ACCOUNTING 120 FINAL

The amount of the purchases for a period is presented in a. the Liabilities section of the balance sheet. b. the Revenue section of the income statement. c. the Cost of Goods Sold section of the income statement. d. the Expenses section of the income statement.

C

The amount of the trade discount taken by the customer is:

not recorded as sales are recorded net of trade discounts

To find the balance due from an individual customer, the accountant would refer to

the accounts receivable subsidiary ledger

At the end of the first month of operations for SloMo Delivery Service, the business had the following accounts: Accounts Receivable, $1200; Prepaid Insurance $500; Equipment, $36,200; and Cash, $40,650. On the same date, SloMo owed the following creditors: Simpson Supply Company, $12,000; Allen Office Equipment, $9,500. The total assets for the SLoMo Delivery Service are:

$78,550

During the year, a firm purchased $56,970 of merchandise and paid freight charges of $12,680. If the total purchases returns and allowances were $6,495 and purchase discounts were $2,050 for the year, what is the net delivered cost of purchases? a. $61,105 b. $69,650 c. $72,349 d. $35,745

A

The objective of internal control of purchases is to a. create written proof that purchases and payments are authorized. b. create a disciplined work environment. c. make the sales process more complex. d.create more organized invoices.

A

Which of the following statements is correct? a. Purchases Discounts is a contra expense account and carries a credit balance. b. Purchases Discounts is an expense account and carries a debit balance. c. Purchases Discounts is an asset account and carries a credit balance. d. Purchases Discounts is an expense account and carries a credit balance.

A

what is required to collect sales tax from customers, make periodic payments to the taxing authority, and pay the taxes due when reports are filed

Retailers

Identify the entry below that records the acquisition of office supplies on account.

debit Office Supplies; credit Accounts Payable

Modern Candy, a wholesaler, sold a crate of candy for $200 on account, to a customer with credit terms of 1/10, n/30. If the customer pays within the discount period, how much cash will Modern Candy receive when it is paid?

$198

During its first year of business, XYZ Inc. purchased $2400 of supplies. By the end of the year, only $500 of supplies remain in the supply cabinet. Determine the amount to be reported in the Supplies account in the Adjusted Trial Balance section of the worksheet prepared on December 31.

$500

If the trial balance totals are not equal, the error may have been caused by a transposition error if the difference is divisible by:

9

Postings to the accounts payable ledger should be made a. daily. b. weekly. c. monthly. d.at the end of the fiscal period

A

Which account would not be involved in any of the closing entries

Accounts Payable

The account numbers from the ledger are recorded in the Posting Reference column of the general journal when?

After each amount is posted.

A firm's bank reconciliation statement shows a book balance of $15,820, an NSF check of $400, and a service charge of $20. Its adjusted book balance is a. $16,240. b. $15,400. c. $15,440. d. $16,200.

B

The Purchases account is a. a permanent account. b. a temporary account. c. a subsidiary account. d. a liability account.

B

Purchases is a temporary _______ account. A. liability B. asset C. revenue D. expense

D. Expense

T/F A check that has a full endorsement can be further endorsed by any bearer and therefore, is not as safe as a check with a blank endorsement.

False

T/F A merchandising business sells goods that it produces

False

NOT one of the three basic types of business

International

Identify the temporary accounts

Owner's Drawing, Depreciation Expense, Income Summary

The process of transferring the data from the journal to the general ledger is called:

Posting

If a business issued a check for $1000 to pay for two months rent in advance, analyze the effect on the firms' assets, liabilities and owner's equity.

Prepaid Rent will increase

Business papers, such as checks, invoices, receipts, letters, and memos, that furnish proof that a transaction has taken place are called:

Source Documents

Which of the following account would be closed?

Supplies Expense

The financial statement that is prepared first is:

The Income Statement

Which account will not normally have a zero balance after the closing entries have been posted?

