Aplia Accounting Ch.14

False

Merchandise Inventory is an asset account with a normal credit balance.

True

Most accounts needing adjustment at the end of a fiscal period have a related temporary account.

True

In order to make adjustments to federal income tax, you must first determine the net income before federal income tax expense.

False

Many business use a percentage of total sales to estimate uncollectiable accounts expense.

True

A board of directors earnings of a corporation to its stockholders by declaring a dividend.

True

A corporation's board of directors is elected by the stockholders.

False

A declared dividend is classified as en expense.

Board of Directors

A group of people elected by the stockholders to manage a corporation.

True

A stockholder is an owner of one or more shares of a corporation.

True

A work sheet is used to plan adjustments and summarize the information necessary to prepare financial statements.

False

Accounts Receivable is a contra account to its related asset account, Allowance for Uncollectable Accounts.

Uncollectible Accounts

Accounts receivable that can't be collected.

False

Accumulated depreciation is the depreciation expense that has been recoreded since the purchase of a current asset.

Declaring a Dividend

Action by a board of directors to distribute corporate earnings to stockholders.

True

An amount earned by a corporation and not yet distributed to stockholders is called retained earnings.

Retained Earnings

An amount earned by a corporation and not yet distributed to stockholders.

True

Assets that will be used for a number of years in the operation of a business are called plant assets.

Plant Assets

Assets that will be used for a number of years in the operation of a business.

Current Assets

Cash and other assets expected to be exchanged for cash or consumed within a year.

Straight-Line Method of Depreciation

Charging an equal amount of depreciation expense for a plant asset in each year of useful life.

Allowance Method

Crediting the estimated value of uncollectible account to contra account.

True

Depreciation accumulates each year of a plant asset's useful like.

False

Dividends are earnings retained by the corporation.

False

During a fiscal period, the amount of merchandise on hand remains unchanged.

False

Each unit of ownership in a corporation is known as a stock holder.

Dividends

Earnings distributed to stockholders.

True

Federal income tax is an expense of a corporation.

False

General Ledger account balances are changed when adjustments are entered on the work sheet.

False

Owner's equity accounts for a corporation normally are listed under a major chart of accounts division titled Operating Expense

Accumulated Depreciatino

The total amount of depreciation expense that has been recorded since the purchase of a plant asset.

False

The adjustment for merchandise inventory is common for all businesses.

True

The ammount of federal income tax expense a corporation must pay is calculated using a tax table furnised by the Internal Revenue Service.

Estimated Salvage Value

The amount an owner expects to receive when a plant asset is removed from use.

Merchandise Inventory

The amount of goods on hand for sale to customers.

False

The difference between an asset's account balance and it's related contra account balance is called par value.

Book Value

The difference between an asset's account balance and its related contra account balance.

Book Value of Accounts Receivable

The difference between the balance of Accounts Receivable and its contra account, Allowance for Uncollectible accounts

True

The dividends account has a normal debit balance and is increased by a debit.

False

The supplies--store account must be adjusted to show the value of insurance that has been prepaid.

Book Value of a Plant Asset

The original cost of a plant asset minus accumulate depreciations.

Depreciation Expense

The portion of a plant asset's cost that is transferred to an expense account in each fiscal period during a plant asset's useful life.

False

The prepaid insurance account is adjusted to show the value of insurance that has been prepaid.

True

The risk of uncollectible accounts should be recorded as an expense in the same acounting period that the revenue is earned.

False

The steps for preparing a work sheet are very different for proprietorships and corporations.

False

When a corporation makes the quarterly payment of the estimated federal income tax, the cahse account is debited.

False

When a declared dividened is paid, Dividends Payable is credited.