Accounting

A petty cash fund of $200 has $17 in cash, $180 in petty cash vouchers, and $3 in miscellaneous receipts not included with the petty cash vouchers. The proper journal entry to replenish the fund would include a credit to Cash for

$183.

The total revenue for the month of June amounted to $7,500; total expenses amounted to $3,500; and withdrawals amounted to $600. The net income for the month amounted to

$4,000.

An asset costs $33,000. It has an expected useful life of 5 years and an expected salvage value of $3,000. Depreciation expense for the first year of the asset's life using the straight-line method is

$6,000

Owner's equity at the start of the period is $35,000; net income for the period is $30,000; the total investments by the owner is $15,000; and total withdrawals by the owner is $5,000. The owner's equity at the end of the period is

$75,000.

The total assets amount to $26,000 and the total liabilities amount to $18,000. The amount of the owner's equity is

$8,000

Which of the following is the main distinction between an employee and an independent contractor?

An employee works under the control and direction of an employer; an independent contractor does not work under the control and direction of the company paying for the service.

When combined, the Social Security and Medicare taxes are known as the acronym

FICA

The act that requires most employers to withhold certain amounts from employees' earnings for contributions to the Social Security and Medicare programs is called the

Federal Insurance Contributions Act.

For payroll purposes, what is the distinction between an employee and an independent contractor?

Government laws and regulations regarding payroll are much more complex for employees than for independent contractors.

Which of the following formulas is used to determine what amount of pay an employee will actually take home?

Gross Pay - Deductions = Net Pay

Which of the following is not a step in preparing a bank reconciliation?

Identify ending balance of previous statement.

The account to which revenue and expenses are closed is called

Income Summary.

Employee Federal Income Tax Payable, Social Security Tax Payable, and Medicare Tax Payable are all classified as what type of accounts?

Liabilities

The account that is credited for the Medicare tax withheld from employee's earnings and the Medicare tax imposed on the employer is

Medicare Tax Payable.

When journalizing the payroll, the amount of cash credited is equal to which of the following?

Net pay

Which of the following is the common account to which all employer payroll taxes are debited?

Payroll Taxes Expense

Which of the following two payroll recording devices are linked?

Payroll register and employee earnings record

What effect do the Social Security, Medicare, FUTA, and SUTA taxes imposed on the employer have on owner's equity?

Payroll taxes decrease owner's equity

Any accounting period of twelve months' duration is usually referred to as a(n)

fiscal year

Instead of T accounts, businesses are more likely to use a

four-column account.

Stephen purchased office supplies for $800 on account. This transaction would

increase assets and increase liabilities.

Meghan started her business by investing $30,000 in cash. This transaction would

increase assets and increase owner's equity

Jason purchased office equipment for $4,800 in cash. This transaction would

increase one asset and decrease another asset

A purchase of an asset on account

increases assets.

Any person who agrees to perform a service for a fee and is not subject to the control of those for whom the service is performed is called a(n)

independent contractor.

The matching principle in accounting requires the matching of

revenue earned with the expenses incurred to produce the revenue.

Increases to owner's equity may be from

revenue that is derived from sales of goods or services.

At the end of the period, a debit balance in the cash short and over account is representative of a(n)

shortage (expense).

The trial balance

shows the current date.

Destiny Dating Co. owes the following amounts for payroll taxes and employees' withholding of Social Security, Medicare, and federal income tax as of March 15:

social Security Tax Payable3,720 Medicare Tax Payable870 Employee Federal Income Tax Payable6,695 Cash11,285

Forms and papers that provide information about a business transaction are called

source documents.

Changes in owner's equity that result from investments or withdrawals of assets by the owner are included in the

statement of owner's equity.

An example of an expense is

supplies consumed.

The standard T account includes all of the following EXCEPT

the current date.

If the book value of an asset is $12,500 and the accumulated depreciation is $3,500, the original cost of the asset is

$16,000.

What Medicare tax rate must an employer pay for each employee?

1.45

During the first week of January, Nora Taylor earned $800. FICA taxes are 7.65% of wages, SUTA is 5.4% of earnings to the maximum allowed, FUTA is 0.6% of earnings to the maximum allowed, and federal and state income tax withholdings are $72 and $24, respectively. Assuming that Nora is the only employee for the Ice is Nice Jewelry store, what is the total employer's tax expense for the first week of January?