The owner's capital account

What is not a formal financial statement

Trial Balance

Trial balances are prepared in a certain order:

Trial balance, adjusted trial balance, post-closing trial balance

T/F A business transaction is a financial event that affects the resources of a business.

True

T/F A ledger account contains a complete record of the individual transaction activity in each account.

True

On the worksheet, the Balance Sheet columns should balance

after the net income amount is added to the Balance Sheet credit column

A consecutive, twelve-month accounting period is called a

fiscal year

A credit policy that is too tight results in

low level of losses at the expense of increases in sales volume

One purpose of closing entries is to give zero balances to

revenue and expense accounts

One purpose of closing entries is to

transfer the results of operations to owner's equity

Adjusting Entries are

updating entries for previously unrecorded expenses or revenues.

T/F Posting references are part of the audit trail

True

T/F The entry to close an expense account requires a credit to the Income Summary account

False

T/F The expenses for a period are reported on the balance sheet.

False

T/F Outstanding checks are checks that are recorded in the journal but have not been paid by the bank.

True

T/F Revenue is a subdivision of owner's equity

True

T/F The post closing trial balance contains balance sheet accounts only.

True

T/F Withdrawals by the owner for personal use do not affect net income or net loss of the business

True

A total of $3200 in supplies was purchased during the year. At the end of the year, $700 of the supplies were left. The adjusting entry needed at the end of the year is:

debit Supplies Expense $2500; credit Supplies $2500

On a worksheet, a net loss is

recorded in the Balance Sheet Debit column

NOT a common type of credit sale

closed-account credit cards

T/F Salvage value is computed by subtracting the accumulated depreciation from the cost of a long-term asset

False

After the worksheet has been completed, the next step in the accounting cycle is to:

Prepare the financial statements.

T/F The accounts payable ledger provides information about the individual accounts for all creditors.

True

T/F The general ledger contains the accounts that are used to prepare the financial statements

True

T/F The supplier's invoice is the source document for a purchase on credit transaction

True

The journal entry to record the withdrawal of cash by Sue Snow, the owner, to pay a personal utility bill would include:

A debit to Sue Snow, Drawing and a credit to Cash

T/F A retail business is a manufacturer or distributor of goods that sells to retailers or large customers.

False

T/F Dunn Bakery bought a new oven for $1280. Al paid $300 as a cash down payment and will pay the balance in 30 days. Total assets increased by $1080.

False

T/F If the owner takes cash out of the business for personal use, the withdrawal should be recorded as an expense of the business.

False

T/F The Purchases Returns and Allowances account has a normal debit balance

False

What is the correct order in which to prepare the financial statements?

Income Statement, Statement of Owner's Equity, Balance Sheet

The "Net Income" or "Net Loss" is transferred from the Income Statement to the:

Statement of Owner's Equity

The owner of the business would like to see both the debit and credit entry for specific transaction, he would look in:

The Journal

T/F A schedule of accounts payable is a list of all balances owed to creditors

True

T/F A subsidiary ledger is a ledger that contains accounts of a single type

True

T/F After all the transactions have been posted, the totals of the balances in the accounts receivable subsidiary ledgers should equal the balance of the accounts receivable account in the general ledger

True

T/F If an adjustment is not recorded for supplies used, the firm's assets will be overstated.

True

T/F Increases in the owner's drawing account are recorded with debits.

True

T/F Letters are used to Label the debit and credit parts of an adjustment on the worksheet.

True

T/F One of the purposes of closing entries is to transfer net income or net loss for the period to the owner's capital account.

True

T/F The statement of owner's equity is prepared from the data in the Income Statement section of the worksheet.

False

T/F When a sales department needs goods, it sends the purchasing department a purchase invoice

False

T/F When an owner invests assets in a business, the capital account is debited.

False

T/F When cash is collected from accounts receivable, the total amount of assets increases.

