Accounting Midterm

Merchandising Business

buys finished goods and sells them to individuals or other businesses

Management Accounting

concerned with preparing information for internal users.

Capital

money invested in a business by its owner(s) or the money provided by banks or investors

Financial Reports

summarize information about the financial status of a business

Going Concern

Following the ____ accounting assumption, the accountant prepares reports as though the business will operate indefinitely

Debit

Indicate whether each of the following statements should be completed with the word debit or credit. The normal balance for asset accounts is a _______________.

Debit

Indicate whether each of the following statements should be completed with the word debit or credit. The normal balance for expense accounts is a _________.

Credit

Indicate whether each of the following statements should be completed with the word debit or credit. The normal balance for the owner's capital account is a __________.

Debit

Indicate whether each of the following statements should be completed with the word debit or credit. The normal balance for the owner's withdrawals account is a _________.

B

The account Accounts Receivable is an example of a(n) ____. Select one: a. none of the above b. asset c. owner's equity d. liability

Manufacturing Business

A business that produces items to sell to individuals and other businesses

D

A business transaction that involves a purchase on account is considered to be a(n) ____. Select one: a. expense transaction b. cash transaction c. investment by the owner d. credit transaction

Salary

A(n) ____ is a fixed amount of money paid to an employee each pay period.

Payroll Register

A(n) ____ is a form summarizing information about employees' earnings for each pay period.

Commission

A(n) ____ is paid to the employee as a percentage of the employee's sales.

Balance Sheet

A(n) ____ is the financial statement that reports the final balances in all asset, liability, and owner's equity accounts at the end of the accounting period.

B

Accounting is often call the "language of business" because ____. Select one: a. it is easy to understand b. it is fundamental to the communication of financial information c. all business owners have a good understanding of accounting principles d. accountants in many companies share financial information

A

Accounts that start each new accounting period with zero balances are ____. Select one: a. temporary accounts b. asset accounts c. permanent accounts d. liability accounts

C

All of the following account titles are asset titles except ____. Select one: a. Office Furniture b. Cash in Bank c. Accounts Payable d. Equipment

Wage

An amount of money paid to employees at a specific rate per hour is a(n) ____.

Overtime Rate

An employee paid 1 1/2 times the regular wage is paid at a(n) ____.

D

An example of an accounting assumption is ____. Select one: a. all businesses must pay taxes to the government in a timely fashion b. all businesses prepare reports for governmental review c. business transactions are regularly adjusted for inflation d. a business has the ability to operate indefinitely

A

An example of an internal user of accounting information is ____. Select one: a. the manager in charge of a specific product line b. the Internal Revenue Service c. a large stockholder d. the president of a bank that has loaned money to the business

A

Closing entries are used to transfer the net income or net loss for the accounting period to the ____. Select one: a. capital account b. revenue account c. expense accounts d. Cash in Bank account

A

Each of the following is a business expense except a payment for ____. Select one: a. equipment b. monthly rent c. utility bills d. advertising

C

If Paul Abdou deposits $30,000 in a checking account in the name of his business, the two accounts affected are ____. Select one: a. Cash in Bank and Computer Equipment b. Cash in Bank and Accounts Receivable c. Cash in Bank and Paul Abdou, Capital d. Cash in Bank and Accounts Payable

B

If a business has a net income for the period, the journal entry to close the balance of the Income Summary account is ____. Select one: a. a debit to owner's capital, a credit to Income Summary b. a debit to Income Summary, a credit to owner's capital c. a debit to Fees, a credit to owner's capital d. a debit to owner's capital, a credit to Fees.

Loss

If a business spends more money to operate than it earns from the sale of goods or services, it is operating at a(n) ____.

Direct Deposit

If an employee has ____,the employer placed the employee's net pay into their personal bank account.

B

If the creditor's financial claim to property totals $1,000 and the owner's financial claim to property totals $11,000, the property value is ____. Select one: a. $11,000 b. $12,000 c. $1,000 d. $10,000

B

In a business, it is the entrepreneur who ____. Select one: a. provides the labor needed to operate the business b. is willing to take the risks to establish and organize the venture c. manages the financial aspects of the business d. supplies the capital needed to establish the business

Free Enterprise System

In a(n) ____, people are free to produce the goods and services they choose

Report Form

In the ____, the classifications of balance sheet accounts are shown one under the other.