109.20

Jillian Diaz receives a regular salary of $1,500 a month and is entitled to overtime pay at the rate of one and one-half times the regular hourly rate for any time worked in excess of 40 hours per week. Diaz's overtime pay rate is

12.98

The payroll register for the week ended April 15 for Ultimate Tanning Spa indicates gross earnings of $4,000 and total deductions of $1,200. The journal entry for the payroll for this week would include which of the following credit amounts to Cash?

2,800

What is the total cost to employ an employee who earns $38,000? Social Security taxes are levied at a rate of 6.2% and Medicare taxes at a rate of 1.45%. In addition, the employer must pay SUTA tax at a rate of 5.4% and FUTA tax at a rate of 0.6% on the first $7,000 of their salary.

41,327

The monthly bank statement shows a checking account balance of $7,500. There are two outstanding checks: Check No. 103 for $425 and Check No. 104 for $650; an outstanding deposit of $390; and a bank service charge of $25. What is the reconciled checking account balance?

6,790

During the first week of March, Ryan Owens earned $800. Assume a Social Security tax rate of 6.2%; a Medicare rate of 1.45%; and that federal and state income tax withholdings are $65 and $24, respectively. Assume that Ryan has voluntary withholdings of $40 for savings. What amount did Ryan receive in his check, net of all deductions, for the week's pay?

609.80

What is a canceled check?

A check that has been paid by the bank

Which of the following is a common approach used by medium- and large-size businesses for payroll record keeping?

A payroll processing center

After the closing entries have been posted, which of the following accounts would still have a balance?

Accumulated Depreciation-Equipment

Which of the following is issued by a bank once a month to each depositor and shows items such as the balances at the beginning and ending of the period?

Bank statement

The register tapes for March 20 showed cash receipts of $872, and a change fund of $200 was maintained, but only $1,070 in cash was in the register drawer. Which of the following journal entries would be made for Cash, Service Fees, and Cash Short and Over on March 20?

Debit Cash for $870, debit Cash Short and Over for $2, and credit Service Fees for $872

On June 15, the following data were reported on the payroll register of Bella Day Spa:

Debit Wages and Salaries Expense for $6,420.00 and credit Employee Income Tax Payable for $680.00, Social Security Tax Payable for $398.04, Medicare Tax Payable for $93.09, Health Insurance Premiums Payable for $180.00, United Way Contributions for $40.00, and Cash for $5,028.87.

Which of the following types of payroll system is based on a software package?

Electronic system

On July 1, Jacquard Design Services established a $300.00 petty cash fund. Throughout July, the following vouchers were written for cash paid from the fund. Unfortunately, a voucher for the owner's drawing account is among those in the petty cash drawer, but no amount is indicated on the voucher. There is $159.00 cash remaining in the drawer. Based on the information provided, what amount should the Dan Dresden, Drawing voucher reflect and which of the following is the proper journal entry to replenish the petty cash fund?

The Dan Dresden, Drawing voucher should be $60.00. To replenish the petty cash account the correct entry is the following: Travel Expense42.40Postage Expense8.60Donation Expense30.00Dan Dresden, Drawing60.00 Cash141.00

On September 30, the register tapes for Colonial Gourmet Shop showed cash receipts of $2,175 and a change fund of $200 was maintained. However, $2,373 was in the register drawer. Is this cash register count indicative of cash short or over, and what does that represent?

This cash register count shows a shortage of $2. A debit balance in the cash short and over account (a net shortage) is treated as an expense

Each employee is required to furnish the employer with which of the following forms?

W-4

The account that is debited for the total amount of the gross earnings of all employees for each pay period is

Wages and Salaries Expense.

Examples of revenue accounts include all of the following EXCEPT

Wages.

A T account has which of the following three major parts?

a title, a debit side, and a credit side

If a business records revenues when earned, regardless of whether cash has been received, and records expenses when they are incurred, the accounting system is a(n)

accrual basis of accounting.

To reconcile the bank statement, which of the following amounts would be added to the checkbook balance?

amounts collected by the bank for the depositor's account

A balance sheet that groups similar items is called a(n)

classified balance sheet.

