Accounting Final Review - Fall 19 (Chs 1-9)

Information needed to prepare a balance sheet's Assets section is obtained from a work sheet's Account Title column and

Balance Sheet Debit column

Asset accounts decrease on the credit side (T/F)

TRUE

The normal balance side of an Accounts Receivable account is a debit (T/F)

TRUE

The procedure of arranging accounts in a general ledger, assigning account numbers and keeping records current is known as file maintenance (T/F)

TRUE

The right side of a liability account is the normal balance side, because liabilities are on the right side of the accounting equation (T/F)

TRUE

The source document for all cash payments is a check (T/F)

TRUE

Transactions are recorded in a journal in chronological (date) order (T/F)

TRUE

Utilities Expense is increased with a debit (T/F)

TRUE

When adding a new expense account between accounts numbered 510 and 520, the new account is assigned the account number 515 (T/F)

TRUE

When an owner withdraws cash from the business, the transaction affects both assets and owner's equity (T/F)

TRUE

When items are bought and paid for at a future date, another way to state this is these items are bought on account (T/F)

TRUE

When posting is complete, the Post. Ref. column in the General Journal is completely filled in with account numbers (T/F)

TRUE

When two assets accounts are changed in a transaction, there must be an increase and a decrease (T/F)

TRUE

Withdrawals are assets taken out of a business for the owner's personal use (T/F)

TRUE

A financial ratio is a comparison between two components of financial information (T/F)

True

Temporary accounts are also called nominal accounts (T/F)

True

The capital account's new balance after all closing entries are posted is verified by checking it with the amount of capital shown on the balance sheet at the end of the fiscal period (T/F)

True

The drawing account is a temporary account (T/F)

True

Two financial statements are prepared from the information on a work sheet (T/F)

True

The last step in the posting procedure is to write the

account number in the Post. Ref. column of the journal

Planning, recording, analyzing, and interpreting financial information

accounting

A planned process for providing financial info that will be useful to management

accounting system

The length of time for which a business summarizes financial information and reports its financial performance

fiscal period

A fiscal period consisting of 12 consecutive months

fiscal year

A reduction in the list price granted to a merchandising business

trade discount

A business activity that changes assets, liabilities, or owner's equity

transaction

A proof of the equality of debits and credits in a general ledger

trial balance

A columnar accounting form used to summarize the general ledger information needed to prepare financial statements

work sheet

After closing entries are posted, the balance in the owner's drawing account should be

zero

Temporary accounts begin each new fiscal period with a

zero balance

The standards and rules that accountants follow while recording and reporting financial activities

GAAP (Generally Accepted Accounting Principles)

The account number is placed in the Post. Ref. column of the journal as the last step in the posting procedure (T/F)

TRUE

The source document used when supplies are bought on account is a memorandum (T/F)

TRUE

A merchandising business places Purchases in the Operating Expenses section of the income statement

False (this would appear in the Cost of Goods Sold section)

The date on a monthly income statement prepared on April 30 is written as

For Month Ended April 30, 20--

A balance sheet reports financial information for a specific date (T/F)

True

A balance sheet reports financial information on a specific date and includes the assets, liabilities and owner's equity (T/F)

True

A bank requires that the signature of the person authorized to sign checks is included on the signature card (T/F)

True

A corporation can own property, incur liabilities and enter into contracts in its own name (T/F)

True

A post-closing trial balance verifies the equality of debits and credits in a general ledger after the closing entries are posted (T/F)

True

Adjusting entries must be posted to the general ledger accounts (T/F)

True

For a service buisness, the revenue reported on an income statement is often compared to two items: total expenses and net income (T/F)

True

If the Trial Balance columns are not equal and the difference can be evenly divided by 9, then the error likely is a transposed number (T/F)

True

If the Trial Balance columns are not equal and the difference is $50.00, the error most likely is a $25.00 amount written in the wrong column (T/F)

True

Net income on a work sheet is calculated by subtracting the Income Statement Debit column total from the Income Statement Credit column total (T/F)

