Accounting Final Exam Study Guide

the person or firm that issues a check is called the __________ or payor of the check

drawer

the final closing entry transfers the balance(s) of the __________ account(s) to the owner's capital account

drawing

a person who is hired by a company and who is under the control and direction of the employer is called an

employee

to transfuse ownership of a check from one party to another, it is necessary to ________ the check

endorse

at the end of the accounting period, the balances of the revenue and expense accounts are transferred to the ____________ account

income summary

When a business pays cash for salaries, assets decrease and expenses

increase

when a business sells services for cash, assets increase and revenue:

increases

a(n) ___________ is paid by the company to carry out a specific task or job but is not under the direct supervision, control, and direction of the company

independent contractor

the entry to record the receipt of a check in settlement of an interest-bearing promissory note includes a debit to cash, a credit to notes receivable and a credit to

interest income

the petty cash account ________ balance

is an asset account with a normal debit

The debts or obligations of a business are known as its

liabilities

sales tax payable is classified as a(n) ________ account

liability

creditors accounts in the accounts payable ledger are _______ balances

liability accounts with normal credit

the stock of goods on hand to sell to consumers is called

merchandise inventory

A(n) ___________ business sells goods that it purchases

merchandising

when taxable goods are sold on credit, the sale of the goods and the ___________ are recorded at the same time of the sale

sales tax

when the _________ method of depreciation is used, an equal amount of depreciation is charged to each accounting period during the asset's useful life

straight-line

Revenue and expense accounts are called __________ accounts

temporary

What would posting reference of J3 within the general ledger indicate?

that the associated journal entry is on page 3 of the general journal

an allowance from a creditor will _______ column of the creditors account

decrease the creditor's account balance and be posted to the debit

the process of allocating the cost of a long-term asset as an expense of operations during the asset's expected useful life is known as

depreciation

If assets are $17,000 and owner's equity is $10,000, liabilities are

$7,000

an employee whose regular hourly rate is $12 and whose overtime rate is 1.5 times the regular rate worked 45 hours in one week. The employer should record an overtime premium of _________ in the payroll register

30

the account used to record amounts that will be collected from charge account customers in the future is referred to as

accounts receivable

The process of updating accounts at the end of an accounting period for previously unrecorded items that belong to the period is referred to as making

adjusting entries

the freight in account is

an expense account with a normal debit balance

The property that a business owns is referred to as its

assets

The difference between the debit and credit side of a T account is called the account

balance

On a worksheet, the adjusted balance of supplies is extended from the Adjusted Trial Balance Debit column to the ___________ debit column

balance sheet

The __________ is the financial report that shows the assets, liabilities, and owner's equity of a business on a specific date

balance sheet

a(n) _______ is a form received from the bank showing all transactions recorded in the depositions account during the month

bank statement

when a sales department needs goods, it sends a form called a(n) _______ to the purchasing department

purchase requisition

_______________ is the process by which employees are investigated by an insurance company that will insure the business against losses through employee theft or mishandling of funds

bonding

accumulated depreciation is classified as a(n) ___________ account

contra-asset

the _______ is (are) the cost to the business of merchandise sold to customers

cost of goods sold

after damaged goods are returned, the supplier issues a(n) ________ memorandum

credit

the account accumulated depreciation has a normal __________ balance

credit

the right side of a T account is referred to as the __________ side of an account

credit

fees charged by the credit card company for processing sales are debited to an account called

credit card expense

the entry to record a sale of merchandise on credit that is subject to sales tax includes an __________

credit to sales tax payable

A decrease in a liability is recorded on the ___________ side of the T account

debit

Expense accounts are increased on the ___________ Side of the T account

debit

when a bank deducts any amount other than a paid check from a depositors account, it issues a form called a(n)

debit memorandum

the entry to record the deposit of federal income taxes withheld includes a _________

debit to the employee income tax payable account

When a transaction is entered in the general journal, the account to be _________ is always recorded first in the description column

debited

When equipment is purchased for cash, the cash account is credited and the ______________ account is debited

