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Board Review > Accounting & Small Business > Flashcards

Accounting & Small Business Flashcards

1
Q

A temporary owner’s equity account used to record the earning of revenue.

A

sales

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2
Q

The process of ledger recording of information is called

A

posting

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3
Q

The profit and loss statement may be called

A

income and expense statement

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4
Q

The proprietorship of a business may be decreased by

A

expenses and withdrawals of assets from the business by the owner

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5
Q

The purchase journal is used for

A

recording purchase of an article on credit

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6
Q

The records of a business are first written in a book called the

A

journal

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7
Q

The selling price is determined by the cost of an item with an amount added to it. That amount added is called

A

mark-up

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8
Q

The sole owner of a business is the

A

proprietor

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9
Q

The time an owner allows for the payment of a scale is a/an

A

terms

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10
Q

The total of sales of funeral services would be shown on the

A

income statement

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11
Q

Which of the following is not a current asset?

  • cash
  • land
  • inventory
  • accounts receivable
A

land

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12
Q

According to GAAP, a business is accounted for as a separate entity, separate and distinct from its owners. T/F

A

true

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13
Q

A limited partnership allows an individual to invest and make management decisions in a business without incurring the liability associated with a regular partnership. T/F

A

false

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14
Q

A partnership is limited to two individuals who both participate in the profits of the business according to some agreement. T/F

A

false

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15
Q

A partnership is not a legal entity for most purposes. T/F

A

true

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16
Q

A book for entry of a particular type of transaction is a/an

A

special journal

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17
Q

Accounting information is used only by the owners of a business. T/F

A

false

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18
Q

A book for recording the buying of goods on credit is called a

A

purchase journal

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19
Q

After all adjusting and clearing entries are posted, the accounting cycle has been completed. T/F

A

false

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20
Q

A check that has been issued but has not yet been paid is a/an

A

outstanding check

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21
Q

An incoming partner is liable for partnership debts contracted before his entry into the business. T/F

A

true

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22
Q

A CR side entry on a revenue account indicates the account has been

A

increased

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23
Q

An individual owning a funeral home as a proprietorship reports business income on his own income tax returns and is generally not liable for debts incurred by the business. T/F

A

false

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24
Q

A credit balance to show what is owed is normally shown as a/an

A

accounts payable

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25
Q

Debit memorandums originate with the buyer, while credit memorandums originate with the seller. T/F

A

false

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26
Q

A customers written promise to pay a sum of money to the business at a future date is called

A

note receivable

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27
Q

A decrease in net worth because of excess of costs and expenses over income is called

A

loss

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28
Q

A CR entry on an expense account indicates the account has been

A

decreased

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29
Q

A ledger is a book of

A

accounts

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30
Q

This group of accounts are credited to increase

A

liabilities and capital

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31
Q

This group of accounts when increased is debited

A

assets and expenses

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32
Q

To establish petty cash, you

A

DR petty cash and CR cash

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33
Q

Total debits and credits differences in a “T” account is the

A

balance

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34
Q

When a bank has been ordered to make payment on a check or draft, the bank is the

A

drawee

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35
Q

When a business keeps merchandise for sale, it is called

A

inventory

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36
Q

When a business owns things of value, they are classed as

A

assets

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37
Q

When a check or draft is made, the person who signs is known as

A

drawer

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38
Q

When a corporation makes a distribution of profits to its stockholders as declared by the board of directors, it is called

A

dividend

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39
Q

When a fixed asset is no longer of any value, the amount it will sell for is called

A

cost scrap value

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40
Q

Disbursements from petty cash funds are recorded in the accounts as they are made. T/F

A

false

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41
Q

Expenses incurred but not yet paid are called accrued expenses. T/F

A

true

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42
Q

Generally, you may only issue as many shares of total stock as you can sell or exchange in a one-year period. T/F

A

false

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43
Q

If the credit balance exceeds the debit balance in the income statement columns, the difference is net income for the period. T/F

A

true

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44
Q

If the total of the left side of an account exceeds the total of its right side, a credit balance is said to exist. T/F

A

false

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45
Q

Increases in all liability accounts are recorded by credits. T/F

A

true

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46
Q

A liability is something a funeral director

A

owes

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47
Q

Which government act regulates public entry and exit accommodations of the funeral home?

A

Americans with Disabilities Act

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48
Q

After completing interviews to hire a new employee and a decision is made not to hire a person because they were over the age of 55, this would be a violation of what government act?