True

Return on sales (ROS) is the ratio of net income to total sales (T/F)

True

Temporary accounts start each fiscal period with a zero balance (T/F)

True

The Adequate Disclosure accounting concept is applied when financial statements contain all information necessary to understand a business's financial condition (T/F)

True

The Matching Expenses with Revenue accounting concept is applied when the revenue earned and the expenses incurred to earn that revenue are reported in the same fiscal period (T/F)

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 (T/F)

True

The amount of supplies used during a fiscal period is an expense (T/F)

True

The area of accounting that focuses on reporting information to internal users is called managerial accounting (T/F)

True

To close a temporary account, an amount equal to its balance is recorded in the account on the side opposite to its balance (T/F)

True

Using a memorandum as the source document for a dishonored check is an application of the accounting concept Objective Evidence (T/F)

True

Vertical analysis is reporting an amount on a financial statement as a percentage of another item on the same financial statement (T/F)

True

Voided checks should be recorded in the journal (T/F)

True

A report of deposits, withdrawals and bank balances sent to a depositor by a bank

bank statement

An endorsement consisting only of the endorser's signature

blank endorsement

An endorsement on the back of a check consisting only of a signature is a(n)

blank endorsement

The use of ethics in making business decisions

business ethics

A formal written document that describes the nature of a business and how it will operate

business plan

A decrease in owner's equity resulting from the operation of a business

expense

Cash Short and Over is classified as a(n)

expense

When cash is received from sales, the change in owner's equity is usually recorded

in a separate revenue account

When a business receives revenue, Sales is

increased by a credit

When an owner invests cash in a business, the owner's capital account is

increased by a credit

When cash is paid for advertising, Advertising Expense is

increased by a debit

When the owner withdraws cash, the owner's drawing account is

increased by a debit

When a business pays for insurance, Prepaid Insurance is

increased with a debit

A purchase of merchandise for cash would be posted

individually to purchases

A form describing the goods or services sold, the quantity, the price and the terms of sale

invoice

If an error requires a correcting entry, the source document describing the correction to be made

is a memorandum

The amount of net income calculated on an income statement is correct if

it is the same as the net income shown on the work sheet

A form for recording transactions in chronological order

journal

The second step in the posting procedure is to write the

journal page number in the Post. Ref. column of the account

Recording transactions in a journal

journalizing

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

list price

A form on which a brief message is written to describe a transaction

memorandum

The difference between total revenue and total expenses when total revenue is greater

net income

The formula for calculating the net income ratio is

net income divided by total sales

A formal report that shows what an individual owes, what an individual owns and the difference between the two

net worth statement

A check dishonored by the bank because of insufficient funds in the account of the maker of the check

non-sufficient funds check (sometimes called insufficient funds)

When preparing a balance sheet, the amount of owner's capital is calculated using amounts obtained from

none of these (NOT the general ledger, NOT the income statement and NOT the journal)

Posting references in a journal are

none of these (not the first item recorded when posting, not placed in an account's Post. Ref. column and not not necessary)

After the closing entries are posted, the owner's capital account balance should be the same as shown

on the balance sheet for the fiscal period

The amount remaining after the value of all liabilities is subtracted from the value of all assets

owner's equity

A merchandise inventory evaluated at the end of a fiscal period

periodic inventory

A check with a future date on it

postdated check

The procedure for transferring information from a journal entry to a ledger account is

posting

Cash paid for an expense in one fiscal period that is not used until a later period

prepaid expense

The last step in the accounting cycle is to

prepare a post-closing trial balance

An income statement reports a business's financial

progress over a specific period of time

Determining that the amount of cash agrees with the accounting records is

proving cash

A form requesting that a vendor sell merchandise to a business

purchase order

A business form giving written acknowledgement for cash received

receipt

A form requesting the purchase of merchandise

requisition

An endorsement on the back of a check indicating that the check is to be accepted for deposit only is a

