Principals of Accounting
The financial statement that is prepared first is : A)up to the accountant. B)the income statement. C)the balance sheet. D)the statement of owner's equity.
B)the income statement.
Which of the following statements is not correct? A) The description of a journal entry should include a reference to the source of the information contained in the entry. B) If goods are purchased on credit, the supplier's invoice number is used as the source document for the transaction. C) The credit portion of a general journal entry is always recorded first. D) A firm should be able to trace amounts through the accounting records and back to their source documents.
C) The credit portion of a general journal entry is always recorded first.
The financial statements and the auditor's report must be made available to stockholders of publicly owned corporations. True / False
True
True/False: Posting references provide a useful cross-reference when entries must be traced and verified.
True
Withdrawals by the owner are reported on the income statement. True / False
True
The frequency of deposits of federal income taxes withheld and social security and Medicare taxes is determined by the amount owed. True / False
True
The individual amounts in the Accounts Payable Debit column of the cash payments journal are posted to the accounts payable subsidiary ledger. True / False
True
Merchandise is sold for $8,820, terms 1/10, n/30. Prior to payment, the customer returned $560 of the merchandise. If the invoice is paid within the discount period the amount of the sales discount is: A) $82.60 B) $165.20 C) $88.20 D) $93.80
A) $82.60
Beckett Co. sold merchandise on account for $10,600, terms 2/10, n/30. Freight charges of $250 were prepaid by the seller and added to the invoice. The customer returned $800 of merchandise before making the payment then paid the invoice within the discount period. What is the amount Beckett Co. received? A) $9,854 B) $9,604 C) $9,849 D) $9,833
A) $9,854
Anna Conda Landscaping service received a bill for the utilities used during September. The bill will be paid in October. The journal entry to record the utility bill received is: A) Debit Utilities Expense; Credit Accounts Payable B) Debit Cash; Credit Utilities Expense C) Debit Utilities Expense; Credit Cash D) Debit Accounts Payable; Credit Cash
A) Debit Utilities Expense; Credit Accounts Payable
On a bank reconciliation statement, you would find all of the following except: A) a list of canceled checks. B) a list of NSF checks. C) a list of outstanding checks. D) the bank service charge.
A) a list of canceled checks.
To arrive at an accurate balance on a bank reconciliation statement, an error made by the bank in which the bank deducted a check issued by another business from the balance of the company's bank account should be A) added to the bank statement balance. B) added to the book balance. C) deducted from the bank statement balance. D) deducted from the book balance.
A) added to the bank statement balance.
Salespeople who are paid a percentage of net sales are paid on A) commission basis. B) salary basis. C) hourly-rate basis. D) piece-rate basis.
A) commission basis.
Merchandise costing $5,600 with terms of 1/10, n/30, with transportation costs of $320 included on the invoice (not included in the $5,600) is sold on account. If the bill is paid within ten days, the amount of the purchase discount is. A) $59.20. B) $56.00. C) $3.20. D) $52.80
B) $56.00.
Form 941 is filed A) monthly. B) quarterly. C) annually. D) each payroll period.
B) Quarterly
Assuming a Medicare tax rate of 1.45% and monthly gross wages of $5,000, the amount recorded in Medicare Tax Payable for one quarter for the employee's payroll deduction is A) a debit for $217.50. B) a credit for $217.50. C) a debit for $72.50. D) a credit for $72.50.
B) a credit for $217.50.
Most states require that the employer file the state return for unemployment taxes A) monthly. B) quarterly. C) annually. D) each payroll period.
B) quarterly.
Which of the following is NOT typically an employee payroll withholding? A) federal income taxes B) state unemployment taxes C) union dues D) medical insurance
B) state unemployment taxes
Which of the following is NOT part of the process of accounting for financial information? A)Recording B)Identifying c)Communicating D)Classifying
B)Identifying
After a supplier of merchandise is selected, the purchasing department issues a form called A)a purchase invoice. B)a purchase order. C)a sale invoice. D)a purchase requisition.
B)a purchase order.
Which of the following would not be shown as an adjustment to the book balance on a bank reconciliation statement? A) Bank service charges B) NSF checks C) Deposits in transit D) A charge for printing new checks
C) Deposits in transit
For which of the following taxes is there no limit on the amount of annual earnings subject to the tax? A) Federal unemployment compensation tax B) Social Security tax C) Federal income tax D) State unemployment compensation tax
C) Federal income tax
A check written by Bosley Co. for $168 was mistakenly recorded in the company records as $186. What is this corrected in: A) Bank Statement Balance: Additions B) Bank Statement Balance: Deductions C) Ledger Balance of Cash: Additions D) Ledger Balance of Cash: Deductions
C) Ledger Balance of Cash: Additions
Which of the following statements is not correct? A) A few states levy an unemployment tax on the employee that must be withheld from the employee's pay. B) One of the purposes of the unemployment insurance program is to stabilize employment and reduce unemployment. C) The reduction of state unemployment taxes because of favorable experience ratings reduces the credit allowable against the federal unemployment tax. D) The unemployment insurance program is a federal program.
C) The reduction of state unemployment taxes because of favorable experience ratings reduces the credit allowable against the federal unemployment tax.
