Midterm Review

Question 1

Owner received an advance payment for services

Answer 1

Debit cash; Credit unearned fees

Question 2

Received cash from clients on account

Answer 2

Debit cash; Credit A/R - Client

Question 3

Paid cash for a newspaper advertisement

Answer 3

Debit advertising expense; Credit cash

Question 4

Paid ABC Co for part of the debt incurred earlier

Answer 4

Debit A/P - ABC Co: Credit cash

Question 5

Recorded services provided on account

Answer 5

Debit A/R; Credit fees earned

Question 6

Paid receptionist salary including amount owed in the previous month

Answer 6

Debit salaries expense and salaries payable; credit cash

Question 7

Purchased supplies on account

Answer 7

Debit supplies; Credit A/P

Question 8

Recorded cash from clients for fees earned

Answer 8

Debit cash; Credit fees earned

Question 9

Paid telephone bill

Answer 9

Debit utilities expense; Credit cash

Question 10

Withdrew money for personal use

Answer 10

Debit owner, withdrawals; Credit cash

Question 11

Adjustment for supplies

Answer 11

Debit supplies expense; credit supplies for amount used (Beginning - amount on hand at the end)

Question 12

Adjustment for insurance

Answer 12

Debit insurance expense; credit prepaid insurance for the amount expired

Question 13

Adjustment for depreciation

Answer 13

Debit depreciation expense (asset); Credit accumulated depreciation (asset(

Question 14

Adjustment forAccrued salaries

Answer 14

Debit salaries expense; Credit salaries payable

Question 15

Adjustment for unearned fees

Answer 15

Debit unearned fees; Credit Fees Earned for the amount actually earned (may have to subtract actual amount earned and the amount in the trial balance for unearned fees)

Question 16

Trial Balance

Answer 16

proves the equality of debits and credits

Question 17

Worksheet

Answer 17

proves that everything works - used to determine the amount of net income or net loss

Question 18

Temporary accounts

Answer 18

accounts whose balance is brought to zero at the end of the period in the closing process

Question 19

Closing Entry for Revenue

Answer 19

Revenue

Income Summary

Question 20

Closing Entry for Expenses

Answer 20

Income Summary

Credit each expense individually

Question 21

Closing Entry for Withdrawals

Answer 21

Owner, Capital

Owner, Withdrawals

Question 22

Closing Entry for Income Summary

Answer 22

If Net Income: Debit Income Summary and Credit Capital for the amount of net income
If Net Loss: Debit Capital and credit income summary for the amount of the loss

Question 23

Post closing trial balance

Answer 23

Last step of the cycle - done after closing and only as permanent accounts (A, L, C)

Question 24

Service Business

Answer 24

A business operated to provide (do something) for clients

Question 25

Business entity concept

Answer 25

The entity is an individual economic unit for which data are recorded, analyzed and reported

Question 26

Amount to be used to record acquisition of an asset

Answer 26

Total cost of getting asset to the business (Cash + notes payable + installation)

Question 27

Prepaid expenses

Answer 27

Goods purchased on account for future use

Question 28

Statement of Cash Flows

Answer 28

statement that shows how money flowed into and out of the business

Question 29

Journalizing

Answer 29

The process (act) of initially recording a business transaction

Question 30

Debit

Answer 30

Left side of an account

Question 31

Credit

Answer 31

Right side of an account

Question 32

Liabilities

Answer 32

Debts to owner, accounts usually say payable, cash received before services ar performed

Question 33

Journal

Answer 33

where a transaction can first be found in the accounting records

Question 34

Assets begin with what number

Answer 34

1

Question 35

Adjusting entries affect

Answer 35

at least one income statement and one balance sheet account

Question 36

Unearned Revenue

Answer 36

Likely to be included in a deferral adjusting entry

Question 37

Business pays weekly salaries of $30,00 on Friday for five day work wee ending that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is

Answer 37

Debit Salary Expense; Credit Salaries Payable $12,000

Question 38

Accumulated Depreciaiton

Answer 38

Contra asset, credit balance

Question 39

Appears on an adjusted trial balance but probably not on the trial balance

Answer 39

Depreciation Expense

Question 40

Order of end of period processing

Answer 40

Preparation of adjustments, adjusted trial balance, financial statements

Question 41

Classified Balance Sheet

Answer 41

Separates Liabilities into current and long-term

Question 42

Item 1 hAs inventory of 12 unit cost was $15 and market was $18

Answer 42

Determine the value if inventory at lower of cost or market

Question 43

Cost of merchandise sold year 1 was $172,000 and year 2 was $160,000 and inventory year 1 was 20,000 and year 2 was 18,000

Answer 43

Determine inventory turnover , average daily cost of mdse sold, number of days’ sales in inventory