Accounting II

Which financial statement shows the sales discount account Gross Profit on Sales?

Income statement

How is the accounting equation affected if a business receives $5,000 from revenue/sales?

Increase assets and increase revenue

Which journal entry is used to adjust the Prepaid Insurance account?

Insurance Expense-debited Prepaid Insurance-credited

What is the term used to describe the steps completed to record financial information for a fiscal period?

Accounting cycle

Salazar Company retrurned damaged meerchandise purchased from LLS Company. How would Salazar Company record this transaction?

Accounts Payable/LLS Company Debit Purchases Return and Allowances Credit

How is the book value of Accounts Receivable calculated?

Accounts Receivable - Allowance for Uncollectible Accounts

Which journal entry REINSTATES Juan Garcia's account, which was PREVIOUSLY written off using the allowance method?

Accounts Receivable/Juan Garcia Debit Allowance for Uncollectible Accounts Credit

When ABC Company records a sale of merchandise on account, Sales and Sales Tax Payable would be credited? Which account should be debited?

Accounts receivable

How is the book value of accounts receivable calculated?

Accounts receivable-Allowance for uncollectible accounts

Using the allowance method, what is the journal entry to record Jay Smith's account as being uncollectible?

Allowance for Uncollectible Accounts Debit Accounts Receivable/Jay Smith Credit

How are accounts affected when the owner withdraws cash for personal use?

Assets decrease and drawing/withdrawls decreases

What is the journal entry to record the purchase of merchandise on account?

Purchases Accounts Payable

Which account has a normal credit balance?

Purchases Returns & Allowances

Which journal entry is used to record the purchase of merchandise with cash?

Purchases- debit Cash- credit

What is the source document for recording a cash sale transaction?

Receipt or tape

Which of the following accounts is debited when journalizing closing entries?

Sales

What is the result when a transaction is properly analyzed and recorded?

Total debits will equal total credits

Using the percentage of net sales method, what is the adjustment amount for Uncollectible Accounts (Bad Debts Expense) if net sales is $64,000 and the uncollectible rate is 2%.

$1,280

Using the straight-line method of depreciation, what is the annual depreciation expense if the original cost of the asset is $820, estimated salvage/disposal value is $100, and the useful life of the asset is 5 years?

$144

An asset is purchased on April 1 and has an annual depreciation amount of $3,600. What is the partial-year depreciation expense on December 31? Clue: calculate from April to December; how many months out of 12?

$2,700 3600/12=300 300*9 months=$2700

Merchandise is sold on account for $300 plus a 5% sales tax. How much would be debited to Accounts Receivable?

$315

Assuming net sales are $164,000, Cost of Goods Sold is $83,000, and Expenses are $47,000. What is the net income?

$34,000

What would be the NET PAY for Jacob Perkins? Earnings-$500; Federal Inc. Tax-$82; State Inc. Tax-$10; Social Security/Medicare (FICA)-$38.25; Health Insurance-$10; Retirement-$10; NET PAY equal?

$349.75

A tax-exempt customer purchased goods for $560 on account. Later a credit memorandum was issued for the return of $160 of goods. What is the balance due?

$400

Elliot's employer pays time-and-a-half for all hours worked over 40 hours per week. Elliot's regular hourly rate is $9.00 per hour. During the week, Elliot worked 49 hours. What are the gross wages/earnings for Elliot this week?

$481.50

Based upon the information provided in the following table, what is the total employer payroll tax expense? Taxable Earnings $4,700 FICA Social Security 6.2% FICA Medicare 1.45% FUTA Tax 0.8% SUTA Tax 5.4%

$650.95

What is the total cash paid on an $835 invoice dated March 12 with terms of 2/10, n30, paid on March 18?

$818.30

What are the correct steps of the accounting cycle?

1. Collect, verify and analyze source documents 2. journalize and post business transactions 3. Prepare trial balance 4. Journalize and post adjusting entries 5. Prepare financial statements 6. Journalize and post-closing entries 7. Prepare post-closing trial balance

Which date range represents a fiscal year?

