Accounting Comprehensive Exam Flashcards
Journal in which the transaction should be recorded:
Purchased store supplies on credit for $485
Purchases Journal
Journal in which the transaction should be recorded:
Sold $230 of merchandise to a customer on account
Sales Journal
Journal in which the transaction should be recorded:
A customer returned a $260 item purchased on account
General Journal
Journal in which the transaction should be recorded:
Paid supplier on due date for merchandise originally purchased on account
Cash Disbursements Journal
Journal in which the transaction should be recorded:
Recorded depreciation for the year
General Journal
Journal in which the transaction should be recorded:
Returned defective merchandise originally purchased on account
General Journal
Journal in which the transaction should be recorded:
Paid the $540 monthly utilities
Cash Disbursements Journal
Journal in which the transaction should be recorded:
The owner invested $10,000 in the business
Cash Receipts Journal
Balance sheet category:
Current assets
Accounts Receivable
Balance sheet category:
Current liabilities
Interest Payable
Balance sheet category:
Long-tern liabilities
Bonds payable in more than one year
Balance sheet category:
Owner’s equity
Owners name, Capital
Balance sheet category:
Plant and equipment
Buildings
Balance sheet category:
Investments
Shares of stock in another company
Balance sheet category:
Intangible assets
Goodwill
Balance sheet category:
Long-term liabilities
Bonds payable in more than one year
Balance sheet category:
Owner’s equity
Owners name, Capital
Balance sheet category:
Current liabilities
Unearned Revenues
Balance sheet category:
Investments
Stocks
Balance sheet category:
Intangible assets
Patents
Balance sheet category:
Plant and equipment
Accumulated Depreciation
Balance sheet category:
Current assets
Building
The statement containing three sections which describe the operating, investing, and financing activities of a business during a period
Statement of Cash Flows (CF)
The statement that lists the types and amounts of the assets of a business on a given date
Balance Sheet (BS)
The statement that explains the items affecting owner’s equity from the beginning of a period to the end of the period
Statement of Changes in Owner’s Equity (COE)
The statement that shows all expenses incurred by a business during a specific period of time
Income Statement (IS)
Product warranties are usually treated as contingent liabilities. (T/F)
True
Federal income taxes are withheld from each paycheck during the year until the tax-exempt limit is reached. (T/F)
False
Deferred income taxes result from temporary differences between taxable income on the tax return and income before taxes on the income statement. (T/F)
True
The costs of patents are amortized over 40 years. (T/F)
True
The process of systematically writing off the cost of an intangible asset to expense over its estimated useful life is:
Amortization
If a business’s inventory on hand was destroyed by fire, but the accounting records were saved, the method that would probably be used to estimate the amount of inventory lost would be the:
Gross profit method
What is the final step in the accounting cycle?
Preparing a post-closing trial balance
A condition in which, because of new inventions and improvements, a plant asset can no longer be used to produce goods or services with a competitive advantage is called:
Obsolescence
An error is indicated if the following account has a balance appearing on the post-closing trial balance:
Depreciation Expense, Law Library
A debit is used to record:
A increase in the balance of the owner’s withdrawals account
The portion of a corporation’s equity that represents its cumulative net incomes, less net losses and dividends, is called:
Retained earnings
A company that uses a Sales Journal, a Purchase Journal, a Cash Receipts Journal, a Cash Disbursements Journal, and a General Journal purchased a truck and signed a promissory note for the purchase price. In which journal should the transaction be recorded?
General Journal
When a company updates the Merchandise Inventory account in the process of making closing entries, one closing entry will include a credit to Merchandise Inventory equal to the:
Amount of beginning inventory
Which of the following statements is incorrect?
- Prepaid expenses, depreciation, and unearned revenues involve previously recorded assets and liabilities
- Accrued expenses and accrued revenues involve assets and liabilities that have not yet been recorded
- Prepaid expenses, depreciation, and unearned revenues require adjusting entries to record the effects of the passage of time
- Adjusting entries are used to record both accrued expenses and accrued revenues
All of the following statements are correct
Double-entry accounting is:
- An accounting system in which the sum of the debit account balances in the ledger must always equal the sum of the credit account balances
- An accounting system which uses the accounting equation, A = L + OE
- An accounting system in which every transaction affects and is recorded in at least two accounts
- An accounting system in which errors cannot always be avoided
When a market value decline occurs in a company’s portfolio of long-term investments in debt and equity securities available for sale, the company would report this decline on the:
Balance sheet
When a single-column Sales Journal’s Amount column is totaled at the end of the month, the total is:
Debited to Accounts Receivable and credited to Sales
Using special journals in addition to a General Journal:
Saves posting labor
Cash investments by owners are listed on which statement?
???
Instead of extending credit to customers, a business may allow customers to use credit cards issued by banks or credit card companies because:
- The business does not have to evaluate the credit standing of each customer
- The business often receives cash from the credit card company sooner than if credit were extended to the customer
- The business avoids the risk of extending credit to customers who cannot pay
The Stanley Company’s beginning inventory for 1991 was $32,000. During 1991 Stanly made purchases of $24,700 and returned $400 of merchandise. Purchases discounts totaled $3,600. If Stanley’s ending inventory was $30,000 for 1991, what was the cost of goods sold?
$22,700
The method of estimating bad debts expense that involves classifying accounts receivable by how long they have been outstanding, and which is usually the most reliable, is the:
Aging of accounts receivable method
What would be reported as a liability in the financial statements or in the footnotes?
- Discounted notes receivable
- Deferred income taxes
- Potential legal claims
- Product warranties
An asset, such as cash, that is easily converted into other types of assets or used to buy services or pay liabilities is a:
Liquid asset
Brandenburg Corp. depreciated a machine that cost $40,000 on a straight-line basis for three years under the assumption it would have a five-year life and a $6,000 trade-in value. At that point, the manager realized that the machine had three years of remaining useful life, after which it would have an estimated $4,600 trade-in value. Determine the amount of depreciation to be charged against the machine during each of the remaining years in its life.
$5,000
Which of the following assets is not depreciated?
- Boats
- Land
- Land improvements
- Professional library
Land
Accounts that are closed at the end of each accounting period (the revenue, expense, Income Summary, and withdrawals accounts) are known as:
???
If the liabilities of a business increased $8,000 during a period of time and owner’s equity in the business decreased $3,000 during the same period, the assets of the business must have:
Increased $5,000
Gross profit (from sales) is:
The difference between net sales and the cost of goods sold