A

Age Discrimination in Employment Act

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49
Q

What should be considered for business location?

A

room for expansion

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50
Q

What type of valuation method, to determine a selling price, is used by calculating the worth the business as if all tangible assets were sold at auction?

A

liquidation value approach

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51
Q

What is a disadvantage of the Limited Liability Company form of business?

A

if improperly structured, can be taxed as a “C” corporation

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52
Q

Making even small disbursements from cash receipts weakens internal control over cash. T/F

A

true

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53
Q

A loan from your bank which is secured by property is

A

a mortgage payable

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54
Q

Ordinary corporation stock usually entitles the owner to one vote for each ten shares he acquires plus the right to dividends. T/F

A

false

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55
Q

A mortgage payable for this month is a

A

current liability

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56
Q

Partnership property is not protected against the creditors of one partner. T/F

A

true

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57
Q

A person making a check or draft ordering payment to be made is the

A

drawer

58
Q

A person owning a corporation’s stock is called a

A

stakeholder

59
Q

An official form which gives what is owed, what is owned, and what the owner is worth is the

A

balance sheet

60
Q

A special fund for use is disbursing small sums of money is called a

A

petty cash

61
Q

A tangible asset is a/an

A

capable of being touched

62
Q

A total usually written in small pencil figures under the last entry of a column is

A

footing

63
Q

A written promise to pay money to another person or business at a specific or determinable time is a/an

A

promissory note

64
Q

When a fixed asset loses value due to wear over time, it is called

A

depreciation

65
Q

When a funeral coach is purchased on credit, you

A

DR casket coach and CR accounts payable

66
Q

When a liability account has a credit entry, it indicates the account has been

A

increased

67
Q

When a liability account has a credit entry, it indicates the account has been

A

increased

68
Q

When a liability account is DR, this indicates the account has been

A

decreased

69
Q

When a proprietorship account is DR, it indicates the account has been

A

decreased

70
Q

When all the accounts are listed showing their arrangement in the ledger, the listing is called the

A

chart of accounts

71
Q

When an expense account is debited, it indicates the account has been

A

increased

72
Q

When an income account is credited, it indicates that the account has been

A

increased

73
Q

When business transactions result in increasing revenue, it is

A

income

74
Q

Revenue accounts are closed to the income summary account by crediting revenues and debiting the income summary. T/F

A

false

75
Q

Revenues usually increase both assets and owner equity. T/F

A

true

76
Q

The balance sheet lists the assets of a business and the claims against those assets. T/F

A

true

77
Q

The ending inventory of merchandise of one fiscal period is always the beginning inventory of the next period. T/F

A

true

78
Q

The FIFO method of inventory valuation assigns the costs of the oldest units to the ending inventory. T/F

A

false

79
Q

The gross profit method may be used to estimate the cost of inventory without the taking of a physical inventory. T/F

A

true

80
Q

The left side of all accounts is referred to as the debit side. T/F

A

true

81
Q

Accounts payable is a/an

A

liability account

82
Q

The mechanics of double-entry bookkeeping require that for each transaction, total debits be equal in amount to total credits. T/F

A

true

83
Q

Accounts receivable is a/an

A

asset account

84
Q

The more people responsible for a given task, the effective the control. T/F

A

false

85
Q

Accounts which you are unable to collect are

A

bad debts

86
Q

The net worth of a firm is equal to its owner equity. T/F

A

true

87
Q

An account called accounts payable will be shown on the

A

balance sheet

88
Q

An official paper showing quantity, description, prices of items, total amount of purchase and terms of payments is called

A

invoice

89
Q

Any debts that are not due and payable within a year are called

A

long-term liability

90
Q

Any excess of current assets over current liabilities is called

A

net working capital

91
Q

Any income received by not yet having services rendered is

A

deferred income

92
Q

Anyone (person or company) who is to receive payment on a promissory note, check, draft, or money order is a

A

payee

93
Q

Anyone who owes debts is a

A

debtor

94
Q

The payment of a liability increases assets and the owner’s equity. T/F

A

false

95
Q

The principal of a note multiplied by the interest rate equals the interest on a note. T/F

A

false

96
Q

The purchases account, used when merchandise is purchased for resale, shows whether the merchandise is on hand or has been sold. T/F

A

false

97
Q

The purpose of the purchases account is to accumulate and summarize the cost of merchandise purchased during the period. T/F

A

true

98
Q

The terms owner equity and liabilities are synonymous. T/F

A

false

99
Q

The total assets of a firm are restricted to the amount that owners are able to provide with their own resources. T/F

A

false

100
Q

Anything of value owned is a/an

A

asset

101
Q

Theoretically, a bad debt becomes an expense when it is discovered to be uncollectible. T/F

A

true

102
Q

To decrease an asset balance, you debit the account. T/F

A

false

103
Q

Anything owed by a firm is

A

liabilities

104
Q

Currency and coin kept in small amounts for payment of incidentals is called

A

petty cash

105
Q

To the purchaser, the total cost of the goods acquired is always the amount paid to the supplier. T/F

A

false

106
Q

A deduction allowed by the seller of goods or by the provider of services in order to motivate the customer to pay within a specified time.

