Accounting test 2

Which of the following best describes the accumulated depreciation account?

A contra-asset account with a normal credit balance

Inventory Sheet

A form used to list the quantity and type of goods a firm has in stock

classified financial statements

A format by which revenues and expenses on the income statement, and assets and liabilities on the balance sheet, are divided into groups of similar accounts and a subtotal is given for each group.

What is a single-step income statement?

A format in which only one computation is needed to determine the net income

Accounts Receivable Turnover

A measure of the speed with which sales on account are collected; the ratio of net credit sales to average receivables

Which of the following is not a current asset?

A note receivable due in 13 months

Current ratios

A relationship between current assets and current liabilities that provides a measure of a firms ability to pay its current debts

Accrual Basis

A system of accounting by which all revenues and expenses are matched and reported on financial statements for the applicable period, regardless of when the cash related to the transaction is received or paid.

multiple-step income statement

A type of income statement on which several subtotals are computed before the net income is calculated.

single-step income statement

A type of income statement where only one computation is needed to determine the net income (total revenue - total expenses = net income).

Which of the following accounts would not appear on the post closing trail balance?

Accumulated depreciation- office equipment

Condensed Income Statement

An income Statement summarizing detailed income statement accounts into a few lines of information

What are reversing entries?

Are journal entries made to reverse the effect of certain adjusting entries involving accrued income or accrued expenses.

How should purchases returns and allowances be shown on the income statement?

As a deduction from the delivered cost of purchase

current assets

Assets consisting of cash, items that normally will be converted into cash within one year, or items that will be used up within one year.

Three elements are needed to compute the cost of good sold:

Beginning inventory Net delivered cost of purchases Ending inventory

The purpose of the second closing entry is to

Close revenue account and cost of goods sold accounts with credit balances

In Caymus Company's December 31 trial balance, a credit balance of $31,500 appears in Unearned Fee Income. This amount represents cash received from a customer on November 1 covering work to be performed by Caymus in November through January. At December 31, Caymus had earned $10,500 of the amount received on November 1. Which of the following would be used to adjust the unearned fees income account on December 31?

Credit Fees Income for $10,500

A company has merchandise inventory at the beginning of the year of $14,000 and merchandise inventory at the end of the year of $18,000. Which of the following would be included in the adjusting entry to place the ending inventory on the books?

Credit Income summary for $18,000

The notes payable account appears on the worksheet in the:

Credit column of the balance sheet section

The unearned fees account appears on the worksheet in the:

Credit column of the balance sheet section.

What are current assets?

Current assets are assets consisting of cash, items that normally will be converted into cash within one year, and items that will be used up within one year.

MJF company has net credit sales of $2,500,000 and estimates bad debts at 0.5 percent of net credit sales. Which of the following journal entries would be used to record estimated uncollectible accounts receivable?

Debit Uncollectible accounts expense for $12,500, and Credit Allowance for Doubtful Accounts for $12,500.

The merchandise inventory account appears on the worksheet in the:

Debit column of the balance sheet section

long-term liabilities

Debts of business that are due more than one year in the future

Current Liabilities

Debts that must be paid or otherwise satisfied within one year

The amount of net income appears on the worksheet in the the:

Debut column of the income statement section

accrued expenses

Expense items that relate to the current period but have not yet been paid and do not yet appear in the accounting records.

Unearned Income

Income received before it is earned.

The sales account will appear in which of the following in the worksheet?

Income statement credit column.

Accrued income

Income that has been earned but not yet received and recorded.

Classified Income Statement

Is sometimes called a multiple-step income statement

Reversing Entries

Journal entries, made to reverse the effect of certain adjusting entries involving accrued income or accrued expenses to avoid problems in recording future payments or receipts of cash in a new accounting period

Property, Plant, and Equipment

Long-term assets that are used in the operation of a business and that are subject to depreciation (except for land, which is not depreciated).

Which of the following would not be classified as plant and equipment on a balance sheet?

Prepaid insurance

Plant and equipment

Property that will be used in the business for longer than one year.

Gross Profit Percentage

The amount of gross profit from each dollar of sales (gross profit percentage = gross profit/net sales).

Average number of days in inventory

The average number of days for merchandise inventory to be sold after it is purchased

A reversing entry is made for an end-of-period adjustment that recorded

The chance in merchandise inventory

A company failed to record depreciation expense. Which of the following is not true?

The company's total liabilities will be overstated.

Liquidity

The ease in which an item can be converted into cash; the ability of a business to pay its debt when due

Working Capital

The measure of the ability of a company to meet its current obligations; the excess of current assets over current liabilities

Inventory Turnover

The number of times inventory is purchased and sold during the accounting period

Average Collection Period

The ratio of 365 days to the accounts receivable turnover; also called the number of days in sales receivable

Which of these is not a general and administrative expense?

Uncollectible accounts expense

Which of the following is not true concerning the accrual basis of accounting? a. revenues are recognized when earned b. expenses are recognized when incurred c. cash received for services to be performed in future months is recognized as revenue when the cash is received d. cash received for services to be performed in future months is recognized as a liability when the cash is received.

cash received for services to be performed in future months is recognized as revenue when the cash is received

Gross Profit

the difference between net sales and cost of goods sold