Liability, owner's capital, and revenue accounts normally have

credit balance

The journal entry to purchase equipment on account includes a:

credit to Accounts Payable.

To a business, cash is an asset that includes

currency, coins, money in checking accounts, checks, and money orders

Cash and other assets that will be converted into cash within one year or the normal operating cycle of the business, whichever is longer, are called

current assets.

Cash Sales from the cash register tapes totaled $882. There is a change fund of $100. The cash count indicates that $984 is in the cash drawer. What journal entry would be required?

debit Cash for $884; credit Revenues for $882, and Cash Short and Over for $2

Supplies originally cost $600, but only $150 worth of supplies were used this period. The adjusting entry would be

debit Supplies Expense, $150; credit Supplies, $150.

Asset and expense accounts normally have

debit balances.

The transaction to record payment for delivery equipment that was purchased on account in the previous month would include

debiting Accounts Payable and crediting Cash.

In reconciling a bank statement, the bank statement balance is $1,000 and the balance per books is $1,205. A bank service charge is $5; a deposit in transit totals $500; and outstanding checks total $300. The journal entry for a bank service charge would include

debiting Miscellaneous Expense and crediting Cash

The check written to establish the petty cash fund is entered in the journal by

debiting Petty Cash and crediting Cash.

If cash is paid for worker salaries, the transaction includes

debiting Salaries Expense and crediting Cash.

The journal entry to close the drawing account includes

debiting the owner's capital account and crediting the drawing account.

Tyler paid $3,700 on account to the company from which equipment was purchased on credit. This transaction would

decrease assets and decrease liabilities.

Check No. 450, a payment of $54 for the telephone bill, was incorrectly entered on the check stub as $45. Which of the following adjustments needs to be made?

decrease the book balance

On a bank reconciliation, deposits that were not entered by the bank before the bank statement was prepared are known as

deposits in transit.

Matching the cost of an asset with the revenue it is expected to produce is called

depreciation

For better internal accounting control, payment by check or ____________ provides better internal accounting control than payment by cash.

direct deposit

The fact that each transaction has a dual effect on the accounting elements provides the basis for what is called

double-entry accounting.

If, in the effort to prove cash, a shortage is found, the amount is treated as a(n)

expense

Payment of a telephone bill represents an increase in a(n)

expense.

Accounts that affect owner's equity are

expenses, capital, and revenue.

A chronological record of financial transactions expressed as debits and credits to accounts is provided by the

journal

The Posting Reference column of the journal provides a cross-reference between the

journal and ledger.

The balance sheet reports

liabilities

The accounts in the chart of accounts are arranged in

numerical order.

The Fair Labor Standards Act provides which of the following minimum rates to be paid to employees for all hours worked over 40 hours per week?

one and one-half times the regular rate

On a bank reconciliation, checks issued during the period that were not presented to the bank for payment before the bank statement was prepared are known as

outstanding checks

To reconcile the bank statement, which of the following amounts would be subtracted from the bank statement balance?

outstanding checks

Employers are required by the Fair Labor Standards Act to pay overtime at 1½ times their regular hourly rate to any hourly employee who works

over 40 hours in a week

The accounting equation may be expressed as

owner's equity = assets - liabilities

Employers usually prepare which of the following types of payroll records?

payroll register, employee earnings record, and payroll check

The form prepared for every payment from the petty cash fund is called a

petty cash voucher.

To prove the equality of the debit and credit balances in the general ledger accounts after the closing entries have been journalized and posted, prepare the

post-closing trial balance

Adjusting entries are

posted to the general ledger at the end of the accounting period.

Identifying accounts and classifying accounts is part of which phase in the accounting process?

processing

Purchase invoices received from suppliers provide information about

purchases of goods or services.

The flow of financial data through the accounting information system does NOT include

receiving payment for all accounts receivable.

What is the correct sequence for closing the temporary accounts?

revenue accounts, expense accounts, Income Summary, drawing account

The outputs from a manual or an electronic payroll accounting system include all of the following EXCEPT

time cards.

The time an asset is expected to last is called its

useful life.

The petty cash fund is replenished

whenever it runs low and at the end of each accounting period.

A decrease in owner's equity may result from a(n)

withdrawal of cash from the business by the owner.