The entry in a firm's accounting records for a credit customer's check that was returned by the bank marked "NSF" would include A) a debit to Miscellaneous Expense and a credit to Cash. B) a debit to Accounts Receivable and a credit to Accounts Payable. C) a debit to Accounts Receivable and a credit to Cash. D) a debit to Cash and a credit to Accounts Receivable.
C) a debit to Accounts Receivable and a credit to Cash.
If at the end of the year the firm owes a balance for workers' compensation insurance, the adjusting entry includes a A) debit to Workers' Compensation Insurance Payable a credit to Workers' Compensation Insurance Expense. B) a debit to Workers' Compensation Refund Receivable and a credit to Workers' Compensation Insurance Expense. C) a debit to Workers' Compensation Insurance Expense and a credit to Workers' Compensation Insurance Payable D) a debit to Payroll Taxes Expense and a credit to cash.
C) a debit to Workers' Compensation Insurance Expense and a credit to Workers' Compensation Insurance Payable
FICA taxes are paid by: A) employees only. B) employer and federal government. C) both the employee and employer. D) neither the employee nor employer.
C) both the employee and employer.
When the owner withdraws cash for personal use: A)assets decrease and expenses increase. B)assets decrease and owner's equity increases. C)assets decrease and owner's equity decreases. D)owner's equity decreases and revenue decreases.
C)assets decrease and owner's equity decreases.
The Sarbanes-Oxley Act includes rules on A)auditor retention. B)auditor reliability. C)auditor rotation. D)auditor reporting.
C)auditor rotation.
To record a return of merchandise purchased on credit on the books of the buyer, the accountant would A)debit Purchases Returns and Allowances and credit Accounts Receivable. B)debit Purchases Returns and Allowances and credit Purchases. C)debit Accounts Payable and credit Purchases Returns and Allowances. D)debit Purchases and credit Purchases Returns and Allowances.
C)debit Accounts Payable and credit Purchases Returns and Allowances.
Rick O'Shea, the only employee of Hunter Furniture Company, makes $30,000 per year and is paid once a month. For the month of July, his federal income taxes withheld are $180, state income taxes withheld are $37, social security is 6.2%, Medicare tax is 1.45%, State Unemployment Tax is 4%, and Federal Unemployment tax is .8%. What is Rick's net pay for July? A) $2,500.00 B) $2,283.00 C) $2,308.75 D) $2,091.75
D) $2,091.75
Which of the following statements is correct? A) The FUTA tax provides benefits for employees who become unemployed. B) The federal unemployment tax rate can be reduced by the rate charged by state for the state unemployment tax. C) The earnings base for the federal and state unemployment taxes are the same, the first $7,000 of an employee's earnings for the year. D) All of the above are correct.
D) All of the above are correct.
Tax returns for the federal unemployment tax are due A) weekly. B) monthly. C) quarterly. D) annually.
D) annually.
The federal unemployment tax rate cannot be reduced by the rate charged by state for the state unemployment tax. True/False
False - The rate CAN be reduced
Which Journal would be used for a general accounting system of journals -Received an allowance for merchandise that was damaged but can be sold at a reduced price; the supplier's credit memorandum is for $475.
General Journal
Which Journal would be used for a general accounting system of journals -Returned damaged merchandise to a supplier and received a credit memorandum for $800.
General Journal
Which Journal would be used for a general accounting system of journals -Purchased merchandise for $2,000 plus a freight charge of $140; the supplier's invoice is payable in 30 days.
Purchases Journal
Which Journal would be used for a general accounting system of journals -Purchased merchandise for $3,000; the terms are 2/10, n/30.
Purchases Journal
A)the purchases journal.
Purchases of merchandise on credit should be recorded in A)the purchases journal. B)the general journal. C)the cash payments journal. D)the sales journal.
D)a debit to Accounts Receivable and a credit to Fees Income.
The journal entry to record the sale of services on credit should include A) a debit to Accounts Receivable and a credit to Capital. B) a debit to Cash and a credit to Accounts Receivable. C) a debit to Fees Income and a credit to Accounts Receivable. D) a debit to Accounts Receivable and a credit to Fees Income.
"Closing" is written in the Description column of the individual revenue and expense accounts in the general ledger. True / False
True
The Medicare tax is levied to provide medical care for the employee and the employee's spouse after they reach age 65. True / False
True
The Purchases account has a normal debit balance. True / False
True
b) Compound entries include only debits.
Which of the following statements is correct? A) All transactions require compound entries. B) Compound entries include only debits. C) Accounts being debited should always follow the accounts being credited in a compound entry. D) Compound entries affect more than one debit and/or more than one credit. B) Compound entries include only debits.
Which of the following accounts is not a permanent account? A)Cash B)Accounts Payable c)Salaries Expense D)Thomas Bernard, Capital
c)Salaries Expense
Which of the following statements is correct? A) The accountant obtains information about wages subject to payroll taxes from the payroll register. B) The Electronic Federal Tax Payment System is a free service provided by the Department of Treasury. C) Payroll tax deposits are made electronically using the Electronic Federal Tax Payment System. D) All of these statements are correct.
d) All of the above are correct
The income statement shows: A)the financial position of a business on a specific date. B)revenue and owner's equity. C)the results of operations for a period of time. D)the total value of the business.
C)the results of operations for a period of time.
The review of financial statements to assess their fairness and adherence to GAAP is A)accounting. B)preparation. c)compliance. D)auditing.
D)auditing.
