Accounting final
If the sum of the debit column equals the sum of the credit column in a trial balance, it indicates
the mathematical equality of the total debits and total credits
The assumption that the economic life of a business can be divided into artificial time periods is knows as the
time period assumption
Expense recognition is tied to revenue recognition
true
Gross profit represents the merchandising profit of a company
true
Sales revenue minus cost of goods sold equals gross profit
true
The accounting cycle begins at the start of a new accounting period
true
The expense recognition principle requires that expenses be matched with revenues
true
The purpose of the adjusted trail balance is to prove the equality of debits and credits in the ledger accounts after adjusting entries are posted
true
Recording a cash sale requires
two entries, one of which includes a debit to Cost of Goods Sold
If a company determines cost of goods sold each time a sale occurs, it
uses a perpetual inventory system
The revenues recognition principles dictates that revenue should be recognized in the accounting records
when the performance obligation is satisfied
In a service-type business, the performance obligation is considered to be satisfied
when the services have been performed
In a perpetual inventory system, cost of goods sold is recorded
with each sale
The journal entry to record a credit sale is
Accounts Receivable Sales Revenue
Which of the terms below could be used when describing a cash purchase?
FOB destination
Which of the following would not be considered a merchandising company?
Jones & Jones, CPAs
Which of these steps of the accounting cycle occur at year-end only (as opposed to during the accounting period, or at the end of the accounting period)
Journalize and post closing entries
In Yani's Gyros trail balance, which type of the balance should Yani not expect for the type of account indicated
Revenues-debit
A credit granted to a customer for returned goods requires a debit to
Sales Returns and Allowances and a credit to Accounts Receivable
The entry to record the remittance of sales tax to the taxing authority includes a debit to
Sales Tax Payable
The heading for a post-closing trail balance has a date line that is similar to the one found on
a balance sheet
As an incentive for customers to pay their accounts promptly, a business may offer its customers
a sales discount
For the Chicago Huskies, the debit total in the trial balance differs from the credit total. This could be caused by (like the accountant puts 15.00 instead of 1,500)
a slide error
A trial balance may balance even when each of the following occurs except when
a transposition error is made (like they accidentally put 65 instead of 56)
Which is true?
a trial balance is prepared after posting to ledger accounts
Posting
accumulates the effects of journalized transactions in the individual accounts
The adjusted trail balance is prepared
after adjusting entries have been journalized and posted
A post-closing trail balance should be prepared
after closing entries are posted to the ledger accounts
When using a worksheet, adjusting entries are journalized
after the worksheet is completed and after financial statements have been prepared
If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as sales
allowance
The first step in the recording process is to
analyze each transaction for its effect on the accounts
The first required step in the accounting cycle is
analyzing transactions
The post-closing trail balance contains only
balance sheet accounts
Gross profit for a merchandiser is sales revenue minus
cost of goods sold
The respective normal account balances of Sales Revenue, Sales Returns and Allowances, and Sales Discounts are
credit, debit, debit
Under a perpetual inventory system, the entry to record a credit purchase of inventory is
debit inventory, credit Accounts Payable
In High Country Ski Rental's trial balance, which type of balance should the company's accounts expect for the type of account indicated?
equipment-debit
If a company fails to make an adjusting entry to record the expiration of prepaid insurance, then
expense will be understated
If the adjusting entry to accrue salaries and wages expense is not made
expenses will be understated
A physical count of inventory is the only needed if a periodic inventory system is used
false
A worksheet is a mandatory from that must be prepared along with an income statement and balance sheet
false
Accounting time periods that are one year in length are referred to as interim periods
false
Closing entries are unnecessary if the business plans to continue operating in the future and issue financial statement each year
false
In the making a journal entry, the credit account and amount should be listed first and indented
false
Posting is the process of proving the equality of debits and credits in the trial balance
false
Sales returns and allowances and sales discounts are both designated to encourage customers to pay their accounts promptly
false
The Sales Returns and Allowances account and the Sales Discounts account are both classified as expense accounts
false
The buyer's entry for a purchase return does not include a credit to inventory when the perpetual inventory system is used
false
The operating cycle for a service business is generally longer than that of a merchandising business
false
The revenue recognition principle dictates that revenue be recognized in the accounting period in which cash is received
false
Transactions are entered in the ledger first and then they are analyzed in terms of their effect on the accounts
false
When the seller grants a sales allowance, two journal entries are required
false
In a credit purchase of inventory, the Cash account is credited
false accs payable is credited (liability)
An accounting record of the balances of all assets, liabilities, and the owner's equity accounts is called a
general ledger
Sales Returns and Allowances is increased when
goods that were sold on credit are returned
The number of accounts in the adjusted trail balance is usually
greater than the number of accounts in the unadjusted trail balance
An accumulated depreciation account
has a normal credit balance
Without inclusion of the period's net income, debits do not equal credits in which section of the worksheet
income statement columns
Under a perpetual inventory system, cash purchases and credit purchases are debited to
inventory
Which of the following statements related to the adjusted trail balance is incorrect?
it is prepared before the adjusting entries have been made * adjusted entries come after the adjusted trial balance
The usual sequence of steps in the recording process is to analyze each transaction, enter the transaction in the
journal, and transfer the information to the ledger accounts
The final step in the recording process is to transfer the journal information to the
ledger
After a business transaction has been analyzed and entered in the book of original entry, the next step in the recording process is to transfer the information to
ledger accounts
Under a perpetual inventory system, the inventory account is adjusted for each of the following transactions except the entry to record
payment of freight on goods sold
Balance sheet accounts are considered to be
permanent accounts
Which of the following steps in the accounting cycle may be performed most frequently?
prepare a trial balance
Which of the following depicts the proper sequence in the accounting cycle
prepare a trial balance, prepare adjusting entries, prepare financial statements
Which one of the following is an optional step in the accounting cycle of a business enterprise
prepare a worksheet
The last step in preparing a trial balance is
prove the equality of the two columns
An adjusted trial balance
proves the equality of the total debit balances and the total credit balances of ledger accounts after all adjustments have been made
A sales invoice is a source document that
providers evidence of credit sales
The primary source of revenue for a wholesaler is
sale of merchandise
The term FOB shipping point means
the buyer pays freight and debits inventory
The credit terms offered to a customer by a business firm are 3/10, n/30, which means that
the customer can deduct a 3% discount if the bill is paid within 10 days of the invoice date
Which of the following would not be classified as a contra account?
Inventory