Accounting Semester Two Review #2

The balances of the liability accounts must be reduced to zero to prepare the accounts for the next period. True False

False

An entry in the general journal that affects Accounts Payable also affects a vendor's account in the accounts payable ledger. True False

True

To close a temporary account, an amount equal to its balance is recorded in the account on the side opposite to its balance. True False

True

6. A legal document that identifies basic characteristics of a corporation

articles of incorporation

9. A reduction in the list price granted to a merchandising business.

trade discount

2. A business that buys and resells merchandise primarily to other merchandising businesses.

wholesale merchandising business

4. An organization with the legal rights of a person which many persons or other corporations may own.

Corporation

Which of the following stockholders' equity accounts has a normal debit balance? a. Dividends. b. Capital Stock. c. Paid-in Capital in Excess of Par. d. Income Summary

Dividends

An amount written in parentheses on a financial statement indicates an estimate. True False

False

The amount of income tax withheld from each employee's total earnings is determined solely from the number of withholding allowances. True False

False

The normal account balance of Purchases Returns and Allowances is a debit. True False

False

Total earnings are sometimes referred to as net pay. True False

False

The series of accounting activities included in recording financial information for a fiscal period is called an accounting cycle. True False

TrueThis

Question 57 Cash Short & Over is classified as a(n)__________ and appears on the __________ financial statement. a. Revenue, Income Statement b. Neither c. Owner's Equity, Balance Sheet d. Expense, Income Statement e. Liability, Balance Sheet f. Asset, Balance Sheet

d. Expense, Income Statement

Federal income tax is withheld from employee earnings... a. only in those states electing to do so. b. only in states where a state income tax is levied. c. in states without a state income tax. d. in all 50 states.

d. in all 50 states.

Until the amounts withheld from employee salaries are paid by the employer, they are recorded as... a. revenue. b. salary expense. c. assets. d. liabilities.

d. liabilities.

18. A journal amount column that is not headed with an account title.

general amount column

8. The retail price listed in a catalog or on an Internet site.

list price

11. A merchandise inventory evaluated at the end of a fiscal period.

periodic inventory

14. An inventory determined by keeping a continuous record of increases, decreases, and the balance on hand of each item of merchandise.

perpetual inventory

15. A form requesting that a vendor sell merchandise to a business.

purchase order

A merchandising business that sells to those who use or consume the goods.

retail merchandising business

20. A listing of vendor accounts, account balances, and the total amount due to all vendors.

schedule of accounts payable

3. Each unit of ownership in a corporation.

share of stock

16. A journal used to record only one kind of transaction.

special journal

10. An agreement between a buyer and a seller about payment for merchandise.

terms of sale

19. The maximum outstanding balance allowed to a customer by a vendor.

credit limit

13. A form requesting the purchase of merchandise.

Requisition

5. The owner of one or more shares of stock.

Stockholder

Form W-2 reports an employee's annual earnings and the withholdings for federal income, social security, and Medicare taxes. True False

True

Return on sales (ROS) is the ratio of net income to total sales. True False

True

The Owner's Equity section of a balance sheet may report different kinds of details about owner's equity, depending on the need of the business. True False

True

The ending account balances of permanent accounts for one fiscal period are the beginning account balances for the next fiscal period. True False

True

The investment income in a Roth IRA is not subject to federal income taxes when withdrawn. True False

True

The petty cash account Cash Short and Over is a temporary True False

True

An income statement reports a business's... a. financial condition over a specific period of time. b. financial progress over a specific period of time.This is the correct answer. c. financial progress on a specific date. d. financial condition on a specific date.

b. financial progress over a specific period of time.

Income Summary is a... a. liability account. b. temporary account c. permanent account. d. asset account.

b. temporary account.

Dividends is a temporary account of a corporation and is similar to which proprietorship account? a. Equity. b. none of these. c. Drawing. d. Contributed Capital.

c. Drawing.

Accounts used to accumulate information from one fiscal period to the next are ... a. temporary accounts.This answer is incorrect. b. expense accounts. c. permanent accounts. d. revenue accounts.

c. permanent accounts.

A periodic inventory conducted by counting, weighing, or measuring items of merchandise on hand is called a(n) ... a. inventory certification. b. audit verification. c. physical inventory. d. perpetual inventory

c. physical inventory.

17. A deduction that a vendor allows on an invoice amount to encourage prompt payment.

cash discount

12. An account that reduces a related account on a financial statement.

contra account

7. An account in a general ledger that summarizes all accounts in a subsidiary ledger.

controlling account