VCYI Accounting

If liabilities are $4,000 and owner's equity is $15,000, assets are

$19,000.

Which account does not close?

Accounts Receivable

Which account balance is entered in the income statement columns from the adjusted trial balance?

Fees income

Priscilla has made a budget. It compares what she expects to spend on a percentage basis (common size). What line item should she focus on if she would like to increase her savings rate?

Groceries and Eating Out 25%

Which financial statement is produced first?

Income statement

The death or withdrawal of one partner ends the partnership.

True

A journal entry for the paying of an account payable would include

a decrease to assets

A firm issues periodic reports called

financial statements.

When there are several entries to one or both sides of an account, the total of those entries is entered in pencil. This is called

footing

Where should the Company's identification be noted in a business

headers

Debit entries increase asset, drawing, expense and liability accounts.

true

Revenue is a subdivision of owner's equity.

true

On June 3 a company purchased a fleet of cars for the sales staff with cash. The total purchase was $100,000 and the company expected the fleet to last 10 years. The company plans to use straight-line depreciation of $10,000 per year. What is the journal entry?

$100,000 debit to Automobiles and a $100,000 credit to Cash.

On a statement of owner's equity, beginning capital is $30,000, Net Income for the year is $11,000 and Drawing for the year is $6,000, the ending capital amount would be

$35,000

A firm earns $45,000 in revenue and the customer is required to pay for it in ninety days. How is this purchase entered on the firm's accounts receivable ledger?

$45,000 debit

The gross pay for a corporation's employees was $4,600. The company computed the payroll for the current month and the Social Security (FICA) for the employees was computed to be $285.20. The total FICA liability will be

$570.40 credit to SS Payable

An inexperience bookkeeper is posting to the General Journal. What journal entry would cause the Trial Balance to be imbalanced?

$800 insurance bill received and paid in the same month; $800 debit to insurance expense and $80 credit to cash

On January 1, Acme Fire Extinguisher purchased equipment for $36,000. The expected life of the equipment is 3 years and there will be no salvage value. The straight-line depreciation is 1,000 per month. Acme pays $20,000 today, and will pay $4,000 per month until the purchase price is satisfied. What is the journal entry for the purchase of the equipment?

A debit to Equipment for $36,000; a credit to Cash for $20,000; a credit to Notes Payable for $16,000.

If a company computes the interest on a note but does not pay that interest, what is the proper journal entry?

A debit to Interest Expense and a credit to Interest Payable.

A company did not receive a bill from an office supply company. The proper journal entry will be

A debit to Supplies and a credit to Accounts Payable

What list includes liabilities by a small business?

Accounts Payable, Wages Payable, and Notes Payable

What method is used when calculating the uncollectable accounts expense using the balance sheet approach?

Aging of accounts receivable

A company purchases an insurance policy for $1,200. Coverage is for an entire year. At the end of the first month, what would the bookkeeper record in the general journal?

An increase of $100 to the insurance expense account.

If the trial balance columns do not equal, what should the bookkeeper do?

Analyze the trial balance and financial records to find the error

What does every double-entry transaction require?

At least one debit entry and one credit entry

Elizabeth decides to change the price of 27 products. This type of decision making is

Autocratic

Which financial statement is reported as of a specific date?

Balance Sheet

Living expenses include all of these except:

Car repair

A company writes a check to purchase printer cartridges. Which account would be credited to record this purchase?

Cash

A company pays employees on a weekly basis. The weekly gross pay is $5,000 for five days of work. The current pay period has three days in March and two days in April. The adjustment for the accrual of wages would include a

Credit salary payable for $3,000

A business purchases supplies on account. The journal entry to record this transaction is

Debit Supplies; Credit Accounts Payable

26. A decrease in a liability is recorded on the ____________________ side of the account.

Debit or left

Which of the following types of accounts normally have debit balances?

Expenses and assets

A company has assets of $56,320 and liabilities of $29,500. The owner's equity is $85,820.

False

Al Dunn Bakery bought a new oven for $1,380. Al paid $300 as a cash down payment and will pay the balance in 30 days. Total assets increased by $1,080.

False

Currently, generally accepted accounting principles are developed by the American Institute of Certified Public Accountants (AICPA)

False

Which of the following groups contain only accounts that normally have credit balances?

Fees Income and John Smith, Capital

What phrase indicates a lack of cash control:

Having one person responsible for the total banking cycle.

Which of the following represents the proper sequence for preparing the financial statements.

Income statement, statement of owner's equity, balance sheet.

What is the characteristic of a liability?

Increases with a credit

Which of the following is NOT an area in which accountants usually practice?

Industrial Accounting

Buster received some accounting information from a vendor. The document had the company's name and address, a PO number, due date. What is this form of communication?

Invoice

Why would a small business use a computerized accounting system?

It gives instant information and reports

What is recording equal debits and credits called?

It is double entry accounting

A CFO asked you to categorize some expenses as assets (both are debit entries so the Trial Balance remains balanced). Why is this a breach in the accounting ethics standards?

