Acc 2

What is deducted from the ledger balance of cash in the bank reconciliation statement?

A bank service charge

An example of a liability is

Accounts Payable

The __________ requires that revenue is recorded when earned and expenses and recorded when incurred.

Accrual based accounting

Prepaid Insurance is a(n)

Asset

When a business pays a creditor on account total _______ decreases.

Assets

The expanded accounting equation is

Assets = Liabilities + Capital - Drawing + Revenue - Expenses

What is the fundamental accounting equation?

Assets = Liabilities + Owners Equity

Graves Company bought supplies on credit, $1800. What are the effects on the fundamental accounting equation?

Assets increase $1800; Liabilities increase $1800; Owner's Equity is not effected.

Jefferson invested $15,000 cash in his business. The accountant would record the following journal entry:

Cash $15,000 J. Jefferson, Capital $15,000

When an owner withdraws cash from the business, it results in a decrease in:

Cash and Capital

The ___________ requires that assets be recorded at the actual cost.

Cost Principle

Net income for Susan's Treasures is $25,000 for the current year. The owner withdrew $3,000 per month for personal living expenses. The owner's Capital account will show a net...

Decrease of $11,000

Apple Company purchased $6000 in equipment, paying $2000 in cash and placing the remainder on an account. The journal entry would look like this:

Equipment $6000 Accounts Payable $4000 Cash $2000

For which of the following taxes is there no ceiling on the amount of an annual employee earnings subject to tax?

Federal Income Tax

The process of subtotaling both sides of an account and recording the amount on that side is known as...

Footing

The _______ is a book or file containing the activity by accounts of a business.

General Ledger

Amounts owned by a business are referred to as...

Liabilities

The proof that the debits and credits in the ledger are equal is called the...

Trial Balance

Which of the following refers to any period of time covering a complete accounting cycle? a. A fiscal period b. A journal period c. A matching cycle d. A time cycle

a. A fiscal period

Baker Co. uses the accrual basis of accounting. Baker Co. prepays cash in May for insurance that covers only the month of June. Which of the following statements is true? a. Baker Co. should record the insurance expense in June b. Baker Co. should record the insurance expense in May c. Baker Co. should record the payment of cash in June d. Baker Co. should neither record the payment of cash nor the insurance expense in May. e.

a. Baker Co. should record the insurance expense in June

What item is NOT used to calculate the federal income tax to be withheld by employers? a. W-2 b. Publication 15 (Circular E) c. Total Earnings d. W-4

a. W-2

Accounts receivable is a(n)

asset

Which of the following is not considered an account? a. Accounts Receivable b. Revenues c. Accounts Payable d. Cash e. Equipment

b. Revenues

Which of the following is true? a. The process of transferring information from the journal to the ledger is called journalizing. b. The ledger account form maintains a running balance of the account. c. When recording business transactions, it is not important that one use the exact amount titles d. All are correct

b. The ledger account form maintains a running balance of the account.

An employer may withhold portions of an employee's total earnings for

charitable contributions

A credit may result in... a. decrease in a capital account b. increase in an asset account c. decrease in a liability account d. increase in a liability account e. none of these are correct

d. An increase in a liability account

Which of the following accounts decrease when they are debited? a. Drawing & Capital b. Liabilities & Expenses c. Assets and Drawing d. Capital and Liabilities e. Expenses and Assets

d. Capital and Liabilities

The entry to close expenses would involve (a)

debit to Income Summary

A business received $600 cash from Charge Customers to apply on account. The effect of the transaction is an increase in assets (A/R) and a...

decrease in an asset (cash)

A debit may result in: a. a decrease in a liability account b. a decrease in a revenue account c. an increase in an asset account d. an increase in an expense account e. all of these are correct

e. All of these are correct

A credit may result in: a. an increase in a revenue account b. a decrease in an asset account c. an increase in a liability account d. an increase in the capital account e. all of these are correct

e. all of these are correct

Payroll tax expense represents the amount of taxes contributed by the...

employer

The term, accrued wages, means that:

expenses have been incurred but not yet been recorded

The amount of employee compensation before deductions are taken out is referred to as:

gross pay

The order the financial statements are prepared is:

income statement, statement of owner's equity, balance sheet

The borrowing of money will

increase liabilities

The systems of policies and procedures that a company sets to protect its assets are known as:

internal control system

A book of original entry is known as a

journal

Accounts Payable is a(n)

liability

Net income results when:

total revenue exceeds total expenses over the period

If the cost of a piece of equipment is $15000 and accumulated depreciation amounts to $5000, the book value of the equipment is:

$10,000

Dowdy Co. has equipment with a cost of $30,000 and accumulated depreciation of $22,000. What is the book value of the equipment?

$8,000

Clean and Fresh laundromat has assets of $120,000 and liabilities of $35,000. Determine the amount of Owner's Equity.

$85,000