equipment

because salaries employees who hold supervisory or managerial positions generally are not subject to wage and hour laws, they are known as

exempt employees

in the closing procedure, the total of the ____________ account balances are transferred to the debit side of the income summary account

expense

a small pencil figure written at the base of an amount column showing the sum of the entries in the column is called a

footing

if a payee indicates as part of the endorsement the name of the person firm or bank to whom the check is to be payable the payee has made a(n) ___ endorsement

full

A ___________ is referred to as a record of original entry

general journal

A description should accompany each entry made in the

general journal

A permanent, classified record of all accounts used in a firm's operation is called a(n)

general ledger

Data for the first two closing entries is taken from the __________ section of the worksheet

income statement

The process of recording transactions in a journal is referred to as

journalizing

When posting, the __________ is recorded in the posting reference column of the journal

ledger account number

on the income statement, revenue minus expenses equals ___________ for a period of time

net income or net loss

the increase side of an account represents the ____________ balance of the account

normal

The balance of the Income Summary account is transferred to the __________ account

owner's capital

employees are required to pay for ________ insurance that will reimburse employees for losses suffered from job-related injuries

worker's compensation

A(n) _____________ is prepared at the end of each accounting period to organize and summarize the data needed for the preparation of the financial statements

worksheet

The supplies account had a balance of $1,200 when a physical count indicated that supplies on hand totaled $250. This means that supplies in the amount of ____________ were used during the accounting period

$950

employees of firms engaged in interstate commerce must receive overtime rate of at least 1.5 times the regular hourly rate of pay for time worked in excess of __________ hours per week

40

The __________ is referred to as the record of final entry

General ledger

if the income summary account has a debit balance before it is closed, the firm experienced _______________ from operations

a net loss

after all the closing entries are posted to the ledger, the income summary account will have _____________ balance

a zero

Separate written records called _____________ are kept for each asset and liability and for the owner's equity of a business

accounts

The account used to record amounts that are owed for goods or services purchased on credit is known as

accounts payable

the entry to record a purchase allowance granted on a credit memo includes a debit to the _________ account in the general ledger

accounts payable

the _______ ledger contains accounts for credit customers

accounts receivable

The difference between the debit balance of the Equipment account and the credit balance of the accumulated depreciation - equipment account is called the ____________ of an asset

book value

the _________ if the amount of cash available for deposit is less than the amount listed on the audit tape taken from the cash register

cash short or over account is debited

the ___________ entries transfer the results of operations to owner's equity

closing

the ____________ entries reduce the balance of revenue, expenses, and drawing accounts to zero so they are ready to record data for the next period

closing

A journal entry containing more than one debit or more than one credit is called a(n) _____________ entry

compound

after all the closing entries are posted, the __________ account reflects the results of operations for the period

owner's capital

the financial interest of the owner in a business is called

owner's equity

after payroll computations are made, the hours worked, rates, earning, and deductions are entered into a record called an

payroll register

The process of transferring data from a journal to a ledger is known as

posting

the account credited in the adjusting entry made to record the expiration of a portion of prepaid rent is the ___________ account

prepaid rent

An _____________ is a written promise to pay a specified amount of money at a specific time

promissory note

the form send to the supplier to order goods is called a(n)

purchase order

the discounts that are offered by suppliers to encourage quick payment of invoices are referred to by customers as _______ discounts

purchases

assuming a periodic inventory system is used, purchases returns and allowances are recorded in the general journal as a debit to accounts payable and a credit to

purchases returns and allowances

A(n) ________________ account is used to record increases in owner's equity from the sale of goods or services

revenue

a worker who is paid an agreed amount for each week or month or year, regardless of the actual hours worked is said to be paid on an ___________ basis

salary

the account used to record products returned by buyer on the seller's books is ________

sales returns and allowances

a business that sells services directly to individual consumers is Called and _______ business

service

FICA tax is commonly referred to as ______ tax

social security

a business pays _________ and medicare taxes at the same rate and on the same taxable wages as its employees

social security

a ledger that contains accounts of a single type is called a(n) ______ ledger

subsidiary