Accounting exam 2

Which of the following accounts will appear on the post-closing trial balance?

Medicare Tax Payable

Journal Entry

1.) date 2.) Debit account and dollar amount 3.) indent, credit account and dollar amount 4.) indent, brief explanation

Robin Banks, Inc. owns an armored truck which was purchased for $80,000. The Accumulated Depreciation on the truck is $55,000. The book value of the armored truck is Correct!

$25,000.

straight line depreciation formula

(cost - salvage value) / useful life

Accounting Cycle Steps

1. Analyze business transactions 2. Journalize the transactions 3. Post to ledger accounts 4. Prepare a trial balance 5. Journalize and post adjusting entries 6. Prepare an adjusted trial balance 7. Prepare financial statements 8. Journalize and post closing entries 9. Prepare a post-closing trial balance

Adjusting Journal Entries

1.) at the end of the accounting period 2.)no cash involved 3.) income statement account is involved-ex and rev 4.)Balance sheet account involved-as and lia

closing entries: four steps

1.)Transfer Revenue to income summary 2.)transfer the expenses to income summary 3.)Transfer balance of income summary account to owners capital 4.)Transfer balance of drawing account to owners capital

Which of the following accounts has a normal credit balance?

Account payable

Allowance for Doubtful Accounts is reported in the

Assets section of the balance sheet.

Which of the following entries records the depreciation on equipment for the fiscal year-end adjustment?

Debit Depreciation Expense; credit Accumulated Depreciation

On January 1, ABC Catering purchased an oven for $2,000. The oven was expected to last five years and have no salvage value. Select the adjusting entry made on December 31, to record the depreciation of the oven for one year.

Depreciation Expense debit $400 and credit Accumulated Depreciation-Equipment $400

Which of the following is not a current asset?

Equipment

Which of the following would not be classified as a Current Asset:

Equipment

Cost of Goods Sold is classified as a(n):

Expense account

Prepaid expenses appear in the

Operating Expenses section of the income statement.

Which of the following is not a section on a Classified Balance Sheet:

Selling Expenses

Identify the statement below that is true regarding the Allowance for Doubtful Accounts account. Correct!

The account has a normal credit balance and is reported on the balance sheet.

The adjusting entry for uncollectible accounts requires a debit to

Uncollectible Accounts Expense and a credit to Allowance for Doubtful Accounts.

On the financial statements prepared at the end of an accounting period, the merchandise inventory is shown as

an asset on the balance sheet.

Accumulated Depreciation, Equipment, is shown as:

contra asset on the Balance Sheet

Gross profit on sales is calculated by subtracting

cost of goods sold from net sales.

A total of $3,200 in supplies was purchased during the year. At the end of the year $700 of the supplies were left. The adjusting entry needed at the end of the year is:

debit Supplies Expense $2,500; credit Supplies $2,500

If a company uses the periodic inventory system, purchases of merchandise are

debited to Merchandise Inventory.

Inventory turnover is calculated by

dividing cost of goods sold by average inventory.

The current ratio is calculated by

dividing current assets by current liabilities.

Accrued income is income that has been

earned but not received.

Accural Basis Accounting

reporting income when it is earned and expenses when they are incurred

income summary is a

special owners equity account that is used only in the closing process. has a zero balance after closing process

Allowance for Doubtful Accounts is

subtracted from Accounts Receivable in the Assets section of the balance sheet.

When a trial balance is in balance,

the debit account balances equal the credit account balances.

The balance of the owner's drawing account is

used in the calculation of ending capital on a statement of owner's equity.

If the prepaid expenses are not adjusted, assets on the balance sheet Correct!

will be overstated.