restrictive endorsement

An endorsement restricting further transfer of a check's ownership

restrictive endorsement

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

retail merchandising business

An increase in owner's equity resulting from the operation of a business

revenue

A sale for which cash will be received at a later date

sale on account

An invoice used as a source document for recording a sale on account

sales invoice

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

schedule of accounts payable

A business that performs an activity for a fee

service business

Each unit of ownership in a corporation

share of stock

A business paper from which information is obtained for a journal entry

source document

A signature or stamp on the back of a check, transferring ownership

special endorsement

An endorsement indicating a new owner of a check

special endorsement

An endorsement on the back of a check consisting of the words "Pay to the order of" and a new owner's name is a

special endorsement

A journal used to record only one kind of transaction

special journal

The owner of one or more shares of stock

stockholder

Income summary is a(n)

temporary account

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

terms of sale

An account number in the journal's Post. Ref. column shows

the account to which an amount is posted

When total revenues are greater than total expenses

the income summary account has a credit balance

Assets taken out of a business for the owner's personal use

withdrawals

If the difference between totals of Debit and Credit columns on a work sheet can be evenly divided by 9, then the error is most likely in addition (T/F)

False

The area of accounting that focuses on reporting information to external users is called managerial accounting (T/F)

False

The balance of the Supplies account plus the value of the supplies on hand equals the up-to-date balance of the Supplies account (T/F)

False

A calculator tape is the source document for daily cash sales (T/F)

TRUE

A group of accounts is called a ledger (T/F)

TRUE

A list of accounts used by a business is a chart of accounts (T/F)

TRUE

A receipt is the source document for cash received from transactions other than sales (T/F)

TRUE

Account numbers may be assigned by 10s so that new accounts can be added easily (T/F)

TRUE

Businesses use accounts to summarize all the information pertaining to a single item (T/F)

TRUE

The balance of an account increases on the same side as the normal balance side (T/F)

TRUE

The most common type of withdrawal by an owner from a business is the withdrawal of cash (T/F)

TRUE

The normal balance side of an Accounts Payable account is a credit (T/F)

TRUE

A corporation exists independently of its owners (T/F)

True

An outstanding check is one that has been issued but not yet reported on a bank statement (T/F)

True

Journal entries used to prepare temporary accounts for a new fiscal period are closing entries (T/F)

True

Making adjustments to general ledger accounts is an application of the Matching Expenses with Revenue accounting concept (T/F)

True

The calculation and interpretation of a financial ratio is called ratio analysis (T/F)

True

The ending account balances of permanent accounts for one fiscal period are the beginning account balances for the next fiscal period (T/F)

True

The formula for calculating the net income ratio is net income divided by total sales (T/F)

True

The owner's capital amount reported on a balance sheet is calculated as capital account balance less drawing account plus net income (T/F)

True

The periodic inventory method does not require records of the quantity and cost of individual goods (T/F)

True

The petty cash account Cash Short and Over is a termporary account (T/F)

True

The series of accounting activities included in recording financial information for a fiscal period is called an accounting cycle (T/F)

True

The source document for an electronic funds transfer is a memorandum (T/F)

True

The total of accounts in the accounts payable subsidiary ledger equals the balance of the controlling account, Accounts Payable (T/F)

True

The two accounts affected by the adjustment for supplies are Supplies and Supplies Expense (T/F)

True

A record summarizing all the information pertaining to one item in the accounting equation

account

The amount in an account

account balance

The name given to an account

account title

Anything of value of that is owned

asset

To replenish a $300.00 petty cash fund, if the petty cash custodian had receipts totaling $224.00 and cash of $74.00 in the petty cash box, one part of the journal entry is a

debit to Cash Short and Over for $2.00

If an amount is recorded on the side of a T account opposite the normal balance side, the account balance is

decreased

When a business pays cash on account, a liability account is

decreased by a debit

The recording of debit and credit parts of a transaction

double-entry accounting

The first digit in the account number 520 means that the account is in the

expense division of the general ledger

Financial reports that summarize the financial conditions and operations of a business

