compensation Insurance Expense and a credit to Workers' Compensation Insurance Payable
After a supplier of merchandise is selected, the purchasing department issues a form called
a purchase order.
A check issued for $890 to pay a vendor on account was recorded in the firm's records as $980; the canceled check was properly listed on the bank statement at $890. To arrive at an accurate balance on a bank reconciliation statement, the error should be
added to the book balance.
Tax returns for the federal unemployment tax are due weekly.
annually.
In a firm that uses special journals, an additional cash investment received from the owner is recorded in the
cash receipts journal.
In a firm that uses special journals, the sale of merchandise for cash is recorded in the
cash receipts journal.
If a trial balance is not in balance (the Debit and Credit columns are not equal), a logical first step is to
check the addition of each column.
If a check written by a firm is not canceled by the bank and returned with the month's bank statement, the firm should:
consider this check as outstanding when preparing the bank reconciliation.
To record a return of merchandise purchased on credit on the books of the buyer, the accountant would
debit Accounts Payable and credit Purchases Returns and Allowances.
To record a deposit of federal income taxes withheld and social security and Medicare taxes, the accountant would:
debit one or more liability accounts and credit an asset account.
Which of the following is not an employer payroll tax?
federal income tax
A consecutive, twelve-month accounting period is called a(n)
fiscal year
In a firm that uses special journals, an allowance given for damaged merchandise is recorded in the
general journal.
Credit terms of 1/10, n/30 mean that
if the invoice is paid within 10 days of its date, a 1% discount may be taken; otherwise the total amount is due in 30 days.
The normal balance of an account is the
increase side of the account.
Credits are used to record
increases in liabilities and owner's equity.
A firm that sells goods that it purchases for re-sale is a
merchandising business.
The Posting Reference column of a journal is used to
record the number of the ledger account to which the information is posted.
Business papers, such as checks, invoices, receipts, letters, and memos, that furnish proof that a transaction has taken place are called
source documents
Which of the following is NOT typically an employee payroll withholding?
state unemployment taxes
On a worksheet, the adjusted balance of a contra asset account would be extended to
the Balance Sheet Credit column.
The entry to transfer a net loss to the owner's capital account would include a debit to
the owner's capital account and a credit to Income Summary.
The owner's drawing account is closed by debiting the owner's drawing account and crediting the owner's capital account.
the owner's capital account and crediting the owner's drawing account.
If the prepaid expenses are not adjusted, assets on the balance sheet
will be overstated.
