WGU CYC1 Accounting 1
If liabilities are $4,000 and owner's equity is $15,000, assets are
$19,000
If a firm had sales of $50,000 during a period and sales returns and allowances of $4,000, its net sales were
$46,000
MacGyver Company bought equipment on January 3, 2013, for $36,000. At the time of purchase, the equipment was estimated to have a useful life of six years and a salvage value of $1,800. Using the straight-line method, the amount of one year's depreciation is
$5700
Equipment costing $21,500 with an estimated salvage value of $1,700 and an estimated life of 5 years was purchased on November 1, 2013. Using the straight-line depreciation method, what is the amount of depreciation expense to be recorded at December 31, 2013?
$660
Equipment cost $44,400 and is expected to be useful for 5 years and have no salvage value. Under the straight-line method, monthly depreciation will be
$740
A retailer recorded the following in June: cash sales $2,000; credit sales, $9,000; sales returns and allowances, $1,000. Assuming the sales tax rate is 7 percent, the entry to record the sales tax payment includes a debit to Sales Tax Payable for
$770
Kay Sadia sold merchandise for $8,750 subject to a 6% sales tax. The entry in the sales journal will include a debit to Accounts Receivable for
$9275
After all postings have been made, the totals of the balances in the accounts receivable subsidiary ledger should equal the balance of the Accounts Receivable account in the general ledger.
...
When the trial balance totals are not equal, the error may have been caused by recording a debit as a credit if the difference is divisible by
2
When done properly, how many journal entries are involved in the closing process?
4
If the trial balance totals are not equal, the error may have been caused by a transposition if the difference is divisible by
9
An example of a merchandising company is a
A book store (any store with merchandise)
The review of financial statements to assess their fairness and adherence to GAAP is
Auditing
The statement of financial position is another term for which financial statement?
Balance Sheet
The balances of selected accounts of Casper Company on February 28, 2013, were as follows: Sales $200,000 and Sales Returns and Allowances $5,000. The firm's net sales are subject to an 8 percent sales tax. Record the payment of the sales tax payable on February 28, 2013 in the general journal
Date General Journal Debit Credit Feb. 28 Sales Tax payable 15600 Cash (credit) 15600
Which of the following entries records the closing of Penny Pincher, Drawing at the end of the accounting period?
Debit Penny Pincher, Capital; credit Penny Pincher, Drawing
Which of the following would not be shown as an adjustment to the book balance on a bank reconciliation statement?
Deposits in transit
An accounting system is designed to accumulate and classify data about a firm's financial affairs and summarize it in the general journal.
FALSE
A form of the partnerships business entity is
LLP
Which of the following would cause the Trial Balance to be out of balance?
Placing the Accounts Receivable balance in the Credit column
Which of the following accounts would be closed?
Supplies Expense (not Accounts receivable, accumulated depreciation, or "Joan Wilson", Capital)
Laws passed by Congress in 1933 and 1934 gave the Securities and Exchange Commission (SEC) final say on matters of financial reporting by publicly owned corporations.
TRUE
The death or withdrawal of one partner ends the partnership.
TRUE
The financial statements and the auditor's report must be made available to stockholders of publicly owned corporations.
TRUE
Which of the following statements is correct?
The cost of supplies used represents an operating expense of the business.
Which of the following is NOT a type of information communicated by the financial statements?
The types of products and services the business provides
After transactions for the period have been recorded, a trial balance is prepared to verify the equality of total debits and credits.
True
If the total of the amounts on the debit side of an account is greater than the total on the credit side, the balance is recorded on the debit side.
True
The individual amounts in the Accounts Payable Debit column of the cash payments journal are posted to the accounts payable subsidiary ledger.
True
On November 25, 2013, the company paid $31,200 rent in advance for a six-month period (December 2013 through May 2014). On December 31, 2013, the adjustment for expired rent would include
a $5,200 credit to Prepaid Rent.
An example of an economic entity is
a business
The Sales Returns and Allowances account is classified as
a contra revenue account.
The journal entry to record the performance of services for cash would include
a debit to Cash and a credit to Fees Income.
The journal entry to record the payment of a monthly utility bill would include
a debit to Utilities Expense and a credit to Cash.
The Sales account is classified as
a revenue account
The Sarbanes-Oxley Act includes rules on
auditor rotation
The Statement of Owner's Equity is calculated as follows:
beginning capital + net income - withdrawals + additional investments = ending capital
The owner's investment or equity in a business is called
capital
Examples of assets are
cash and accounts receivable.
In a firm that uses special journals, the collection of sums on account from credit customers is recorded in the
cash receipts journal
Management advisory services are designed to help
clients
If a check written by a firm is not canceled by the bank and returned with the month's bank statement, the firm should
consider this check as outstanding when preparing the bank reconciliation.