It is unethical because it was fraudulent financial reporting.

What is the purpose of the accounting cycle?

It results in the creation of the company's financial accounting statements.

Which form communication should be used to convey information to employees?

Memorandum

A holiday bonus is an example of

Non-recurring income

When equipment is purchased for cash

One asset increases and another asset decreases

What step does an bookkeeper perform after journalizing transactions"

Post to the ledger

Which account does not appear on the post-closing trial balance?

Revenue

When are revenue and expenses recognized in cash based accounting?

Revenue is recognized when cash is received, and expenses are recognized when cash is paid

Monthly utility bills; expenditures for food, clothing, and entertainment, are all examples of:

Short-term Budget considerations.

Payroll tax expense consists of

Social Security Payable, Medicare Payable, Federal Unemployment Tax Act Payable, and State Unemployment Tax Act Payable.

The ending capital balance appears on which of the following statement(s)?

Statement of owner's equity and balance sheet

One difference in the Balance Sheet and the Income Statement is:

The Income Statement is over a period of time and the Balance Sheet is as of a point in time.

What must an accountant record when posting a transaction?

The date the transaction took place

Consensus decision-making style is used when

The decision will have broad and significant impacts on the entire organization.

The amount of financial activity is

The major consideration in developing a budget.

Why does a stockholder's equity need to be completed after to preparing an income statement?

The net income is used in calculating the stockholder's equity

The last job that you worked, you felt that the company did not treat you right. You are expecting it to happen in your new job, even though you have been treated well. Why is this is an assumption?

The statement is unsupported by communication from management.

The Net Income amount from the Income Statement is used as a line item on which statement?

The statement of owner's equity

Why are special journals used in accounting systems?

To group together similar transactions

How is a worksheet used?

To help prepare adjusting entries and financial statements

The purpose of the Sarbanes-Oxley Act is

To prevent accounting scandals.

A firm has the following assets and liabilities: Cash $45,000 Accounts Receivable 65,000 Allowance for Doubtful Accounts 4,500 Accounts Payable 27,500 Notes Payable 47,000 What should the assets and liabilities be?

Total assets of $105,500, and liabilities of 74,500.

What financial document ensures the transactions for the period are in balance?

Trial Balance

In a sole proprietorship, the owner is responsible for the debts of the business if the firm is unable to pay.

True

The entire process of analyzing, recording, and reporting business transactions is based on the fundamental accounting equation.

True

The price of gasoline is a macro-factor that has impact on our personal budgets. Another example is:

Variable interest rates

If assets are numbered from 100-199, which of the following accounts would not be given a number in the 100 series?

accounts payable

All financial statements submitted to the SEC by publicly owned corporations must include an auditor's report prepared by

an independent certified public accountant.

The rent paid for future months is a(n)

asset

When equipment is purchased on credit

assets and liabilities increase

When the owner withdraws cash for personal use

assets decrease and owner's equity decreases

Assets and liabilities are reported on

balance sheet

If a trial balance is not in balance (the Debit and Credit columns are not equal), a logical first step is to

check the addition of each column.

25. Accountants use the term ____________________ when referring to the right side of an account.

credit

When the owner writes a company check to pay the firm's electric bill

expenses increase and owner's equity increases.

An amount debited to Cash in a journal entry should be posted as a credit to the Cash account in the ledger.

false

Transactions are recorded in either a journal or a ledger, but not in both.

false

When transactions are entered in a general journal, the asset accounts are listed first, followed by the liability and owner's equity accounts.

false

Ginger Yale Ice Company receives money from a customer on account. Recording this transaction will

increase Cash

When purchasing some land, a company uses $40,000 in cash and issues a note for the remaining $30,000 due in 90 days. The notes payable account will

increase by $30,000

The normal balance of an account is the

increase side of the account.

Debits are used to record

increases assets

The total of the figures on the left side of a Cash account is $25,800. The total of the figures on the right side is $14,100. The balance of this account

is $11,700 and would be recorded on the left side of the account.

The process of recording transactions in a journal is referred to as

jounalize

When charge customers pay cash to apply against their accounts, the amount is recorded

on the left side of the Cash account and the right side of the Accounts Receivable account.

The process of transferring data from a journal to a ledger is known as

posting

A(n) ____________________ account is used to record increases in owner's equity from the sale of goods or services.

revenue

Which of the following increase owner's equity?

revenue

Which of the following accounts is not a permanent account?

salaries expense

The Net Income or Net Loss is transferred from the income statement to the

statement of owner's equity.

The balance sheet shows

the financial position of a business at a given time.

The financial statement that is prepared first is

the income statement.

The account used to record increases in owner's equity from the sale of goods or services is

the revenue account.

If the total of the amounts on the debit side of an account is greater than the total on the credit side, the balance is recorded on the debit side.

true

The revenue accounts come before the expense accounts in the general ledger.

true

Transactions are entered in the journal in chronological order.

true