In some states, a firm receives a discount for paying the amount of sales tax due on time. True / False
True
Increases in assets and expenses are both recorded with debits. True / False
True
Laws passed by Congress in 1933 and 1934 gave the Securities and Exchange Commission (SEC) final say on matters of financial reporting by publicly owned corporations. True /False
True
Public accounting firms provide three major types of services: auditing, tax accounting, and management advisory services. True / False
True
The Sales Returns and Allowances account has a normal debit balance. True / False
True
When an entry is made in the general journal: A) the accounts to be credited should be indented. B) the first account entered should be indented. c) liability, capital, and revenue accounts should be indented. D) asset accounts should be indented.
A) the accounts to be credited should be indented.
An accounting system that involves recording the effects of each transaction as debits and credits is A) completing one T account. B) the double-entry system. c) preparing financial statements. d) analyzing a business transaction.
B) the double-entry system.
Which of the following describes Sales Tax Payable? A)A revenue account with a normal credit balance. B)A liability account with a normal debit balance. C)A liability account with a normal credit balance. D)An asset account with a normal debit balance.
C)A liability account with a normal credit balance
The Sales Returns and Allowances account is classified as A)an asset account. B)a contra asset account. C)an expense account. D)a contra revenue account.
D)a contra revenue account.
A business partnership can have only two partners. True / False
False
When a business is organized as a sole proprietorship, the owner may combine his/her personal financial information with the business financial information. True / False
False
When a business makes a sale on a bank credit card, the business is responsible for collecting from the customer. True / False
False
The Securities and Exchange Commission (SEC) requires that publicly owned corporations submit financial statements to it each year. True / False
True
D) Placing the Accounts Receivable balance in the Credit column
Which of the following would cause the Trial Balance to be out of balance? A) Placing the Capital account balance in the Credit column B) Placing the Equipment account balance in the Debit column C) Placing the Rent Expense account balance in the Debit column D) Placing the Accounts Receivable balance in the Credit column
The entry to record the social security and Medicare taxes levied on a business includes a debit to Payroll Taxes Expense. True / False
True
Publication 15, Circular E contains withholding information A) for social security and Medicare taxes only. B) for federal income taxes only. C) for social security, Medicare, and federal income tax taxes. D) for federal and state income taxes.
B) for federal income taxes only.
The frequency of deposits of federal income taxes withheld and social security and Medicare taxes is most dependent on A) the amount owed. B) the number of payroll periods a firm has. C) the profit reported by the firm. D) the number of employees on the payroll.
A) the amount owed.
Hour Place Clock Shop sold a grandfather clock for $2,250 subject to a 9% sales tax. The entry in the sales journal will include a credit to Sales for A)$2,250.00 B)$2,092.50 C)$2,452.50 D)$2,362.00
A) 2,250 because the sales journal receives a credit and the tax payable receives a credit
A deposit is in transit What is this corrected in: A) Bank Statement Balance: Additions B) Bank Statement Balance: Deductions C) Ledger Balance of Cash: Additions D) Ledger Balance of Cash: Deductions
A) Bank Statement Balance: Additions
Which of the following forms is submitted with a copy of the Form W-2 for each employee to the Social Security Administration? A) Form W-3 B) Form W-4 C) Form 940 D) Form 941
A) Form W-3
Which of the following accounts has a normal debit balance? A)Purchases B)Purchase Returns C)Accounts Payable D)Sales
A) Purchases
The column totals in a payroll register A) are used in the journal entry to record the payroll. B) are posted directly to the general ledger accounts. C) are unnecessary. D) are neither recorded in a journal entry nor posted to the general ledger accounts.
A) are used in the journal entry to record the payroll.
All of the following are internal control procedures that are recommended to protect payroll operations except A) assign new employees to work in payroll operations. B) keep payroll records in locked files. C) make voluntary deductions from employee earnings based only on a signed authorization from the employee. D) retain all Forms W-4.
A) assign new employees to work in payroll operations.
If a check written by a firm is not canceled by the bank and returned with the month's bank statement, the firm should A) consider this check as outstanding when preparing the bank reconciliation. B) immediately notify the bank requesting that it correct its records. C) adjust the balance in the firm's checkbook to reflect the data that appears in the bank's records. D) make no adjustment when preparing the bank reconciliation.
A) consider this check as outstanding when preparing the bank reconciliation.
Which of the following payroll taxes is not paid by the employee? A) federal unemployment tax B) federal income tax C) state income tax D) FICA (Social Security and Medicare)
A) federal unemployment tax
Generally, the base earnings subject to state unemployment taxes is A) smaller than the base for social security. B) the same as the base for social security. C) larger than the base for social security. D) the amount of total earnings.
A) smaller than the base for social security.
Both the employer and the employee are responsible for paying A) social security and Medicare taxes. B) FUTA taxes. C) social security, Medicare, and FUTA taxes. D) SUTA taxes.
A) social security and medicare taxes
On a bank reconciliation statement, you would find all of the following except A)a list of canceled checks. B)a list of NSF checks. C)a list of outstanding checks. D)the bank service charge.
A)a list of canceled checks.
In a firm that uses special journals, the purchase of merchandise for cash is recorded in the A)cash payments journal. B)cash receipts journal. C)purchases journal. D)general journal.
A)cash payments journal.