financial statements

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

general amount column

An amount owed by a business

liability

The difference between total revenue and total expenses when total expenses are greater

net loss

If posting is interrupted, the accounting personnel know to resume posting

on the line with a blank Post. Ref. column in the journal

Since contra accounts are offsets to their related accounts, contra account normal balances are

opposite the normal balances of their related accounts

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

perpetual inventory

The difference between personal assets and personal liabilities

personal net worth

An amount of cash kept on hand and used for making small payments

petty cash

A form showing proof of a petty cash payment

petty cash slip

A check that cannot be processed because the maker has made it invalid

voided check

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

wholesale merchandising business

A bank account from which payments can be ordered by a depositor

checking account

A withdrawal is an expense (T/F)

FALSE

A financial statement showing the revenue and expenses for a fiscal period

income statement

A periodic inventory conducted by counting, weighing or measuring items of merchandise on hand is called a(n)

physical inventory

Merchandise with a list price of $1,500.00 is purchased on account for $900.00 on August 1. Terms of sale are 2/10, n/30. Payment is made on August 17. The amount paid should be

$900

The title of the account debited in a journal is indented (T/F)

FALSE (the title of the account CREDITED in a journal is indented)

Preparing financial statements at the end of each monthly fiscal period is an application of the accounting concept

Accounting Period Cycle

When $1,500 cash is received on account

Accounts Receivable is decreased with a credit and Cash is increased with a debit

Assuring that financial statements contain all information necessary to understand a business's financial condition is an application of the accounting concept

Adequate Disclosure

The Cash account is the first asset account and is numbered 110 (T/F)

TRUE

A negative amount for net worth would reflect more debt than assets, something a creditor would favor (T/F)

FALSE

A transaction for the sale of goods or services results in a decrease in owner's equity (T/F)

FALSE

Accounts Payable accounts are increased with a debit (T/F)

FALSE

Accounts Receivable accounts are increased with a credit (T/F)

FALSE

An amount recorded on the left side of a T account is a credit (T/F)

FALSE

An amount recorded on the right side of a T account is a debit (T/F)

FALSE

Asset accounts decrease on the debit side (T/F)

FALSE

Business ethics are the principles of right and wrong that guide an individual in making personal decisions (T/F)

FALSE

Cash is an asset account with a normal credit balance (T/F)

FALSE

Common accounting practice is to record withdrawals as debits directly in the owner's capital account (T/F)

FALSE

Decreases to liability accounts are recorded on the credit side (T/F)

FALSE

Each asset account has a normal credit balance (T/F)

FALSE

Each liability account has a normal debit balance (T/F)

FALSE

Increases in expense accounts are recorded as credits, because they increase the owner's capital accounts (T/F)

FALSE

Increases in revenue accounts are recorded as debits, because they increase the owner's capital account (T/F)

FALSE

Maya Abbasi, Drawing is decreased with a debit (T/F)

FALSE

Payments for advertising, equipment repairs, utilities, and rent are liabilities (T/F)

FALSE

The accounting equation is most often stated as Assets + Liabilities = Owner's Equity (T/F)

FALSE

The balance of an account decreases on the same side as the normal balance side (T/F)

FALSE

The left side of an asset account is the credit side, because asset accounts are on the left side of the accounting equation (T/F)

FALSE

The owner's equity account is increased on the debit side, because the owner's capital account has a normal balance on the debit side (T/F)

FALSE

To summarize withdrawal information separately from the other records, owner withdrawal transactions are recorded in the owner's capital account (T/F)

FALSE

Total assets are the amount the owner has invested in the business (T/F)

FALSE

When cash is paid for supplies, the Supplies account is increased by a credit (T/F)

FALSE

Every business uses the same journal to record transactions (T/F)

FALSE (Some use a GENERAL JOURNAL and others use a MULTICOLUMN JOURNAL (or a combination of both types))

Errors discovered after an entry is posted may be corrected by ruling through the item (T/F)

