Exam 1 Questions Flashcards
True or False
An accounting period is based on the balance sheet
False
A calendar year is based on the months of _____________________
January 1 - December 31
The normal financial procedures that take place over a period of time are known as:
Accounting Cycle
When journalizing a transaction, the dollar amount for the ________ is recorded first.
debit
The accounting cycle takes place in a period of time called the _____________________.
accounting period
What separates each transaction recorded in the journal?
A blank line
When we transfer the transaction from the journal to the ledger the activity is called ______________
Posting
In the ledger, how are we able to determine the balance of an account?
Subtract credit / debit (lower from higher amount) and determine the difference between the two
The list of individual accounts on the worksheet, with their balances taken from the ledger is called the _____________
Trial Balance
True or False
In the trial balance, debits and credits do not have to be equal
False
To make a correction before posting
- Draw a line through incorrect entry
- Write correct info above
- Initial it
True or False
To make a correction after posting, draw a line through the error and write the correct figure above it. Change the running balance to reflect the corrected posting
True
A business transaction occurs and generate document in what step of the accounting cycle?
1st Step
Analyze and record business transactions into a journal occurs in what step of the accounting cycle?
2nd step
In step four of the accounting cycle a(n) ________________ is prepared.
Trial Balance
Which of the following is not a part of the worksheet?
Statement of Owner’s Equity
True or False
Adjustments from the worksheet are journalized in the same journal as step 2
True
Financial statements are prepared from the ___________
Worksheet
Which of the following are not included on the balance sheet section of the worksheet?
Expenses
True or False
The income statement only includes assets and liabilities
False
True or False
The balance sheet section totals on the worksheet do not match the formal balance sheet
True
The correct formula for the straight line method of depreciation consists of:
Cost of Equipment - Residual Value
_____________________________________
Estimated years of depreciation
The Formal Income Statement lists the following two account categories:
Revenue
Expenses
When accumulated depreciation is ___________ from equipment, the balance of the equipment is then _____________
Subtracted
Decreased
Withdrawals from the Owner’s Equity account:
reduces the balance
Journalizing and posting adjusting entries occurs in step ________
7
Step 8 in the accounting cycle consists of:
Journalizing and Posting Closing entries
Preparing a post closing trial balance occurs in step __________
9
The Post Closing trial balance lists only _______________ accounts in the ledger and their balances after adjusting and closing entries have been posted
Permanent
When the closing process is complete, the accounting equation will be reduced to:
Assets = Liabilities + Ending Capital
Which endorsement consists of a mere signature and is the least secure?
Blank Endorsement
Which endorsement designates a particular person to whom payment is to be made?
Special / Full Endorsement
Which endorsement limits the liability of the endorser?
Qualified Endorsement
Which endorsement prevents the use of the instrument for anything except the stated use?
Restrictive Endorsement
The ___________ is defined as the one to whom the check is payable
Payee
The _________ is defined as the one who pays the money to the payee
Drawee
The __________ is defined as the one who writes the check
Drawer
Which is not true of overtime pay?
It only applies to your bimonthly period
It is a federal law
Anything over 40 hours must be paid as overtime
It applies to a seven-day work period
It only applies to your bimonthly period
________ is a program you pay into now for others and later others will pay you
FICA
_______ is a federal tax that you pay to support the federal government
FIT
_____________________ is paid by the employer and based on your job description rated on a scale of 1 to 10, should you become injured on the job
Worker’s Comp
This pay is based on the number of hours you work and your hourly pay
Gross Pay
2/10, n/30 means
2% discount if paid within 10 days
Net is paid in full in due within 30 days
n/10, EOM means
No discount
Must pay full within 10 days after end of month
This inventory system continually monitors the level of inventory -
Perpetual
This inventory system is taken at the end of each accounting period, the cost of unsold goods is calculated
Periodic
Revenue earned from the sale of merchandise to customers is known as
Gross Sales
_____________ is a contra-revenue account with a debit balance
Sales Returns and Allowances (SRA)
The formula for Net Sales is
Gross sales - Sales Discounts - SRA = Net Sales
The sale of merchandise on account (EOM) is recorded in the special journal known as _____________
Sales Journal
Paying cash is recorded in the special journal known as _______________
Cash Payments Journal
Receiving cash from any source is recorded in the special journal known as ____________
Cash Receipts Journal
Buying supplies / merchandise on account is recorded in the special journal known as ________________
Purchases Journal
A ledger that contains only an account of a single type and is not listed on the chart of accounts is known as a _______________
Subsidiary Ledger
The sum of the accounts receivable subsidiary ledger will equal the ending balance in accounts receivable, the controlling account in the general ledger. This is known as ____________
Proving
When recording from the Sales Journal to the Accounts Receivable Subsidiary Ledger, which of these are true?
All of the above
The Posting at EOM from the Sales Journal to the General Journal includes:
All of the above
An account in the general ledger that accumulates the amount of sales tax owed to the government
Sales Tax Payable
Sales Tax ___________ is a new account, it is a liability account in the general ledger with a credit balance
Payable
The __________ account records all merchandise bought for resale. This account has a debit balance and is classified as a cost
Purchases
The account that records a decrease in a buyer’s cost is a contra-cost account called the ___________ account
Return and Allowances
The account that records a company’s discount is called the _____________ account
Purchases Discount
The formula for Net Purchases is:
Purchases - Returns & Allowances - Purchases Discounts = Net Purchases
Goods transported in bulk by truck, train, ship, or plane are known as ____________
Freight
The shipping method in which the seller pays shipping charges and legal title passes to the buyer when goods reach their destination is known as _____________
FOB Destination
The shipping method in which the buyer pays shipping charges and legal title passes to buyer when goods are shipped is known as ___________
FOB Shipping Point
Which of the following are a component of the final Income Statement
All of the above
True or False
Additional investment(s) by the owner would be added to his or her beginning capital amount
True
True or False
The statement of owner’s equity is the same for a merchandise business as for a service firm
True
