midterm

Question 1

Under periodic inventory system, “___” is used to describe the products that have been purchased and intended for sale

Answer 1

Purchases

Question 2

Under perpetual inventory system, account title used to describe the products for sale is “_____”

Answer 2

Merchandise Inventory

Question 3

Normal balance is credit

they are contra accounts : deduction from the Purchases account (2)

Answer 3

Purchase Returns

Purchase Allowances

Question 4

is a purchase reduction from a published list.

Granted at point of sale hence immediately deducted from the list price

Answer 4

A trade discount

Question 5

This discount is offered to encourage prompt payment

Answer 5

Cash Discount

Question 6

Cash Discount of Seller

Answer 6

Sales Discount

Question 7

Cash Discount of Buyer

Answer 7

Purchase Discount

Question 8

Is a tax levied by the government to certain providers of goods and services.

Answer 8

VALUE-ADDED TAX OR VAT

Question 9

Annual gross revenue should exceed _______ before the company is required to pay this privilege tax

Answer 9

P1,919,500

Question 10

type of taxes

Answer 10

input

output

Question 11

types of VAT

Answer 11

inclusive

exclusive

Question 12

List of all accounts with their respective debit or credit balances.
Prepared to verify the equality of debits and credits in the ledger at the end of each accounting period or at any time the postings are updated

Answer 12

TRIAL BALANCE

Question 13

Basic adjusting entries

Answer 13

Accruals
Prepayments
Precollections
Depreciation and Amortization
Estimated Uncollectible accounts
Ending Inventory

Question 14

an income that is already earned but not yet received

Answer 14

Accrued revenue

Question 15

an incurred and unrecorded expense that remains unpaid because payment is not yet due

Answer 15

Accrued Expense

Question 16

is the used or expired portion of productive facilities such as building, furniture and fixtures, and equipment which have been recorded at their acquisition costs as capital expenditures

Answer 16

Depreciation

Question 17

Method in computing depreciation:

Straight line method

Answer 17

(Acquisition cost - salvage value) / estimated economic life in years

Question 18

DEPRECIATION

Adjusting entry:

Answer 18

Depreciation Expense

Accumulated Depreciation

Question 19

is the allocation of the acquisition costs of an intangible asset over its legal or accounting estimated life

Answer 19

Amortization

Question 20

is an asset that has no physical existence but provides the owner some selling and operational advantages over competitors
Examples are goodwill, franchise, copyright, patent and trade names

Answer 20

Intangible asset

Question 21

Formula for amortizing intangible assets

Answer 21

Annual amortization expense = acquisition cost

/legal or accounting life

Question 22

When accounts receivables are already long overdue, some portion should be recorded as

Answer 22

uncollectible accounts AKA bad debts

Question 23

Recording uncollectible accounts records bad debts expense only when there is certainty that the accounts receivable would become worthless

Answer 23

Direct write off method

Question 24

For general-purpose reporting.
Records bad debts expense even if the uncollectibility is only estimated.
Preferred method based on the matching principle.

Answer 24

Allowance method

Question 25

This multi column document provides an efficient way to summarize the data for financial statements
The accountant generally prepares a worksheet when it is time to adjust the accounts and prepare financial statements.

Answer 25

WORKSHEET

Question 26

Receipts from investments by owners

Receipts from issuance of notes payable

Answer 26

Cash Inflows

Question 27

Payments to owners in the form of withdrawals

Payments to settle notes payable

Answer 27

Cash Outflows

Question 28

umutang

Answer 28

debitor

Question 29

nagpautang

Answer 29

creditor