A

cash discount

107
Q

The quantity to be purchased which minimizes total costs is the

A

Economic Order Quantity (EOQ)

108
Q

The average time required to sell inventory

A

age of inventory

109
Q

An incentive offered to a buyer that results in a decreased cost per unit of goods or materials when purchased in greater numbers.

A

quantity discount

110
Q

A trading arrangement in which a seller sends goods to a buyer or reseller who pays the seller only when the goods are sold.

A

consignment

111
Q

You decide to utilize the Fixed Multiple method of price determination (mark-up = 300%) in your funeral home. You purchased two caskets today, one that cost you $920 and one that cost you $1100, what will be the retail price for these two caskets?

A

$2760 and $3300

112
Q

A method of pricing by which each unit of service and merchandise is priced separately.

A

itemization

113
Q

A price determination method whereby the wholesale cost is multiplied by a constant factor.

A

fixed multiple markup

114
Q

A pricing method where there is an inverse relationship between the markup and the wholesale cost of the merchandise.

A

declining price

115
Q

A pricing method which groups together selected services and/or merchandise.

A

package pricing

116
Q

A method of price quotation in which one price includes both service and casket.

A

unit pricing

117
Q

A method of price quotation showing separately the price of the service to be rendered and the price of the casket.

A

bi-unit pricing

118
Q

A business or company that makes or manufactures a product is called a

A

manufacturing business

119
Q

When a company buys a product from another business and sells it to its customers it is referred to as a _______ business.

A

retailer or merchandising

120
Q

When a business provides a particular service to its customers it is aptly referred to as a ____ business.

A

service

121
Q

A one owner business, the owner is responsible for reporting business income or loss on their own personal income tax.

A

sole proprietorship

122
Q

A business structure which combines aspects of partnerships with the limited liability of a corporation.

A

limited liability company

123
Q

A business formation that consists of two or more people that have combined their resources to carry on as co-owners of the lawful enterprise.

A

partnership

124
Q

A business organization that has a distinct existence separate and apart from the existence of its individual members.

A

corporation

125
Q

A statistical study of human populations regarding size, density, distribution, composition, and income

A

demographics

126
Q

A summary of how a business intends to organize and implement activities required in order to be successful.

A

business plan

127
Q

A tangible long-term operating asset.

A

fixed asset

128
Q

Long-term capital invested in a small business.

A

fixed capital

129
Q

Makes it illegal to discriminate against a person with a disability in private companies and state and local governments.

A

Americans with Disabilities Act of 1990

130
Q

Prohibits discrimination against protected veterans by covered federal contractors and subcontractors.

A

Vietnam Veterans’ Readjustment Assistance Act of 1974

131
Q

A qualification that is necessary for the job.

A

Bona Fide Occupation Qualification

132
Q

The number of times average inventory has been sold or used during a period.

A

inventory turnover

133
Q

The difference between merchandise cost and retail selling price.

A

markup

134
Q

A reduction of selling price below the original selling price.

A

markdown

135
Q

Planning and executing the development, pricing, promotion, and distribution of a firm’s goods and services.

A

marketing

136
Q

The process of making the public aware of the products and services offered by a business.

A

advertising

137
Q

Actions taken by a business entity in promoting goodwill between the organization and the public, the community, its employees and customers.

A

public relations

138
Q

A brand is a name, term, design, or symbol (or combination of these) that identifies the products and/or services of a seller or group of sellers.

A

branding

139
Q

A formal financial statement that reports earning activities for a specified time.

A

income statement

140
Q

A financial statement that presents a firm’s assets, liabilities, and owner’s equity at a particular point in time.

A

balance sheet

141
Q

The computation of financial data to analyze and compare a firm’s economic performance and to expose business risks.

A

ratio analysis

142
Q

The difference between total revenue and total expenses when total expenses are greater.

A

net loss

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