August 1, 2019 to July 31, 2020

Which of the following equations is used to compute Cost of Goods Sold?

Beginning Inventory + Purchases - Ending Inventory

Who pays social security and medicare taxes?

Both employer and employees

When ABC Company makes a cash payment on account, ABC Company's Accounts Payable is debited. Which account is credited?

Cash

On May 6, MM Company sold merchandise on account for $9,500 with credit terms of 2/10, n/30. What is the journal entry to record the receipt of payment on May 14?

Cash 9,310 Sales Discount 190 Accounts Receivable 9,500

When a company receives a payment on account, Accounts Receivable decreases. What other account is affected and how?

Cash increases

What document shows a list of all accounts and their account numbers?

Chart of accounts

What is the amount paid to an employee based on a percentage of the employee's sales?

Commission

What type of account is Sales Returns and Allowances?

Contra Revenue Account

What is an organization with the legal rights of a separate entity and which may be owned by many persons?

Corporation

What is the term for allocating or equally distributing the cost of a plant asset over the asset's useful life?

Depreciation

What is the adjusting entry to record annual depreciation expense?

Depreciation Expense Debit Accumulated Depreciation Credit

What report shows personal payroll data and yearly cumulative earnings, deductions, and net pay for each employee?

Employer Earnings (Record)

Where is a controlling account found?

General Ledger

Where is the information found to prepare a Trial Balance?

General Ledger

GAAP is used to ensure consistent ethical business practices. What does GAAP stand for?

Generally Accepted Accounting Principles

What is the term for the total amount of money an employee earns in a pay period?

Gross earnings

When an error in journalizing is discovered AFTER POSTING, what should be done?

Journalize a correcting error

How are employer taxes classified BEFORE payment is made?

Liabilities

What is a primary advantage of a corporation over other forms of business ownership?

Limited liability

What type of business purchases and sells goods?

Merchandising

What is the correct method to calculate Gross Profit on Sales?

Net Sales - cost of merchandise sold

What is the result when total expenses exceeds total revenues?

Net loss

What is the take home pay for an employee after deductions are withheld?

Net pay

What is the term for Sales less Sales Discount and Sales Return and Allowances?

Net sales

What is the journal entry to record the employer's payroll taxes?

Payroll Tax Expense Social Security Tax Payable Medicare Tax Payable Federal Unemployment Tax Payable State Unemployment Tax Payable

Which accounts appear on the Post-Closing Trial Balance?

Permanent accounts

Which report is prepared after all adjusting and closing entries have been posted?

Post-Closing Trial Balance

What is the process of transferring amounts from a journal to a ledger?

Posting

What is the source document for a purchase of merchandise on account?

Purchase invoice

ABC Company issued a credit memorandum to customer Ann Fischer for merchandise returned including sales tax. How would ABC Company record this transaction?

Sales Return and Allowance Debit Sales Tax Payable Debit Ann Fischer/Accounts Receivable Credit

If a customer returns merchandise to the seller, which account will the SELLER debit?

Sales Returns & Allowances

What report lists each customer, the balance in the customer's account, and the total amount due from all customers?

Schedule of Accounts Receivable

Trinity earned $1,200 this pay period. What are the deductions withheld for Social Security tax (6.2%) and Medicare tax (1.45%)?

Social Security - $74.40; Medicare - $17.40

What are the owners of a corporation called?

Stockholders

What would be the result if the entry to adjust Supplies is NOT made at the end of the fiscal period?

Supplies would be overstated

What is the balance of temporary accounts at the beginning of each new fiscal period?

Zero

All asset account balances are shown on which financial statement?

balance sheet

Which financial statement reports assets, liablilities, and stockholder's equity?

balance sheet

What is the term for recording transactions in chronological order?

journalizing

What accounts are closed at the end of a fiscal period?

temporary