Credit

Indicate whether each of the following statements should be completed with the word debit or credit. A decrease in an asset account is recorded as a ___________.

Debit

Indicate whether each of the following statements should be completed with the word debit or credit. A decrease in the owner's capital account is recorded as a __________.

Debit

Indicate whether each of the following statements should be completed with the word debit or credit. A decrease to Accounts Payable is a ________.

Debit

Indicate whether each of the following statements should be completed with the word debit or credit. A decrease to Collection Fees is recorded as a ______.

Credit

Indicate whether each of the following statements should be completed with the word debit or credit. A decrease to an expense account is a _______.

Debit

Indicate whether each of the following statements should be completed with the word debit or credit. A decrease to the U.S. Savings Bonds Payable account is recorded as a _____.

Credit

Indicate whether each of the following statements should be completed with the word debit or credit. An increase in a liability account is recorded as a _________.

Credit

Indicate whether each of the following statements should be completed with the word debit or credit. An increase to Gilberto Ferreira, Capital is a _________.

Debit

Indicate whether each of the following statements should be completed with the word debit or credit. An increase to Mark Cookson, Withdrawals is recorded as a _______.

Debit

Indicate whether each of the following statements should be completed with the word debit or credit. An increase to Office Furniture is a ________.

Debit

Indicate whether each of the following statements should be completed with the word debit or credit. An increase to Utilities Expense is a recorded as a _____.

Credit

Indicate whether each of the following statements should be completed with the word debit or credit. An increase to a revenue account is a ______.

Debit

Indicate whether each of the following statements should be completed with the word debit or credit. An increase to the withdrawals account is a ______.

Debit

Indicate whether each of the following statements should be completed with the word debit or credit. Payroll Tax Expense has a normal ________ balance.

Credit

Indicate whether each of the following statements should be completed with the word debit or credit. The State Unemployment Tax Payable account is increased by a ________.

Credit

Indicate whether each of the following statements should be completed with the word debit or credit. The account Employees' Federal Income Tax Payable has a normal _____ balance.

Debit

Indicate whether each of the following statements should be completed with the word debit or credit. The account Salaries Expense has a normal _____ balance.

Debit

Indicate whether each of the following statements should be completed with the word debit or credit. The left side of a T account is a _________.

Credit

Indicate whether each of the following statements should be completed with the word debit or credit. The normal balance for Accounts Payable is a __________.

Debit

Indicate whether each of the following statements should be completed with the word debit or credit. The normal balance for Accounts Receivable is a ____________.

Credit

Indicate whether each of the following statements should be completed with the word debit or credit. The normal balance for Consulting Fees is a _______.

Debit

Indicate whether each of the following statements should be completed with the word debit or credit. The total amount of gross earnings is entered on the _______ side of the Salaries Expense account.

Credit

Indicate whether each of the following statements should be completed with the word debit or credit. The total net pay for the period is recorded as a ______ to the Cash in Bank account.

Credit

Indicate whether each of the following statements should be completed with the word debit or credit. When federal unemployment taxes are recorded by the employer, a __________ entry is made to the Federal Unemployment Tax Payable account.

Debit

Indicate whether each of the following statements should be completed with the word debit or credit. When the federal government is paid the amount owed for social security tax, an entry is made on the ______ side of the Social Security Tax Payable account.

C - Debit E - Credit

Listed below are several account titles, each identified by a letter. Following the list of accounts is a series of business transactions. For each transaction, indicate the account to be debited and the account to be credited. A. Cash in Bank B. Accounts Receivable C. Office Supplies D. Office Equipment E. Accounts Payable F. D. Orondo, Capital G. D. Orondo, Withdrawals H. Fees I. Rent Expense J. Utilities Expense Bought $175 of office supplies on credit from North Supply, Inc.

A - Debit H - Credit

Listed below are several account titles, each identified by a letter. Following the list of accounts is a series of business transactions. For each transaction, indicate the account to be debited and the account to be credited. A. Cash in Bank B. Accounts Receivable C. Office Supplies D. Office Equipment E. Accounts Payable F. D. Orondo, Capital G. D. Orondo, Withdrawals H. Fees I. Rent Expense J. Utilities Expense Received $925 for services provided to Abruzzi Construction.