On October 1, 2013, Jay Walker Company purchased a one-year advertising campaign for $840. The correct adjusting entry on December 31, 2013, is
debit Advertising Expense $210; credit Prepaid Advertising $210
On July 3, the ABC Company received $865 in cash on account from customers. The correct journal entry is
debit Cash, $865; credit Accounts Receivable, $865
A total of $4,000 in supplies was purchased during the year. At the end of the year $1,020 of the supplies were left. The adjusting entry needed at the end of the year is:
debit supplies expense $2980, credit supplies $2980
When revenue is earned from charge-account sales, the accountant
debits Accounts Receivable and credits a revenue account.
On the Income Statement, Sales Returns and Allowances have the effect of
decreasing total revenue
In order to analyze the effect of a business transaction one must do all of the following except
determine which asset, liability, or equity accounts will change.
The Financial Accounting Standards Board is responsible for
developing generally accepted accounting principles.
The current worth of an asset is its
fair market value
Anyone can invest in a closely held corporation.
false
Bank Reconciliations are not that important because banks never make errors.
false
Increases in assets and revenue are both recorded with debits.
false
Public accountants work on the staff of federal, state, or local governmental units.
false
The SEC uses financial information to determine a company's tax base.
false
The owners and managers of a business are the only users of the Financial Information.
false
The statement of owner's equity is prepared from the data in the Income Statement section of the worksheet.
false
When a business is organized as a sole proprietorship, the owner may combine his/her personal financial information with the business financial information.
false
When there are several entries to one or both sides of an account, the total of those entries is entered in pencil. This is called
footing
In a firm that uses special journals, the acceptance of a return of merchandise from a credit customer is recorded in the
general journal
Which of the following is NOT part of the process of accounting for financial information?
identifying
The normal balance of an account is the
increase side of the account.
Debits are used to record
increases in assets.
Credits are used to record
increases in liabilities and owner's equity.
Which of the following is NOT an area in which accountants usually practice?
industrial Accounting
The financial affairs of a business and the financial affairs of the owners should be
kept totally seperate
The area of accounting that involves the preparation of internal reports for a firm's executives and the analysis of the data in these reports to aid in decision making is known as
managerial accounting.
Managerial accounting is
private accounting
The corporations whose stock can be bought and sold on stock exchanges and in over-the-counter markets are referred to as
publicly owned corporations
An act passed in response to the wave of corporate accounting scandals is the
sarbanes-Oxley Act.
tax planning includes
suggesting actions to reduce tax liability.
ax accounting involves tax compliance and
tax planning
The group of accounting educators who offer their opinions about proposed FASB statements, after research has been done to determine the possible effects on financial reporting and the economy, is
the AAA
On a worksheet, the adjusted balance of the Accumulated Depreciation account is extended to:
the Balance Sheet Credit column
On a worksheet, the adjusted balance of a contra asset account would be extended to
the Balance Sheet Credit column.
On a worksheet, the adjusted balance of the Supplies Expense account is extended to:
the Balance sheet debit column
On a worksheet, the adjusted balance of the revenue account Fees Income would be extended to:
the Income Statement Credit column
The entry to close the Depreciation Expense account would include a debit to
the Income Summary account and a credit to the Depreciation Expense account.
To find the balance due from an individual customer, the accountant would refer to
the accounts receivable subsidiary ledger.
The book value of long-term assets is reported on
the balance sheet
An accounting system that involves recording the effects of each transaction as debits and credits is
the double-entry system.
If a firm does not have a sales returns and allowances journal, the entries for these transactions are made in
the general journal
The amount used by wholesalers to record sales in its sales journal is
the net price
The income statement shows
the results of operations for a period of time.
The first step in the closing process is to close
the revenue accounts
"Closing" is written in the Description column of the individual revenue and expense accounts in the general ledger.
true
Accountants provide financial information to various parties so they can make business decisions.
true
After the closing entries are posted, the balance of the owner's capital account agrees with the amount of owner's equity shown on the balance sheet for the period.
true
Cash Short or Over is an expense account when it has a debit balance.
true
For statements prepared on plain paper, dollar signs are placed with the first amount in each column and with each total.
true
Increases in the owner's drawing account are recorded with debits.
true
Public accounting firms provide three major types of services: auditing, tax accounting, and management advisory services.
true
Revenue is a subdivision of owner's equity.
true
The Securities and Exchange Commission (SEC) requires that publicly owned corporations submit financial statements to it each year.
true
The balance of a liability account is extended to the Balance Sheet Credit column of the worksheet.
true
The death or withdrawal of one partner ends the partnership
true
The postclosing trial balance contains balance sheet accounts only.
true
The purpose of accounting is to provide financial information about an economic or social entity.
true
A net loss results
when expenses are greater than revenue.
If long-term assets are not adjusted, expenses on the income statement
will be understated