The first two closing entries to the Income Summary account indicate a debit of $54,000 and a credit of $65,200. The third closing entry would be A)debit Income Summary $11,200; credit Capital $11,200 B)debit Income Summary $11,200; credit Drawing $11,200 C)debit Capital $11,200; credit Income Summary $11,200 D)debit Revenue $65,200; credit Expenses $54,000
A)debit Income Summary $11,200; credit Capital $11,200
After a bank reconciliation statement is completed, a firm may have to make an entry in its accounting records for A)outstanding checks. B)deposits in transit. C)the bank statement balance. D)NSF checks.
A)outstanding checks.
Purchases of merchandise on credit should be recorded in A)the purchases journal. B)the general journal. C)the cash payments journal. D)the sales journal.
A)the purchases journal.
Managerial accounting is: A)public accounting. B)government accounting. C)private accounting. D)tax accounting.
C)private accounting.
The Purchases account is A)a permanent account. B)a temporary account. C)a subsidiary account. D)a liability account.
B) A temporary account
A canceled check for $147 erroneously listed on bank statement as $74. What is this corrected in: A) Bank Statement Balance: Additions B) Bank Statement Balance: Deductions C) Ledger Balance of Cash: Additions D) Ledger Balance of Cash: Deductions
B) Bank Statement Balance: Deductions
Bertrand Inc. purchased some shop equipment for $4,500 in cash. By mistake, the journal entry debited the Office Equipment account rather than the Shop Equipment account. What correcting entry would be necessary? A) Debit Office Equipment $4,500; credit Shop Equipment $4,500 B) Debit Shop Equipment $4,500; credit Office Equipment $4,500 C) Debit Cash $4,500; credit Shop Equipment $4,500 D) Debit Office Equipment $4,500; credit Cash $4,500
B) Debit Shop Equipment $4,500; credit Office Equipment $4,500
Which of the following statements is correct? A) The entry to record the payment of an invoice within the cash discount period would include a debit to the Purchases Discounts account. B) To record a cash purchase of merchandise, the accountant would debit Purchases and credit Cash. C) A transaction that is properly recorded in the cash payments journal will always include the recording of an amount in the Cash Debit column. D) Purchase discounts is a contra revenue account.
B) To record a cash purchase of merchandise, the accountant would debit Purchases and credit Cash.
The Social Security Tax Payable account will normally have a(n) A) debit balance. B) credit balance. C) debit or credit balance depending on the timing of payments. D) zero balance.
B) credit balance.
Each employee of a firm will receive several copies of Form W-2, the Wage and Tax Statement, from the A) employer with each paycheck. B) employer once a year. C) federal government once a year. D) employer once a quarter.
B) employer once a year.
Which of the following statements is not correct? A)Cash purchases of merchandise are not recorded in the purchases journal. B)A credit purchase of equipment for use in the business would be recorded in the purchases journal. C)The Purchases account has a normal debit balance. D)The invoice date and credit terms must be carefully recorded in the purchases journal because they determine when payment is due.
B)A credit purchase of equipment for use in the business would be recorded in the purchases journal.
A firm appropriately wrote a check for $78 but entered the amount as payment of $87 in its records. On a bank reconciliation statement this error would be shown as A)A deduction of $9 from the book balance. B)An addition of $9 to the book balance. C)A deduction of $9 from the bank statement balance. D)An addition of $9 to the bank statement balance.
B)An addition of $9 to the book balance.
Hugh Snow returned merchandise to Farley Co. The entry on Hugh Snow's books to record the return of merchandise to Farley Co. would include a: A)Debit Accounts Payable B)Credit to Purchase Returns and Allowances C)Debit to Account Receivable D)Debit Sales Returns and Allowances
B)Credit to Purchase Returns and Allowances
Check marks next to the individual amounts in the purchases journal mean that the amounts A)have been posted to the general ledger. B)have been posted to the accounts payable subsidiary ledger. C)have been posted to the accounts receivable subsidiary ledger. D)do not need to be posted to any account.
B)have been posted to the accounts payable subsidiary ledger.
Credit purchases of supplies that are to be used in the business are entered in A)the purchases journal. B)the general journal. C)the cash payments journal. D)the cash receipts journal.
B)the general journal.
The most appropriate form of endorsement of a check for business purposes is A)the blank endorsement. B)the restrictive endorsement. C)the full endorsement. D)no endorsement.
B)the restrictive endorsement.
If a journal entry that contains an error has already been posted: A) the incorrect items should be erased and replaced with the correct data. B) the journal need not be corrected but the posting to the ledger should be corrected by crossing out the incorrect data and writing the correct data above it. C) a correcting entry should be journalized and posted. D) the incorrect items should be corrected by crossing out the incorrect data and writing the correct data above it in both the journal and the ledger.
C) a correcting entry should be journalized and posted.
The journal entry to record the payment of a monthly utility bill would include A) a debit to Utilities Expense and a credit to Capital. B) a debit to Capital and a credit to Cash. C) a debit to Utilities Expense and a credit to Cash. D) a debit to Utilities Expense and a credit to Accounts Payable.
C) a debit to Utilities Expense and a credit to Cash.
When checks are issued to employees after the entry to record the payroll has been made, the accountant would A) debit Salaries Expense, debit Wages Expense, and credit Cash. B) debit Salaries and Wages Payable, debit Social Security Tax Payable, debit Medicare Tax Payable, debit Employee Income Tax Payable, and credit Cash. C) debit Salaries and Wages Payable and credit Cash. D) debit Salaries and Wages Payable and credit Salaries Expense and Wages Expense.