F - Debit A - Credit

Listed below are several account titles, each identified by a letter. Following the list of accounts is a series of business transactions. Indicate the account to be debited and the account to be credited for each transaction. A. Cash in Bank D. Store Equipment F. Accounts Payable B. Accounts Receivable E. Office Equipment G. Melanie Nelson, Capital C. Office Supplies Issued a check for $800 to Modern Equipment, Inc., as half payment for the computer.

D - Debit A - Credit

Listed below are several account titles, each identified by a letter. Following the list of accounts is a series of business transactions. Indicate the account to be debited and the account to be credited for each transaction. A. Cash in Bank D. Store Equipment F. Accounts Payable B. Accounts Receivable E. Office Equipment G. Melanie Nelson, Capital C. Office Supplies Melanie Nelson issued a check for $1,750 to buy store equipment.

E - Debit F - Credit

Listed below are the account titles for Hays Secretarial Services, each identified by a letter. Following the accounts is a list of the closing entries. Using the identifying letters, indicate the account(s) to be debited and credited in each closing entry. A. Cash in Bank B. Accounts Receivable C. Computer Equipment D. Accounts Payable E. Mariko Hays, Capital F. Mariko Hays, Withdrawals G. Income Summary H. Fees I. Miscellaneous Expense J. Rent Expense K. Supplies Expense L. Utilities Expense Record the closing entry for the withdrawals account.

Time Card

Most companies use a(n) ____ to keep track of an hourly wage employee's hours.

Statement of Changes in Owner's Equity

The ____ is completed as a support document for the balance sheet.

A

Paula Abrizzi has a career goal of obtaining an entry-level job with a large accounting firm or with a large corporation after graduating from college. Indicate whether the following activities will help her achieve that goal. Finance college education. Select one: a. Yes b. No

B

Paula Abrizzi has a career goal of obtaining an entry-level job with a large accounting firm or with a large corporation after graduating from college. Indicate whether the following activities will help her achieve that goal. Join a social sorority at college. Select one: a. Yes b. No

A

Paula Abrizzi has a career goal of obtaining an entry-level job with a large accounting firm or with a large corporation after graduating from college. Indicate whether the following activities will help her achieve that goal. Learn to prepare a résumé and write a cover letter. Select one: a. Yes b. No

B

Paula Abrizzi has a career goal of obtaining an entry-level job with a large accounting firm or with a large corporation after graduating from college. Indicate whether the following activities will help her achieve that goal. Participate in an accounting-based internship program. Select one: a. No b. Yes

B

Paula Abrizzi has a career goal of obtaining an entry-level job with a large accounting firm or with a large corporation after graduating from college. Indicate whether the following activities will help her achieve that goal. Pass CPA examination. Select one: a. No b. Yes

A

Paula Abrizzi has a career goal of obtaining an entry-level job with a large accounting firm or with a large corporation after graduating from college. Indicate whether the following activities will help her achieve that goal. Take a summer job in the business office of a local performing arts center. Select one: a. Yes b. No

B

Paula Abrizzi has a career goal of obtaining an entry-level job with a large accounting firm or with a large corporation after graduating from college. Indicate whether the following activities will help her achieve that goal. Vacation in Europe during her junior year. Select one: a. Yes b. No

B

Paula Abrizzi has a career goal of obtaining an entry-level job with a large accounting firm or with a large corporation after graduating from college. Indicate whether the following activities will help her achieve that goal. Volunteer during the school year at a homeless shelter. Select one: a. Yes b. No

Service Business

Read the paragraph below and answer the questions. You and your friend Lou Novatna both love animals. Your family breeds poodles, and Lou studied to be a veterinary assistant. Last year, the two of you started a dog grooming business that you call Pampered Pooches. You also offer dog walking, dog "play groups," and some boarding. You and Lou worked hard and shared the responsibilities of the business. At the end of the first year, Pampered Pooches has earnings of $27,500. The costs to operate the business were $19,440. What type of business is Pampered Pooches?

