accounting exam

a balance sheet must be prepared in account form only

false

a cash sale in which a credit card is used for the total amount of the sale at the time of the transaction

false

a purchase invoice lists only the total cost of the merchandise

false

accounts receivable is a contra account to its related asset account, allowance for uncollectible accounts

false

entries in a cash receipts journal affect account balances in the accounts payable ledger and the general ledger

false

errors found in the process of totaling and proving a journal page do not need to be corrected until the end of the fiscal period

false

for a merchandising business, every sale dollar reported on the income statement includes only two components; total expenses and net income

false

no employees are exempt from having federal income taxes withheld

false

the contra account purchases discount has a normal debit balance

false

the heading of the balance column of an account in the accounts payable ledger is titiled debit balance

false

the last journal to be posted should be the general journal

false

the prepaid insurance account is adjusted to show the value of insurance that has been prepaid

false

the report that summarizes the cash and credit card sales of a point-of-sale terminal is called a batch report

false

the source document for journalizing employer payroll taxes is a check

false

the total amount of the purchases journal is posted to the purchases and accounts receivable accounts

false

the total of all customer account balances in the accounts receivable ledger equals the balance of the general ledger controlling account accounts payable

false

the totals of the general columns of the cash payments journal are posted

false

all employees must report their withholding allowances on a

form w-4

special amount columns are used for transactions that occur

frequently

the useful life of a planet asset is affected by

functional depreciation, and physical depreciation

the revenue remaining after cost of merchandise sold has been deducted is

gross profit on sales

medicare is for people who

have reached retirement age

federal income tax is withheld from employee earnings

in all 50 states

a journal used to record only one kind of transaction

is a special journal

each entry in the purchases journal is an amount that

is to be paid to a vendor

employeers are required to furnish each employee an annual statement of earnings and withholdings before

january 31 on the following year

until the amounts withheld from employee salaries are paid by the employer, they are recorded as

liabilities

the retail price listed in a catalog or on an internet site is called the

list price

liabilities owed for more than a year are called

long-term liabilities

the amount added to the cost of merchandise to establish the selling price is known as the

markup

using a sales invoice as a source document for recording a sale on account is an application of the accounting concept

objective evidence

a cash payments journal is used to journalize

only cash payment transactions

in the entry to journalize employeer payroll taxes expenses for a semimonthly period, the account debited would be

payroll taxes expense

a work sheet is used to

plan adjustments, and summarize information necessary to prepare financial statements

computers, sales display cases, furniture, and cash registers are examples of

planet assets

a business may decide to pay employee salaires every week, every two weeks, twice a month, or once a month

true

a corporation's board of directors is elected by the stockholders

true

a major difference between balance sheets of a corporation and a proprietorship is the owner's equity section

true

a payroll system must include an accurate record of the time each employee has worked

true

a reduction in the list price granted to customers is called a trade discount

true

a sale of merchandise may be for cash or on account

true

a stockholder is an owner of one or more shares of a coroporation

true

accounts receivable is an asset account with a normal debit balance

true

businesses must withhold federal income tax from employee total earnings

true

cost of merchandise sold is also known as cost of goods sold

true

each amount in the general columns of the cash payments journal is posted to a general ledger account

true

each amount in the sales journal's accounts receivable debit column is posted to the accounts receivable ledger

true

each entry in the accounts receivable credit column of the cash receipts journal affect the customer names in the account title column

true

employee total earnings are calculated as regular hours x regular rate, plus overtime hours x overtime rate

true

a business form used to record details affecting payments made to an employee is

an employee earnings record

sometimes increasing the markup to improve an unacceptable component percentage for gross profit on sales is a bad decision because`

an increase in markup may actually cause a decrease in sales revenue

a financial statement that reports a corporations assets, liabilities, and stockholders equity on a specific date is

a balance sheet

to indicate that column totals are not to be posted

a check mark is placed in parentheses under the total

until payment is made, payroll taxes for an employer are

a liability

to record the payment of federal unemployment tax, the account debited is

a liability account

the amount of goods on hand for sale to customers is

a merchandise inventory

a business form used to payroll information is

a payroll register

when cash is received on account, the balacne of the

accounts receivable account decreases

preparing financial statements that provide information about a businesses financial condition, changes in this financial condition, and the progress of operations is an application of the accounting concept

adequate disclosure

information to be recorded in the accounts payable ledger is

all of the above

a subsidiary ledger containing only accounts for vendors from whom items are purchased or bought on account is

an accounts payable ledger

the distribution of dividens only by formal action of a corporations board of directors is an application of the accounting concept

business entity

the journal entry for a cash and credit card sales transaction is

debit cash; credit sales; credit sales tax payable

the entry to adjust prepaid insurance at the end of a fiscal period when the balance of the prepaid insurance account is $3,600 and the value of the prepaid insurance is $1,600

debit insurance expense, $2,000; credit prepaid insurance, $2,000

the amount of net income after federal income tax belonging to a single share of stock is called

earnings per share

the total earnings column total is journalized as a debit to

salary expense

in a cash sales transaction with sales tax the

sales tax amount collected is a liability

the amount of sales tax collected is recorded in a

separate liability account

a vendor number is written in the post. ref. column of the journal as the last posting step to

show that posting of this line to the accounts payable ledger is complete

to record the employer payroll taxes expense, the following accounts are credited

social security tax payable, medicare tax payable, unemployment tax payable-federal, and unemployment tax payable-state

an agreement between a buyer and a seller about payment for merchandise is the

terms of sale

the total of the schedule of accounts receivable should equal

the accounts receivable account balance in the general ledger

when a customer account balance is changed

the balance of the controlling accounts receivable is also changed

to prepare the corporations balance sheet use the information from

the balance sheet columns of a work sheet, and the owners equity statement

each account in a subsidiary ledger has

three amount columns

what is the formula for calculating the invoice amount

total list price-trade discount=invoice amount

employee withheld income tax, employee social security and medicare tax, and employer social security and medicare tax are paid periodically to the federal government in a combined payment

true

employers must pay to the government the taxes withheld from employee earnings

true

every business collecting a sales tax needs accurate records of the amount of total sales and total sales tax collected

true

form w-3, transmittal of income and tax statements, is sent to the social security administration by feburary 28 each year

true

information from a completed work sheet is used to prepare the income statement

true

payroll taxes are based on employee total earnings

true

sales for cash and credit cards are recorded as a single cash sales transaction

true

sales tax is a tax on sale of merchandise or services

true

sales tax rates are usually stated as a percentage of sales

true

some income may be distributed as dividends to provide stockholders with a return on their investments

true

the amount of sales tax collected is recorded in a seperate liability account titled sales tax payable

true

the beginning balance of the capital stock account is the amount of capital stock issued at the beginning of the year

true

the money paid for employee services is a salary

true

the petty cash account cash short and over is a temporary account

true

the realization of revenue accounting concept is applied when a sale is recorded at the same time the sale is made

true

the source document for a purchases return is a debit memorandum

true

the total amount of the purchases journal is posted to two general ledger accounts, purchases and accounts payable

true

total earnings are sometimes referred to as gross pay

true

when purchases are recorded at their cost, including any related shipping costs and taxes, the historical cost accounting concept is being applied

true

the form used for the transmittial of the previous years earnings and payroll taxes withheld for all employees is form

w-3

a deduction from total earnings of each person legally supported by a taxpayer is a

witholding allowance