C) debit Salaries and Wages Payable and credit Cash.
Each type of deduction made from the employees' earnings is recorded in a separate A) asset account. B) expense account. C) liability account. D) revenue account.
C) liability account
A postclosing trial balance could include all of the following except the A)owner's capital account. B)Cash account. C)Fees Income account. D)Accounts Receivable account.
C)Fees Income account.
When the sales department needs goods, it sends the purchasing department a form called A)a purchase invoice. B)a purchase order. C)a purchase requisition. D)a sales invoice.
C)a purchase requisition.
To arrive at an accurate balance on a bank reconciliation statement, outstanding checks should be A)added to the bank statement balance. B)added to the book balance. C)deducted from the bank statement balance. D)deducted from the book balance.
C)deducted from the bank statement balance.
In a firm that uses special journals, the purchase of merchandise with terms of 2/10, n/30 is recorded in the A)cash payments journal. B)cash receipts journal. C)purchases journal. D)general journal.
C)purchases journal.
The amount of the purchases for a period is presented in A)the Liabilities section of the balance sheet. B)the Revenue section of the income statement. C)the Cost of Goods Sold section of the income statement. D)the Expenses section of the income statement.
C)the Cost of Goods Sold section of the income statement.
Freight charges on merchandise purchases should be debited to A)the Purchases account. B)the Accounts Payable account. C)the Freight In account. D)the creditor's account in the subsidiary ledger.
C)the Freight In account.
Which Journal would be used for a general accounting system of journals -Issued a check for $3,600 to a supplier as a payment on account.
Cash Payments Journal
Which Journal would be used for a general accounting system of journals -Purchased merchandise for $3,500 in cash.
Cash Payments Journal
Which of the following statements is correct? A) A company is required to withhold various employee taxes from amounts paid independent contractors. B) The accountant who performs the independent audit for a company is an employee of the company. C) All employees must be paid at the minimum wage rate set by the Fair Labor Standards Act. D) Disability benefits for the worker and the worker's dependents are provided by the Federal Insurance Contributions Act.
D) Disability benefits for the worker and the worker's dependents are provided by the Federal Insurance Contributions Act.
A service charge charged by the bank. What is this corrected in: A) Bank Statement Balance: Additions B) Bank Statement Balance: Deductions C) Ledger Balance of Cash: Additions D) Ledger Balance of Cash: Deductions
D) Ledger Balance of Cash: Deductions
An NSF check was received from a customer. What is this corrected in: A) Bank Statement Balance: Additions B) Bank Statement Balance: Deductions C) Ledger Balance of Cash: Additions D) Ledger Balance of Cash: Deductions
D) Ledger Balance of Cash: Deductions
The entry to replenish a petty cash fund includes A) a debit to Cash and a credit to Petty Cash. B) a debit to Petty Cash Fund and a credit to Cash. C) debits to various expense accounts and a credit to Petty Cash Fund. D) debits to various expense accounts and a credit to Cash.
D) debits to various expense accounts and a credit to Cash.
To arrive at an accurate balance on a bank reconciliation statement, a debit memorandum for a customer check marked NSF should be A) added to the bank statement balance. B) added to the book balance. C) deducted from the bank statement balance. D) deducted from the book balance.
D) deducted from the book balance.
Employees' payments for federal income taxes withheld and social security and Medicare taxes are periodically A) sent directly to the Internal Revenue Service. B) deposited in a special-purpose bank account, controlled by the company, until year-end when the funds are sent to the U.S. Treasury Department. C) sent to the local office of the Internal Revenue Service. D) submitted electronically using the Electronic Federal Tax Payment System.
D) submitted electronically using the Electronic Federal Tax Payment System. At the end of each quarter, the individual earnings records are totaled. True / False True
The group of accounting educators who offer their opinions about proposed FASB statements, after research has been done to determine the possible effects on financial reporting and the economy, is A)the FCC. B)the AICPA. C)the SEC. D)the AAA.
D) the AAA
The amount debited to Wages Expense when a payroll is recorded is the A) regular gross earnings. B) earnings after taxes. C) net earnings. D) total gross earnings.
D) total gross earnings.
The entry to record a purchase of merchandise on credit includes A)a debit to Purchases and a credit to Accounts Receivable. B)a credit to Purchases and a credit to Accounts Payable. C)a debit to Accounts Payable and a credit to Purchases. D)a debit to Purchases and a credit to Accounts Payable.
D)a debit to Purchases and a credit to Accounts Payable.
To arrive at an accurate balance on a bank reconciliation statement, a service charge should be A)added to the bank statement balance. B)added to the book balance. C)deducted from the bank statement balance. D)deducted from the book balance.
D)deducted from the book balance.
In a firm that uses special journals, the receipt of a credit memorandum from a supplier for merchandise that was damaged but can be sold at a reduced price is recorded in the A)cash payments journal. B)cash receipts journal. C)purchases journal. D)general journal.
D)general journal.
In a firm that uses special journals, the return of damaged merchandise to a supplier and receipt of a credit memorandum is recorded in the A)cash payments journal. B)cash receipts journal. C)purchases journal. D)general journal.
D)general journal.
