Accounting 211: Final Exam Review

Two or more people working together to circumvent internal controls and defraud a company is known as what?

Collusion

Under the direct write-off method, what is included in the entry to write write off an noncollectable account?

A credit to the customer's accounts receivable

Under the direct write-off method, the entry to write-off an noncollectable account will include what?

A debit to Bad Debts Expense account

What is a requirement of a Sarbanes-Oxley Act?

An outsider must evaluate the client's internal controls and report on the internal controls as part of the audit report.

The balance sheet is a snapshot of the entity. What is included on the balance sheet to show this entity?

Assets

When is a trial balance usually prepared?

Before the financial statements are prepared.

What inventory costing method uses the cost of the oldest purchases to calculate the cost of goods sold?

FIFO

What financial statement reports expenses in decreasing order of their amounts, by stating the largest expense first?

Income statement

Assets with no physical form are called what?

Intangible assets

Patents, copyrights, and trademarks are all examples of what?

Intangible assets

How are the allowance to bad debts shown on the balance sheet?

It is shown as a contra account related to account receivables

What inventory costing method uses the costs of the oldest purchases to calculate the value of the ending inventory?

LIFO

What appears on both the income statement and the statement of owner's equity?

Net income

A check for whicha maker's bakn account has inadequate money to pay the check is known as what?

Non-sufficient funds check

The sales discount account is a contra account to what account?

Sales returns and allowances

A posting reference column is used when?

The information is transferred from the journal to the ledger.

After initially recording a transaction, the data is the then transferred to what?

The ledger

The ending merchandise inventory forr the current accounting period is overstated by $3,500. What will be the effect of this error?

The net income for the current period will be overstated by $3,500.

The ending merchandise inventory for the current year is overstated by $25,000. What effect will this error have on the following year's net income?

The net income will be understated by $25,000.

Posting a transaction means what?

Transferring data from the journal to the ledger.

An overstatement of ending merchandise inventory in the current period results in an understatement of cost of goods sold in the current period.

True

Petty cash is a fund containing a small amount of cash that is used to pay for minor expenditures.

True

The journal entry to open a new petty cash fund includes a debit to the Petty Cash account and a credit to the Cash account

True