Invoice

Several transactions of Hanson Pool Service are described below. Indicate the type of source document that is likely to contain the details of each transaction. Billed customers for pool services performed during the past week, $2,300.

Single

Should a single rule or a double rule be drawn across the Trial Balance section under the last amount shown?

Yes

Terry West, the owner of West Carpet Cleaning Services, was examining the accounting records and discovered the following errors. A. A $95 payment on account to a creditor was recorded as a debit to Advertising Expense for $95 and a credit to Cash in Bank for $95. B. The purchase of a new filing cabinet for $125 cash was recorded as a debit of $125 to Equipment and a credit of $152 to Cash in Bank. In A, were the debit and credit amounts recorded correctly? If not, what are the correct amounts?

Employee's Earnings Record

The ____ is an individual payroll record kept for each employee.

Gross Earnings

The ____ is the total amount earned by the employee in the pay period.

Exemptions

The amount deducted from gross earnings for federal income tax each pay period depends on the total earnings, marital status, and the number of ____ an employee claims on Form W-4.

Net Pay

The amount of money actually received by the employee after all deductions are subtracted is called the ____.

B

The amount of money earned after the costs of operating a business are paid is ____. Select one: a. revenue b. profit c. expense d. capital

Pay Period

The amount of time for which an employee is paid is called the ____.

B

The assumption that requires accounting reports to be prepared for a specific period of time is ____. Select one: a. going concern b. accounting period c. business entity d. unit of measure

C

The balance of the revenue account is transferred to the ____. Select one: a. credit side of the owner's capital account b. debit side of the Cash in Bank account c. credit side of the Income Summary account d. debit side of the owner's withdrawals account

on a specific date

The balance sheet reports financial information ____.

No

The ending balances of the Advertising Expense and Maintenance Expense were inadvertently transposed when they were transferred to the work sheet. Would this error have any effect on the trial balance?

No No No No No Yes Yes Yes Yes Yes Yes yes Yes

The following amounts appear on the work sheet for West Side Cleaners. Use the information to answer the following questions. Cash in Bank - $3,482.00 Accounts Receivable -800.00 Supplies - 903.00 Equipment - 4,236.00 Accounts Payable - 2,673.00 James Brown, Capital - 7,926.00 James Brown, Withdrawals - 1,130.00 Income Summary - Cleaning Fees - 3,890.00 Maintenance Expense - 345.00 Rent Expense - 1,900.00 Salaries Expense - 800.00 Utilities Expense - 893.00 Indicate whether each account is affected by a closing entry. "Yes" or "No". Cash in Bank Accounts Receivable Supplies Equipment Accounts Payable James Brown, Capital James Brown, Withdrawals Income Summary Cleaning Fees Maintenance Expense Rent Expense Salaries Expense Utilities Expense

6 (Cash in Bank, Accounts Receivable, Supplies, Equipment, Accounts Payable, and James Brown, Capital)

The following amounts appear on the work sheet for West Side Cleaners. Use the information to answer the following questions. Cash in Bank - $3,482.00 Accounts Receivable -800.00 Supplies - 903.00 Equipment - 4,236.00 Accounts Payable - 2,673.00 James Brown, Capital - 7,926.00 James Brown, Withdrawals - 1,130.00 Income Summary - Cleaning Fees - 3,890.00 Maintenance Expense - 345.00 Rent Expense - 1,900.00 Salaries Expense - 800.00 Utilities Expense - 893.00 How many accounts will appear on the post-closing trial balance? Name the accounts.

$6,748

The following amounts appear on the work sheet for West Side Cleaners. Use the information to answer the following questions. Cash in Bank - $3,482.00 Accounts Receivable -800.00 Supplies - 903.00 Equipment - 4,236.00 Accounts Payable - 2,673.00 James Brown, Capital - 7,926.00 James Brown, Withdrawals - 1,130.00 Income Summary - Cleaning Fees - 3,890.00 Maintenance Expense - 345.00 Rent Expense - 1,900.00 Salaries Expense - 800.00 Utilities Expense - 893.00 What is the balance of the capital account on the post-closing trial balance?