Credit terms of 1/10, n/30 mean that: A)payment in full is due 10 days after date of the invoice. B)a 1% discount may be taken for up to 30 days. C)if the invoice is paid within 10 days of its date, a 1% discount may be taken; otherwise the total amount is due in 20 days. D)if the invoice is paid within 10 days of its date, a 1% discount may be taken; otherwise the total amount is due in 30 days.
D)if the invoice is paid within 10 days of its date, a 1% discount may be taken; otherwise the total amount is due in 30 days.
Credit terms of 2/20, n/30 mean that: A)payment in full is due 20 days after date of the invoice. B)a 1% discount may be taken for up to 30 days. C)if the invoice is paid within 20 days of its date, a 2% discount may be taken; otherwise the total amount is due in 20 days. D)if the invoice is paid within 20 days of its date, a 2% discount may be taken; otherwise the total amount is due in 30 days.
D)if the invoice is paid within 20 days of its date, a 2% discount may be taken; otherwise the total amount is due in 30 days.
a) increases in assets.
Debits are used to record a) increases in assets. b) increases in revenue. c) increases in owner's equity. d) increases in liabilities.
A ledger is sometimes referred to as a record of original entry. True / False
False
An accounting system is designed to accumulate and classify data about a firm's financial affairs and summarize it in the general journal. True / False
False
Cash Purchases of merchandise are recorded in the purchases journal True / False
False
Form 941, which is used to report employee earnings, the federal income taxes withheld, and the social security and Medicare taxes, must be filed each time a firm makes a required deposit of the taxes due. True / False
False
If a business uses pre numbered purchase orders, it is not necessary to account for every purchase order. True / False
False
Sales has a Debit Balance True / False
False
Sending copies of Form W-2 to each employee marks the end of the payroll procedures for the year. True / False
False
The employer must issue each employee a Form W-2 by January 15 of the next year. True / False
False
A)cash payments journal.
In a firm that uses special journals, the issuance of a check to a supplier as a payment on account is recorded in the A)cash payments journal. B)cash receipts journal. C)purchases journal. D)general journal.
The entry to record the return of merchandise purchased on credit includes a debit to Accounts Payable and a credit to Purchases Returns and Allowances. True / False
True
A compound entry in the general journal is made to close expense accounts. True / False
True
A creditor's claim against the firm's property lasts until the debt is paid. True / False
True
A firm's accounts payable ledger may include accounts for creditors who are not suppliers of merchandise. True / False
True
After all postings have been made, the totals of the balances in the accounts receivable subsidiary ledger should equal the balance of the Accounts Receivable account in the general ledger. True / False
True
Cash Short or Over is an expense account when it has a debit balance. True / False
True
Financial statements are prepared after the trial balance is prepared. True / False
True
For statements prepared on plain paper, dollar signs are placed with the first amount in each column and with each total. True / False
True
If an employee leaves the firm before the end of the year, the employee may ask for and receive Form W-2 within 30 days after the request or after the final wage payment. True / False
True
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/False
True
In a small business, the customer accounts are usually kept in alphabetical order. True / False
True
Publication 15, Circular E contains federal income tax withholding tables. True / False
True
The FUTA tax provides benefits for employees who become unemployed. True / False
True
The amount of a check issued to a creditor is posted from the cash payments journal to the debit column of the creditor's account in the accounts payable subsidiary ledger. True / False
True
The entry to record the employer's payroll taxes would include a debit to an expense account and a credit to one or more liability accounts. True / False
True
The individual amounts in the Accounts Receivable Debit column of a sales journal should be posted to the accounts receivable subsidiary ledger, and the column total should be posted to the Accounts Receivable account in the general ledger. True / False
True
The invoice date and credit terms must be carefully recorded in the purchases journal because they determine when payment is due. True / False
True
The statement of owner's equity is prepared before the balance sheet so that the ending capital balance is available. True / False
True
The unemployment compensation tax program is often called the unemployment insurance program. True / False
True
When a firm records its payroll, the amount of federal income tax withheld from employees is entered as a liability. True / False
True
Withholding for federal income taxes places employees on a pay-as-you-go basis. True / False
True
The earnings base for the federal and state unemployment taxes are the same, the first $7,000 of an employee's earnings for the year. True/False
True - First $7,000 of earnings
Which of the following statements is correct? A) The general ledger contains the accounts that are used to prepare the financial statements. B) Some companies use the general ledger instead of a general journal. C) When entries are posted from the general journal to the general ledger, the account number is written in the Posting Reference column in the general ledger. D) When entries are posted from the general journal to the general ledger, the page number is written in the Posting Reference column in the general journal.
A) The general ledger contains the accounts that are used to prepare the financial statements.
Which of the following statements is correct? A) The general ledger contains the accounts that are used to prepare the financial statements. B) Some companies use the general ledger instead of a general journal. C) When entries are posted from the general journal to the general ledger, the account number is written in the Posting Reference column in the general ledger. D)When entries are posted from the general journal to the general ledger, the page number is written in the Posting Reference column in the general journal.
A) The general ledger contains the accounts that are used to prepare the financial statements.
If the income statement covered a six-month period ending on November 30, 2010, the third line of the income statement heading would read: A)Month Ended November 30, 2010. B)November 30, 2010. C)Six-month Period Ended November 30, 2010. D)Month of November, 2010.
