Review

Question 1

An incentive discount for the customer to pay early is called…

Answer 1

Prompt Payment Discount (606)

Question 2

What account do we consider when returning purchases?

Answer 2

608

Question 3

If the cost of transporting the goods is responsibility of the company…

Answer 3

it must be added at the purchase value

Question 4

Merchandise Sold what does its balance represent at the end of the accounting period?

Answer 4

the GROSS SALES: the total sales made by the organization

Question 5

account debited when a defective or unsatisfactory item is returned by the customer

Answer 5

SALES RETURNS AND SIMILAR TRANSACTIONS (708)

Question 6

In Spain VAT is levied at a standard rate of

Answer 6

21%

Question 7

Define input VAT

Answer 7

records the VAT registered or paid in advance when the company buys goods or services

Question 8

Define Output VAT

Answer 8

registers the VAT charge to customers when the company sells its goods or services

Question 9

Define VAT payable

Answer 9

amount owed to tax office by the company

Question 10

Define VAT Recoverable

Answer 10

(receivable) amount owed to the company by the tax office

Question 11

Name de codes for VAT recoverable, VAT payable, Input VAT and Output VAT

Answer 11

Input VAT - 472
Output VAT - 477
VAT payable - 4750
VAT recoverable - 4700

Question 12

define volumen discounts and its code

Answer 12

Discounts and similar reductions granted to the company for having reached a certain volume of orders
code - 609

Question 13

Define Changes in inventories of merchandise

Answer 13

Changes between the closing and opening balances of (300)

Question 14

Accounting cycle steps

Answer 14

1- Journal 
2- Ledgers
3- Income Statement
4- closing Entries 
5- Balance Sheet 
6- VAT liquidation

Question 15

what are the temporary accounts?

Answer 15

expenses and revenues, groups 6 and 7

Question 16

group 1 contains..

Answer 16

Equity & non- current liabilities

Question 17

group 2 contains..

Answer 17

Non- current assets

Question 18

group 3 contains..

Answer 18

Inventories

Question 19

group 4 contains..

Answer 19

current assets and trade accounts

Question 20

group 5 contains..

Answer 20

current liabilities and financial accounts

Question 21

what are finished goods?

Answer 21

produce our own products to sell

Question 22

what is the difference between purchase price and acquisition price?

Answer 22

Purchase prices don’t include mandatory charges while acquisition price includes them. example of a mandatory charge : transportation.

Question 23

How many discounts are there, how are they called and what are their codes.

Answer 23

1- Volume Discounts (purchase 609, sales 709)
2- Prompt Payment (purchase 606, sales 706)
3- Others (purchase 608, sales 708)

Question 24

What are financial Assets, how long do they last and which are them?

Answer 24

Financial Assets are investments.
They can be long or short term depending of the intention of the investor.
There are two types, Shares (owners) and bonds (lends).

Question 25

What are bonds and how many types are there?

Answer 25

Bonds are loans. they can be public (government) or private (corporations).

Question 26

TRUE OR FALSE | All accounts begin each fiscal year with zero balances

Answer 26

FALSE

Question 27

TRUE OR FALSE | Assets are decreased with debit entries

Answer 27

FALSE

Question 28

TRUE OR FALSE | Revenues are increased with credit entries

Answer 28

TRUE

Question 29

TRUE OR FALSE | Transactions are first recorded in the general ledger and then posted to the journal

Answer 29

FALSE

Question 30

# Choose the INCORRECT balance of XXX Co Ledgers: a) Accounts Payable: credit balance 1200€; b) Retained earnings: credit balance 23000€ c) Short-term creditors: debit balance 50300€; d) Sales: debit balance 2330€.

Answer 30

d) Sales: debit balance 2330€.

Question 31

On May 21, L&L SA earned 2000€ of services for a client on account. On May 27, the company received 500€ of the amount owed. The remaining balance will be collected on June 21. The May 21 journal entry will include: a) A Credit to revenue of 2000€ b) A Debit to Cash of 2000€; c) A Credit to Accounts Receivable of 2000€; d) More than one of these answers is correct.

Answer 31

a) A Credit to revenue of 2000€

Question 32

Which of the following steps comes first? a) Prepare the financial statements; b) Preparing adjusting journal entries; c) Close the permanent accounts; d) Close the temporary accounts.

Answer 32

b) Preparing adjusting journal entries;

Question 33

Adjusting Entries: a) Are prepared to prove that debits equal credits; b) Are prepared after financial statements are prepared; c) Get the temporary accounts ready for the next accounting period; d) None of this is correct.

Answer 33

d) None of this is correct.

Question 34

Which of the following accounts are temporary accounts? a) Wages; b) Accounts Receivable; c) Share Capital; d) Net income.

Answer 34

a) Wages

Question 35

Which of the following accounts are permanent accounts? a) Reserves; b) Accounts payable; c) Salaries payable; d) All of these are permanent accounts;

Answer 35

c) Salaries payable;

Question 36

Changes in inventories, is an account: a) That should be considered as a revenue; b) That could be considered as an expense or as an revenue, depending on each situation; c) That should be considered as an expense; d) None of the above is right.

Answer 36

b) That could be considered as an expense or as an revenue, depending on each situation;

Question 37

TRUE OR FALSE | a) Discounts in the invoice reduce inventory costs;

Answer 37

true

Question 38

TRUE OR FALSE | There are many different inventories;

Answer 38

true

Question 39

TRUE OR FALSE | Inventory costs include transportation costs;

Answer 39

true

Question 40

If the beginning inventory amount is 100€, during the period purchases of goods amount is 1300€ and the cost of goods sold amount is 1000€, the balance of ending inventory is: a) 1100€, credit balance; b) 400€, debit balance; c) 400€, credit balance; d) 300€, debit balance.

Answer 40

b) 400€, debit balance;

Question 41

what type of account are retained earnings?

Answer 41

equity

Question 42

what are creditors?

Answer 42

assets, rights

Question 43

4 basic transactions

Answer 43

1. Purchases 2. Sales 3. Payments 4. Collections

Question 44

merchandises

Answer 44

bought and sold as they are (supermarkets)

Question 45

formula to calculate bank balance

Answer 45

A= L + Eq + Rv – Exp

Question 46

how to calculate net income

Answer 46

Revenue- expenses

Question 47

containers when purchasing

Answer 47

(602) when buying containers (not returning all of them) | (406) a right until returned/bought

Question 48

containers when selling

Answer 48

(704) containers and packaging sold (customers decides to keep some) (437) an obligation until we know if the customer returns/buys

Question 49

Closing date of the accounting cycle

Answer 49

1. Balances from ledgers 2. Adjusting entries - changes in inventories (610) - VAT liquidation 3. Closing entries - revenue accounts and expense accounts (129- profit of the year) - assets, liability, and equity accounts 4. Financial statements