FALSE (a correcting entry must be recorded and posted if the error was discovered after posting)

A journal shows in one place all the changes in a single account (T/F)

FALSE (a journal shows transactions in chronological (date) order)

The posting reference should always be recorded in the journal's Post. Ref. column before amounts are recorded in the ledger (T/F)

FALSE (after NOT before)

A transaction recorded in a journal is not considered a permanent record (T/F)

FALSE (it IS considered a PERMANENT record)

To correct an error in a journal, one can simply erase the incorrect item and write the correct item (T/F)

FALSE (one should draw a line through the incorrect item and write the correct item above)

The only use for the Post. Ref. column of a journal and general ledger is to indicate which entries in the journal still need to be posted if posting is interrupted (T/F)

FALSE (the Post. Ref. columns also show where transaction info came from or was posted to)

If the payment of cash for rent was journalized and posted in error as a debit to Miscellaneous Expense instead of Rent Expense, the correcting entry will include a credit to cash (T/F)

FALSE (the correcting entry would be to Dr. Rent Expense and to Cr. Misc. Expense)

The steps for posting are to write the date, the journal page number, the amount and the balance (T/F)

FALSE (the last step is to put the account number of the account you posted to back in the Post. Ref. column on the journal)

The day of the month is written only once on a journal page (T/F)

FALSE (the name of the month and the year are written only once on the top of a journal page--NOT THE DAY OF THE MONTH)

The principles of right and wrong that guide an individual in making decisions

ethics

The GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) concept "Unit of Measurement" is being applied when a source document is prepared for each transaction (T/F)

FALSE (this is the concept "OBJECTIVE EVIDENCE")

When an entry in an amount column is an even dollar amount, either "00" or "--" can be entered in the cents column (T/F)

FALSE (when an entry is an even dollar amount "00" (NOT "--") should be entered in the cents column)

The two steps for opening an account are writing the account title and recording the balance (T/F)

FALSE (write the account title and the account number when opening an account)

The drawing account is a permanent acount (T/F)

False

The accounting concept Consistent Reporting is being applied when a word processing service business reports revenue per page one year and revenue per hour the next year (T/F)

False (Consistent Reporting means to report financial results in the same way month after month and year after year)

The petty cash fund is a liability with a normal debit balance (T/F)

False (Petty Cash is an asset with a normal debit balance)

Ownership of a check cannot be transferred (T/F)

False (a special endorsement can be used to transfer ownership of a check)

A transaction to record merchandise purchased with a trade discount would include a debit to Merchandise Discount (T/F)

False (a trade discount is subracted away BEFORE the transaction is recorded)

Only accounts with a balance are listed in the Trial Balance columns of a work sheet (T/F)

False (all accounts are listed)

An amount written in parentheses on a financial statement indicates an estimate (T/F)

False (an amount written in parentheses usually indicates a negative amound such as a net loss)

An income statement reports information for a specific date indicating the financial progress of a business in earning a net income or a net loss (T/F)

False (an income statement reports "financial progress over a period of time" such as a month or a year)

Many businesses choose a one-year fiscal period that ends during a period of high business activity (T/F)

False (businesses typically choose an ending time during a period of low activity)

The Income Summary account has a normal debit balance (T/F)

False (income summary is a rare thing--it DOES NOT have a normal balance)

The income summary account has a normal debit balance (T/F)

False (income summary is rare--it DOES NOT have a normal balance)

The contra account Purchases Discount has a normal debit balance (T/F)

False (it has a normal credit balance)

If an amount is written in an incorrect column on a work sheet, a line should be drawn through the incorrect amount and the correct amount should be written in the correct column (T/F)

False (it is OK to erase information on a work sheet since it is not a permanent accounting record)

Journals, ledgers and work sheets are considered permanent records (T/F)

False (journals and ledgers are permament accounting records BUT work sheets are not)

The balances of the liability accounts must be reduced to zero to prepare the accounts for the next period (T/F)

False (only temporary accounts get zeroed out (revenue, expenses, income summary and drawing))