C)Six-month Period Ended November 30, 2010.
Anyone can invest in a closely held corporation. True / False
False
Currently, generally accepted accounting principles are developed by the American Institute of Certified Public Accountants (AICPA) True / False
False
If an error is discovered before the entry is posted, the incorrect amount can be erased and the correct amount recorded. True / False
False
Public accountants work on the staff of federal, state, or local governmental units. True / False
False
B) Revenue
Which of the following increase owner's equity? A) Expenses B) Revenue c) Withdrawals D) Receiving cash from customers B) Revenue
Bertrand Inc. performed services for clients in the amount of $1,950 on credit. If this transaction had been posted in error to the Cash account instead of the Accounts Receivable account, what correcting entry would be necessary? A) Debit Fees Income $1,950; credit Cash $1,950 B) Debit Cash $1,950; credit Accounts Receivable $1,950 C) Debit Accounts Receivable $1,950; credit Cash $1,950 D) Debit Accounts Receivable $1,950; credit Fees Income $1,950
c) Debit Accounts Receivable $1,950; credit Cash $1,950
The Sales Returns and Allowances account is presented A)on the balance sheet as a deduction from Accounts Receivable. B)on the income statement as a deduction from Sales. C)on the income statement as an addition to Sales. D)on the balance sheet as a deduction from Capital.
B)on the income statement as a deduction from Sales.
False
A ledger is sometimes referred to as a record of original entry. True/ False
Bertrand Inc. purchased some shop equipment for $6,500 in cash. By mistake, the journal entry debited the Office Equipment account rather than the Shop Equipment account. What correcting entry would be necessary? A) Debit Shop Equipment $6,500; credit Office Equipment $6,500 B) Debit Office Equipment $6,500; credit Shop Equipment $6,500 C) Debit Cash $6,500; credit Shop Equipment $6,500 D) Debit Office Equipment $6,500; credit Cash $6,500
A) Debit Shop Equipment $6,500; credit Office Equipment $6,500
Hour Place Clock Shop sold a grandfather clock for $2,250 subject to a 9% sales tax. The entry in the sales journal will include a credit to Sales for A)$2,250.00 B)$2,092.50 C)$2,452.50 D)$2,362.00
A)$2,250.00
Which financial statement is reported as of a specific date? A)Balance Sheet B)Statement of Owner's Equity C)Income Statement D)Statement of Changes in Financial Position
A)Balance Sheet
Tax accounting involves tax compliance and A)tax evaluation. B)tax planning. C)tax configuration. D)tax obfuscation.
B)tax planning.
If a firm does not have a sales returns and allowances journal, the entries for these transactions are made in A)the sales journal. B)the general journal. C)the cash receipts journal. D)the cash payments journal.
B)the general journal.
Which of the following statements is not correct? A)Postings to the accounts receivable subsidiary ledger are usually made once a month on the last day of the month. B)Before any posting to the subsidiary ledger takes place, the equality of the debits and credits recorded in the sales journal are proved by comparing the column totals. C)Before any posting to the general ledger takes place, the equality of the debits and credits recorded in the sales journal are proved by comparing the column totals. D)When special journals are used, postings to the accounts receivable account in the general ledger are usually made once a month on the last day of the month.
A)Postings to the accounts receivable subsidiary ledger are usually made once a month on the last day of the month.
When an entry is made in the general journal: A) assets should be listed first. B) accounts to be debited should be listed first. C) accounts to be increased should be listed first. D) accounts may be listed in any order.
B) accounts to be debited should be listed first.
In a firm that uses special journals, the collection of sums on account from credit customers is recorded in the A)cash payments journal. B)cash receipts journal. C)sales journal. D)purchases journal.
B)cash receipts journal.
The first two closing entries to the Income Summary account indicate a debit of $53,000 and a credit of $64,000. The third closing entry would be A)debit Capital $11,000; credit Income Summary $11,000 B)debit Income Summary $11,000; credit Capital $11,000 C)debit Revenue $64,000; credit Expenses $53,000 D)debit Income Summary $11,000; credit Drawing $11,000
B)debit Income Summary $11,000; credit Capital $11,000
The Financial Accounting Standards Board is responsible for A)auditing financial statements. B)developing generally accepted accounting principles. C)establishing accounting systems for businesses. D)making recommendations to the Securities and Exchange Commission.
B)developing generally accepted accounting principles.
The Financial Accounting Standards Board is responsible for A)auditing financial statements. B)developing generally accepted accounting principles. c)establishing accounting systems for businesses. D)making recommendations to the Securities and Exchange Commission.
B)developing generally accepted accounting principles.
The Balance Sheet heading includes each of the following except: A)firm's name. B)firm's address. C)title of the report. D)date of the report.
B)firm's address.
The area of accounting that involves the preparation of internal reports for a firm's executives and the analysis of the data in these reports to aid in decision making is known as A)financial accounting. B)managerial accounting. C)auditing. D)cost accounting.
B)managerial accounting.
The journal entry to record the payment of a monthly utility bill would include A) a debit to Utilities Expense and a credit to Capital. B) a debit to Capital and a credit to Cash. C) a debit to Utilities Expense and a credit to Cash. D) a debit to Utilities Expense and a credit to Accounts Payable.
C) a debit to Utilities Expense and a credit to Cash.