$1,320

The following information was taken from the work sheet of Graff Home Repairs. Use the information to answer the questions below. Total Assets = $34,819 Total Liabilities = $2,499 Capital = $32,000 Withdrawals = $1,000 Revenue = $3,230 Expenses = $1,910 What is the amount of the net income or net loss for the period?

$23,000

The following information was taken from the work sheet of Graff Home Repairs. Use the information to answer the questions below. Total Assets = $34,819 Total Liabilities = $2,499 Capital = $32,000 Withdrawals = $1,000 Revenue = $3,230 Expenses = $1,910 During the period, the owner invested an additional $9,000 in the business. What was the balance of the capital account at the beginning of the period?

Income statement, statement of changes in owner's equity

The following information was taken from the work sheet of Graff Home Repairs. Use the information to answer the questions below. Total Assets = $34,819 Total Liabilities = $2,499 Capital = $32,000 Withdrawals = $1,000 Revenue = $3,230 Expenses = $1,910 On which statement or statements will the net income (or net loss) amount appear?

Payroll Clerk

The individual who prepares the payroll is called the ____.

Income Statement section of the work sheet

The information needed to prepare the income statement comes from the____.

A

The most common form of business organization is the ____. Select one: a. sole proprietorship b. partnership c. not-for-profit organization d. corporation

C

The most common time period covered by an accounting report is one ____. Select one: a. week b. quarter c. year d. month

D

The purchase of a desk on account will increase Office Furniture and will also increase ____. Select one: a. Accounts Receivable b. Cash in Bank c. Marie Krabish, Capital d. Accounts Payable

When?; For the Month Ended October 31, 2016

The trial balance section of the work sheet for Top Hat Chimney Service for the month ended October 31 appears below. Based on the information presented, answer the questions that follow. What question should the third line of the heading for this work sheet answer? How would the third line be worded?

A

The type of business that provides a product or a service, makes sales to customers, and incurs expenses is ____. Select one: a. all of the above b. a service business c. a manufacturing business d. a merchandising business

D

The word equities refers to claims against the assets of a business by ____. Select one: a. customers only b. owners only c. creditors only d. both creditors and owners

B

To survive, a business must ____. Select one: a. earn a profit and invest excess profits b. earn a profit and have someone willing to take the risk to run it c. have adequate start-up capital and prepare periodic reports d. make a product consumers want and report profits to the IRS

C

Transferring the expense account balances to the Income Summary account is the ____. Select one: a. fourth closing entry b. third closing entry c. second closing entry d. first closing entry

Business Entity

Under the ____ accounting assumption, a business owner must keep the financial records for the business separate from personal records.

(picture)

Using the following information, reconcile the bank statement for Abrams Tree Service. 1. Bank statement balance, November 30: $892.20. 2. Check book balance, November 30: $621.45. 3. Outstanding checks: Check 39 for $50.00, Check 40 for $45.00, Check 41 for $105.50, Check 42 for $100.00, Check 43 for $70.25. 4. Outstanding deposits: $100.00.

C

Which of the following accounts is not closed at the end of the accounting period? Select one: a. Maintenance Expense b. Income Summary c. Klaus Braun, Capital d. Fees

C

Which of the following statements is true? Select one: a. The Income Summary account has a normal debit balance. b. The Income Summary account is a permanent account. c. The Income Summary account is located in the owner's equity section of the general ledger. d. The Income Summary account is used throughout the accounting period.

B

Which of the following would not be considered a service business? Select one: a. Delta Air Lines b. General Motors c. Alamo Rent a Car d. North American Van Lines

Current Liabilities

____ are debts of the business that must be paid within the next accounting period.

Accumulated Earnings

____ are the year-to-date gross earnings of an employee.

Net Income or Net Loss

____ is reported on the income statement.

Financial Statements

____ summarize the changes resulting from business transactions that have occurred during an accounting period.

Corporation

a business organization that must get permission from the state to operate.

Sole Proprietorship

a business with a single owner

Entrepreneur

an individual who transforms ideas for products or services into real-world businesses

Accounting System

designed to collect, document, and report on the financial transactions affecting the business

Return on Sales

indicates what percentage of net sales represents profit.

Charter

legal document giving a business the right to operate as a corporation.

GAAP

the rules accountants follow when recording and reporting accounting information