The balances of the asset accounts must be reduced to zero to prepare the accounts the next period (T/F)

False (permanent accounts (such as assets) are NOT zeroed out)

The total of a schedule of accounts payable less purchases discounts taken during the month will equal the total of Accounts Payable (T/F)

False (purchases discounts are not considered when comparing the schedule of accounts payable with the Accounts Payable account)

If a business has a net loss for the period, expenses should be reported before revenues on the income statement (T/F)

False (revenue is reported before expenses regardless of whether there is a net income or net loss)

When petty cash is replenished, Petty Cash is debited and Cash is credited (T/F)

False (supplies and expenses are usually debited and cash is credited) PETTY CASH IS NEVER INVOLVED WHEN REPLENISHING

Temporary accounts include liabilities, expenses and the owner's drawing account (T/F)

False (temporary accounts include revenue, expenses, income summary and drawing)

Temporary accounts include assets, expenses and the owner's drawing account (T/F)

False (temporary accounts include sales, expenses, income summary and drawing)

The terms of sale 1/10, n/30 mean that 1/10 or 10% of the invoice amount may be deducted if paid within 30 days (T/F)

False (the 1/10 means 1% of the invoice amount may be deducted if paid within 10 days)

At the end of a fiscal period, the balances of permanent accounts are summarized and transferred to the owner's capital account (T/F)

False (the balances of permanent accounts ARE NOT transferred to the owner's capital account)

When a business has two different sources of revenue, a separate income statement should be prepared for each kind of revenue (T/F)

False (the different sources of revenue can be listed in the same revenue section of an income statement)

The formula for calculating the total expenses ratio is total expenses divided by net income (T/F)

False (the formula is total expenses divided by total sales)

The net income calculated for the income statement and the net income on the work sheet can be different because of adjusting entries (T/F)

False (the net income on the income statemnt and the net income on the work sheet should be the same)

When the Income Statement Debit column total is greater than the Income Statement Credit column total on a work sheet, the business has a net income (T/F)

False (the opposite is True--when the Income Statement CREDIT column is greater, there is a net income)

The source document for a debit card purchase is a purchase invoice (T/F)

False (the source document is a memorandum)

Journal entries used to prepare temporary accounts for a new fiscal period are adjusting entries (T/F)

False (these are called closing entries)

The ending account balances for temporary accounts for one fiscal period are the beginning account balances for the next fiscal period (T/F)

False (this applies to permanent (NOT TEMPORARY) accounts)

Permanent accounts are used to accumulate information until it is transferred to the owner's capital account (T/F)

False (this is what temporary accounts are used for)

Information needed to prepare an income statement's Expense section is obtained from a work sheet's Account Title column and

Income Statement Debit column

Accounts used to accumulate information from one fiscal period to the next are called

Permanent (assets, liabilites and capital)

An employeee working with an account can trace a transaction back to the correct journal by using information in the

Post. Ref. column

A business owned by one person

Proprietorship

When services are sold for $500 cash

Sales is increased with a credit and Cash is increased with a debit

Supplies bought for use in a business are recorded in the

Supplies account

A complete journal entry consists of the date, the debit amount, the credit amount, and a source document (T/F)

TRUE

A drawing account is increased by debits and decreased by credits (T/F)

TRUE

A general journal page is complete when there is insufficient space to record any more entries (T/F)

TRUE

Accounts Payable accounts are increased with a credit (T/F)

TRUE

After each transaction, the accounting equation must remain in balance (T/F)

TRUE

All corrections for posting errors should be made in a way that leaves no question as to the correct amount (T/F)

TRUE

An accounting device used to analyze transactions is a T account (T/F)

TRUE

An expense is a decrease in owner's equity resulting from the operation of a business (T/F)

TRUE

Before a transaction is recorded in the records of a business, it is analyzed to determine which accounts are changed and how (T/F)

TRUE

Cash is increased with a debit (T/F)

TRUE

Detailed information about changes in owner's equity is needed by owners and managers to make sound business decisions (T/F)