A retailer recorded the following in June: cash sales $2,000; credit sales, $9,000; sales returns and allowances, $1,000. Assuming the sales tax rate is 7 percent, the entry to record the sales tax payment includes a debit to Sales Tax Payable for A)$560. B)$630. C)$700. D)$770.
C)$700.
Which financial statement is a representation of the accounting equation? A)Income Statement B)Statement of Owner's Equity C)Balance Sheet D)Profit and Loss Statement
C)Balance Sheet
On the Income Statement, Sales Returns and Allowances have the effect of A)Increasing total revenue B)Increasing total expenses C)Decreasing total revenue D)Decreasing total expenses
C)Decreasing total revenue
Which of the following is NOT a type of information communicated by the financial statements? A)The equity, or value, of the business B)The amount spent on costs (expenses) of the business C)The types of products and services the business provides D)The amount of revenue earned by the business
C)The types of products and services the business provides
To find the balance due from an individual customer, the accountant would refer to A)the sales journal. B)the Sales account in the general ledger. C)the accounts receivable subsidiary ledger. D)the Accounts Receivable account in the general ledger.
C)the accounts receivable subsidiary ledger.
After all postings have been made, the total of the schedule of accounts receivable should equal: A)the balance of the Sales account. B)the total of the Accounts Receivable Debit column in the sales journal. C)the balance of the Accounts Receivable account in the general ledger. D)the total of all sales on account for the accounting period.
C)the balance of the Accounts Receivable account in the general ledger.
The amount used by wholesalers to record sales in its sales journal is A)the retail price. B)the list price. C)the net price. D)the original price.
C)the net price.
The income statement shows A)the financial position of a business on a specific date. B)revenue and owner's equity. C)the results of operations for a period of time. D)the total value of the business.
C)the results of operations for a period of time.
An independent accountant who provides accounting services to the public for a fee is a A)CIA B)CFE c)CMA D)CPA
D) CPA
Hugh Snow returned merchandise to Farley Co. The entry on the books of Farley company to record the return of merchandise from Hugh Snow would include a: A)Debit Accounts Payable B)Credit to Purchase Returns and Allowances C)Debit to Account Receivable D)Debit Sales Returns and Allowances
D)Debit Sales Returns and Allowances
Which of the following statements is not correct? A)Before the Income Summary account is closed, its balance represents the net income or net loss for the accounting period. B)The Income Summary account is a temporary owner's equity account. C)The Income Summary account is used only at the end of an accounting period to help with the closing procedure. D)The owner's drawing account is closed to the Income Summary Statement.
D)The owner's drawing account is closed to the Income Summary Statement.
The journal entry to record the purchase of equipment for a $160 cash down payment and a balance of $520 due in 30 days would include: A) a debit to Equipment for $160 and a credit to Accounts Payable for $520. B) a debit to Equipment for $680 and a credit to Cash for $680. C) a debit to Equipment for $160 and a credit to Cash for $160. D) a debit to Equipment for $680, a credit to Cash for $160, and a credit to Accounts Payable for $520.
D)a debit to Equipment for $680, a credit to Cash for $160, and a credit to Accounts Payable for $520.
The Sales account is classified as A)a liability account. B)an asset account. C)a contra account. D)a revenue account.
D)a revenue account.
The current worth of an asset is its A)original cost. B)cost less accumulated depreciation. C)asking price when put up for sale. D)fair market value.
D)fair market value.
In a firm that uses special journals, the acceptance of a return of merchandise from a credit customer is recorded in the A)cash receipts journal. B)sales journal. C)cash payments journal. D)general journal.
D)general journal.
The financial affairs of a business and the financial affairs of the owners should be: A)combined in the firm's accounting records. B)reported in different parts of the firm's accounting records. c)combined only if the owner wants them to be. D)kept totally separate.
D)kept totally separate.
The amount of the trade discount taken by the customer is recorded as a(n) A)asset. B)liability. C)expense. D)sales recorded net of trade discounts.
D)sales recorded net of trade discounts.
Tax planning includes A)preparing tax returns. B)auditing tax returns. C)correcting tax returns. D)suggesting actions to reduce tax liability.
D)suggesting actions to reduce tax liability.
Tax planning includes: A)preparing tax returns. B)auditing tax returns. c)correcting tax returns. D)suggesting actions to reduce tax liability.
D)suggesting actions to reduce tax liability.
The SEC uses financial information to determine a company's tax base. True / False
False
The owner's capital account is closed at the end of each accounting period. True / False
False
Transactions are recorded in either a journal or a ledger, but not in both. True/False
False
Public accountants work on the staff of federal, state, or local governmental units. True / False
False - They support the public as CPAs and tax prep
B)Accounts Payable
If assets are numbered from 100-199, which of the following accounts would not be given a number in the 100 series? A)Supplies B)Accounts Payable c)Prepaid Rent D)Accounts Receivable
The entry to close the revenue account Fees Income requires a debit to that account. True / False
True
Which of the following groups contain only accounts that normally have credit balances? A) Accounts Receivable and Fees Income B) Salaries Expense and Accounts Payable c) Fees Income and John Smith, Capital D) Accounts Payable and Equipment
c) Fees Income and John Smith, Capital
Owners are not personally responsible for the debts of the business if the form of business organization is A)the sole proprietorship. B)the partnership. c)the corporation. D)the nonprofit organization.
c)the corporation.
