Acct Ch 14

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

True

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

True

The Merchandise Inventory amount in a work sheet's Trial Balance Debit column represents the merchandise inventory __________.

at the beginning of a fiscal period

In calculating the amount of depreciation expense for a plant asset, you must consider __________.

original cost, estimated salvage value and estimated useful life

Recording expenses in the accounting period in which the expenses contribute to earning revenue is an application of the account concept __________.

Matching Expenses with Revenue

The portion of the insurance premium that has expired during a fiscal period is classified as __________.

an expense

The distribution of dividends only by formal action of a corporation's board of directors is an application of the accounting concept _________.

Business Entity

Which account is used for the investment of all owners of a corporation?

Capital Stock

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

False

Dividends are earnings retained by the corporation.

False

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

False

Many businesses use a percentage of total sales to estimate uncollectible accounts expense.

False

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

False

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

False

The supplies--store account must be adjusted to show the expense of the supplies that are purchased during the year.

False

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

False

The two accounts used to record the adjustment for federal income tax are __________.

Federal Income Tax Payable and Federal Income Tax Expense

What is the formula for calculating book value of an asset?

Original Cost - Accumulated Depreciation = Ending Book Value

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

True

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

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.

True

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

True

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

True

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

True

The two accounts used to adjust the uncollectible accounts are ___________.

Uncollectible Accounts Expense and Allowance for Uncollectible Accounts

A business prepares a summary of financial information at least once each fincal period because financial information ___________.

all of the above

A work sheet is used to __________.

both plan adjustments and summarize information necessary to prepare financial statements

The entry to journalize the adjustment for merchandise inventory when beginning Merchandise Inventory is $125,000.00 and ending Merchandise Inventory is $115,000.00 is __________.

debit Income Summary, $10,000.00; credit Merchandise Inventory, $10,000.00.

The entry to journalize the adjustment for merchandise inventory at the end of a fiscal period when ending merchandise inventory is smaller than the beginning is __________.

debit Income Summary; credit Merchandise Inventory

The entry to adjust prepaid insurance at the end of a fiscal period when the balance of the prepaid insurance account is $3,600 and the value of the prepaid insurance is $1,600 is __________.

debit Insurance Expense $2,000; credit Prepaid Insurance $2,000

The entry to journalize the adjustment for prepaid insurance at the end of the physical period is __________.

debit Insurance Expense; credit Prepaid Insurance

The entry to journalize the adjustment for merchandise inventory at the end of a fiscal period when the ending merchandise inventory is larger than beginning merchandise inventory is ____________.

debit Merchandise Inventory; credit Income Summary

The entry to journalize the adjustment for office supplies at the end of fiscal period when the balance of the office supplies account is $5,100.00 and the office supplies inventory is $3,900.00 is _________.

debit Supplies Expense--Office, $1,200.00; credit Supplies--Office, $1

Businesses may have three major types of plant assets: __________.

equipment, buildings and land