TRUE

Each journal entry requires at least two lines (when using a GENERAL JOURNAL) (T/F)

TRUE

Each transaction changes the balances in at least two accounts (T/F)

TRUE

If the previous account balance and the current entry posted to an account are both debits, the new account balance is a debit (T/F)

TRUE

In double-entry accounting, each transaction affects at least two accounts (T/F)

TRUE

Increases in expense accounts are recorded as debits, because they decrease the owner's capital account (T/F)

TRUE

Increases in revenue accounts are recorded as credits, because they increase the owner's capital accounts (T/F)

TRUE

Keeping separate financial records for a business and for its owner's personal belongings is an application of the Business Entity GAAP accounting concept (T/F)

TRUE

Maya Abbasi, Capital is decreased with a debit (T/F)

TRUE

Prepaid Insurance is decreased with a credit (T/F)

TRUE

The "Objective Evidence" GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) Concept requires proof that a transaction did occur (T/F)

TRUE

If an amount is written in an incorrect column on a work sheet, the error should be erased and the amount should be written in the correct column (T/F)

True (the work sheet is not considered to be a "permanent accounting record" so erasing is permitted)

An equation showing the relationship among assets, liabilities and owner's equity

accounting equation

Reporting income when it is earned and expenses when they are incurred

accrual basis accounting

Journal entries recorded to update general ledger accounts at the end of a fiscal period

adjusting entries

Changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period

adjustments

If any kind of error is made in preparing a check

all of the above (VOID should be written on the check, VOID should be written on the check stub AND a new check should be prepared)

A lost check with a blank endorsement on it can be cashed by

anyone who has the check

A legal document that identifies basic characteristics of a corporation

articles of incorporation

The accounts that appear on a post-closing trial balance are

assets, liabilities and owner's capital

A petty cash fund is always replenished

at the end of the month

A financial statement that reports the value of a business's assets, liabilities and owner's equity on a specific date

balance sheet

A check that has been paid by the bank

canceled check

The account used to summarize owner's equity in the business

capital

Reporting income when the cash is received and expenses when the cash is paid

cash basis accounting

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

cash discount

A petty cash on hand amount that is more than a recorded amount

cash over

A petty cash on hand amount that is less than the recorded amount

cash short

A business form ordering a bank to pay cash from a bank account

check

An account that reduces a related account on a financial statement

contra account

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

controlling account

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

corporation

The Purchases account is classified as a(n)

cost of goods sold account

The maximum outstanding balance allowed to a customer by a vendor

credit limit

Increases in a revenue account are shown on a T account's

credit side

The normal balance side of a liability account is the

credit side

The normal balance side of any revenue account is the

credit side

A person or business to whom a liability is owed

creditor

The journal entry to close Income Summary when there is a net income is

debit Inome Summary, credit owner's capital

The entry to establish a $200.00 petty cash fund is

debit Petty Cash $200.00; credit Cash $200.00

When the total expenses are greater than the total revenue

debit balance (after closing the revenue acount by crediting income summary and closing the expense accounts by debiting income summary)

A bank card that automatically deducts the amount of a purchase from the checking account of the cardholder

debit card

The journal entry to close Income Summary when there is a net loss is

debit owner's capital and credit income summary

The left side of a T account is the

debit side

The normal balance side of any expense is the

debit side

When cash is short, the entry to replenish petty cash includes a

debit to Cash Short and Over

A bank form listing the checks, currency and coins that an account holder is adding to the bank account

deposit slip

Each time cash or checks are placed in a bank account, the customer prepares a

deposit slip

A check that a bank refuses to pay

dishonored check

When accounts are arranged in a general ledger, account numbers are assigned, and the chart of accounts is kept up to date, the account personnel are

doing file maintenance

A computerized cash payments system that transfers funds without the use of checks, currency or other paper documents

electronic funds transfer

Information for each transaction recorded in a journal

entry

Financial rights to the assets of a business

equities

The difference between assets and liabilities

equity