Acct Fundamentals Assessment Flashcards
In a sole proprietorship, the owner is NOT responsible for the debts of the business if the company is unable to pay. (T/F)
False
A partnership has __________ owners.
two or more
Assets always equal debts of the business plus the financial interest of the owner. (T/F)
True
The property that a business owns is referred to as its __________.
assest
A debit has the same impact on expenses and liabilities. (T/F)
False
A debit increases expenses but decreases liability accounts.
Expense accounts are increased on the ____________________ side of the T account.
debit
Account names are written in the general journal exactly as they appear in the chart of accounts. (T/F)
True
The process of recording transactions in a journal is referred to as ____________________.
journalizing
If the adjustment for supplies used is not recorded, the firm’s assets will be overstated. (T/F)
True
Accumulated depreciation is classified as a(n) ___________ account.
contra-asset
On a worksheet, the adjusted balance of Supplies is extended from the Adjusted Trial Balance Debit column to the ___________ Debit column.
Balance Sheet
The entry to close an expense account requires a credit to the Income Summary account. (T/F)
False
(The entry to close an expense account will include a credit to the expense account, with an offsetting debit to the income summary account.)
If the Income Summary account has a debit balance before it is closed, the firm experienced ____________________ from operations.
a net loss
After all the closing entries are posted to the ledger, the Income Summary account will have ____________________ balance.
a zero
A sales return or a sales allowance is usually recorded in the sales journal. (T/F)
False
(A sales return or a sales allowance may be recorded in either a general journal or a special sales returns and allowances journal, depending on the volume of sales returns and allowances, but they are not recorded in the sales journal.)
The quantity of goods kept on hand to sell to consumers is called _________________________.
merchandise inventory
The Purchases Returns and Allowances account has a normal debit balance. (T/F)
False
Purchase returns and allowances is a contra cost of goods sold account. Therefore, it has a normal credit balance.
The amount of an allowance received from a creditor is posted to the __________ column of the creditor’s account in the accounts payable subsidiary ledger.
debit
After a multicolumn special journal such as a cash receipts journal is totaled, it should be proved to be sure that the debits and credits in the journal are equal. (T/F)
True
Checks issued by a firm and entered in its accounting records that have not been paid by the bank are called __________ checks.
outstanding
To arrive at the accurate balance on a bank reconciliation statement, it is necessary to deduct any NSF checks from the bank statement balance. (T/F)
False
(To arrive at the accurate balance on a bank reconciliation statement, it is necessary to deduct any NSF checks from the book balance, not the bank statement balance.)
To transfer ownership of a check from one party to another, it is necessary to __________ the check.
endorse
The overtime rate is usually one and one-half times the regular hourly rate. (T/F)
True
If an employee works for more than one employer during the year, the social security tax is deducted and matched by only one employer. (T/F)
False
(If an employee works for more than one employer during the year, the social security tax is deducted and matched by each employer.)
A(n) __________ is paid by the company to carry out a specific task or job but is not under the direct supervision, control, and direction of the company.
independent contractor
A worker who is paid an agreed amount for each week or month or year, regardless of the actual hours worked, is said to be paid on a(n) __________ basis.
salary
The amount of social security tax withheld depends on an employee’s gross earnings, marital status, and number of withholding allowances. (T/F)
False
Federal law requires that social security, Medicare, and federal income taxes be deducted from the gross pay of most employees. (T/F)
True
Medicare taxes are levied in an equal amount on both employers and employees. (T/F)
True
Once an employee’s year-to-date wages reach a certain amount prescribed by law, social security tax is no longer withheld. (T/F)
True
Multiple copies of Form W-3 are provided to each employee by January 31 for the previous calendar year’s earnings. (T/F)
False
(Multiple copies of Form W-2 are provided to each employee by January 31 for the previous calendar year’s earnings. Form W-3 is submitted with Forms W-2 to the Social Security Administration.)
If an employee leaves the firm before the end of the year, the employee may ask for and receive a Form W-2 within 30 days after the request or after the final wage payment. (T/F)
True
The entry to record a payroll tax that is incurred by the employer would include a debit to a(n) __________ account.
expense
Form 940 must be filed __________ time(s) a year.
one
Both the employer and the employee are responsible for paying…
Social Security and Medicare.
After the closing entries are posted, the balance of the owner’s capital account agrees with the amount of owner’s equity shown on the balance sheet for the period. (T/F)
True
The ____________________ is prepared to make sure that the general ledger is in balance after adjusting and closing entries have been recorded and posted.
post-closing trial balance
Under a periodic inventory system, the Merchandise Inventory account is debited when goods are purchased for resale and credited when goods are sold and delivered to customers. (T/F)
False
(All purchases of merchandise are debited to the Purchases account, while all sales of merchandise are credited to the Sales account.)
The account “allowance for doubtful accounts” is a contra-revenue account. (T/F)
False
Allowance for Doubtful Accounts is a contra-asset account that is reported on the balance sheet.
To determine the amount of the annual depreciation, the depreciable base is divided by the __________.
useful life in years
The procedure that most nearly attains the objective of matching revenues and expenses to specific accounting periods is called the __________ basis of accounting.
accrual
Net income is recorded on the net income line in the __________ column of the _________ section of the worksheet.
credit column of the balance sheet section
The statement of owner’s equity is prepared before the balance sheet so that the ending owner’s capital balance is available for the balance sheet. (T/F)
True
After all adjusting entries are posted, the balances of the general ledger accounts should match the amounts shown in the Adjusted Trial Balance section of the worksheet. (T/F)
True
All accounts appearing in the ____________________ section of the worksheet are closed to the Income Summary account.
income statement
An adjusting entry was made for $600 of accrued salaries at the end of 2021. The adjusting entry was then reversed. To record the first payroll of 2022, which totaled $1,500, Salaries Expense should be debited for $___________________.
$1500
An income statement that has one total for all revenues and one total for all expenses is known as a…
single-step income statement
Which of the following is not a current liability? Multiple Choice • Accounts Payable • Salaries Payable • Prepaid Insurance • Interest Payable
prepaid insurance
A double line drawn under the figures in a money column shows that the computation is complete. (T/F)
True
The __________ is the financial report that shows the assets, liabilities, and owner’s equity of a business on a specific date.
balance sheet
The balance sheet shows: Multiple Choice • the results of business operations. • all revenues and expenses. • the amount of net income or loss. • the financial position of a business at a given time.
the financial position of a business at a given time.
The Balance Ledger form displays the date, description, post reference, debit, and credit for each entry. (T/F)
True
Which of the following statements is NOT correct?
Multiple Choice
• The description of a journal entry should include a reference to the source of the information contained in the entry.
• If goods are purchased on credit, the supplier’s invoice number is used as the source document for the transaction.
• The credit portion of a general journal entry is always recorded first.
• A firm should be able to trace amounts through the accounting records and back to their source documents.
The credit portion of a general journal entry is always recorded first.
(Debit is always recorded first.)
The description of a journal entry should include a reference to the source of the information contained in the entry. (T/F)
True
If goods are purchased on credit, the supplier’s invoice number is used as the source document for the transaction. (T/F)
True
The balance sheet shows…
the financial position of a business at a given time.