False

NOT a step on the accounting cycle

Prepare invoices for customers

Upon collection of the amount due on an interest-bearing promissory note from a customer, the accountant would debit Cash, credit Notes Receivable, and a. debit Interest Expense. b. credit Interest Income. c. credit Interest Expense. d. debit Interest Income.

B

83. Assuming a periodic inventory system is used, freight charges on merchandise purchases should be debited to a. the Purchases account. b. the Accounts Payable account. c. the Freight In account. d. the creditor's account in the subsidiary ledger.

C

Assuming a periodic inventory system, the journal entry to record the purchase on account of $900 of merchandise with freight of $65 prepaid and added to the invoice is: a. debit Purchases $965; credit Accounts Payable $965 b. debit Accounts Payable $965, debit Freight in $65; credit Purchases $900 c. debit Purchases $900, debit Freight In $65; credit Accounts Payable $965 d.debit Accounts Receivable $965; credit Sales $965

C

T/F When transactions are entered in a general journal, the asset accounts are listed first, followed by the liability and owner's equity accounts.

False

T/F The owner's capital account is closed at the end of each accounting period

False

Which of the following statements is correct? a. The purchase requisition is the form sent to a supplier to order goods. b. The Purchases account is reported as an asset on the balance sheet. c. To the customer, a supplier's invoice is a sales invoice. d. The credit terms, 2/10, n/30, allow the customer to take a 2 percent discount if payment is made within 10 days of the invoice, otherwise payment is due in full in 30 days.

D

Accumulated Depreciation, Equipment, is shown as

a contra asset on the Balance Sheet

Which of the following describes the Sales Returns and Allowances account?

a contra revenue account with a normal debit balance

The total of the balances in the creditors' accounts should agree with the balance of a. the Purchases account in the general ledger. b. the Accounts Receivable account in the general ledger. c. the Accounts Payable account in the general ledger. d.the Sales account in the general ledger

C

T/F The monthly bank statement should be received and reconciled by the employee who deposits cash receipts and writes the checks.

False

T/F The safest endorsement on a check is a full endorsement

False

T/F Transactions completed with a debit card appear on a statement separate from other banking transactions

False

T/F When a business makes a sale on a bank credit card, the business is responsible for collecting from the customer

False

T/F When using the fundamental accounting equation, an accountant must make sure that total assets are always equal to total liabilities and owner's equity.

True

The posting reference column of a journal is used to

Record the number of the ledger account to which the information is posted

T/F Service charges and other deductions listed on the bank statement have already been recorded in the business records.

False

T/F The balance of the Sales Returns and Allowances account is subtracted from the balance of the Accounts Receivable account in the Assets section of the balance sheet

False

T/F The balance of the owner's capital account, as reflected on the post-closing trial balance, will match the amount reported on the income statement.

False

T/F The balances of the revenue accounts are recorded in the Trial Balance Credit column, the Adjusted Trial Balance Credit column, and the Balance Sheet Credit column of the worksheet.

False

T/F The entry to replenish petty cash includes a debit to Petty Cash Fund and a credit to Cash.

False

T/F When a customer pays within a certain time, he is eligible to receive a trade discount

False

Which of the following is a common example of the distribution channel?

Manufacturer sells to Wholesaler who sells to Retailer who sells to Customer

T/F When an accounts payable subsidiary ledger is used, the entry to Accounts Payable requires two posting references in the general journal

True

A company purchases equipment costing $15,000. They paid $1000 right away and agreed to pay the balance in 30 days, the journal entry to record the purchase of equipment would include:

a debit to Equipment for $15,000, a credit to Cash for $1000 and a credit to Accounts Payable for $14,000.

The first two closing entries to the Income Summary account indicate a debit of $53,000 and a credit of $64000. The third closing entry would be

debit Income Summary $11000; credit Capital $11000

On October 1, 2016, Jay Walker purchased a one-year insurance policy for $660. The correct adjusting entry on December 31, 2016, is

debit Insurance Expense $165, credit Prepaid Insurance $165

Sales Returns and Allowances have the effect of

decreasing total revenue