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Accounting

Accounting

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A comprehensive testing of accounting terms, concepts, and accounting knowledge. Great for studying for your next accounting test.

Items (98)

  • A special journal used to record all transactions involving cash receipts or increases is called:

    cash receips journal

  • What is the second step in the closing process?

    close debit balances in expense accounts to income summary

  • Expenditures that add to the utility of fixed assets for more than one accounting period are called:

    capital expenditures

  • Things that one wants to accomplish are called:

    financial goals

  • The ____ is a multiple step procedure that results in the preparation and analysis of the major financial statements.

    financial management process

  • Owner's equity is the amount remaining after:

    the amount of liabilities is subtracted from the amount of assets

  • When the perpetual inventory system is used, the inventory sold is shown on the income statement as:

    cost of merchandise sold

  • A trial balance is prepared to:

    summarize the account balances to help prepare financial statements

  • When the market rate of interest on bonds is higher than the contract rate, the bonds will sell at:

    a discount

  • The method of determining depreciation that yeilds successive reductions in the periodic depreciation charge over the estimated life of the asset is called:

    declining-balance

  • The amount of goods on hand for sale to customers is:

    merchandise inventory

  • After the adjusting entry for Supplies has been posted, Supplies Exepense has an up-to-date balance, which is the:

    value of supplies used during the fiscal period

  • Which section of an income statement reports how much was paid for the goods a company sells?

    cost of merchandise sold

  • The first step in the posting procedure is writing:

    the entry date in the Date column of the account

  • On a worksheet, the balance of the Sales account is extended to the:

    Income Statement Credit column

  • A petty cash fund is replinished:

    monthly

  • The Accumulated Earnings column of the employee earnings record:

    is the total earnings since the first of the year

  • A business owned by two or more people is called a:

    partnership

  • The capital account is an owner's equity account.

    True

  • If two amounts are recorded on the same side of the accounting equaiton, the equation will no longer be in balance.

    False

  • A business that performs an activity for a fee is called a service business.

    True

  • A proprietorship is also known as a sole proprietorship.

    True

  • A business has two types of equities.

    True

  • When an owner withdraws cash from the business, the transaction affects both assets and owner's equity.

    True

  • When cash is paid to the owner for personal use, assets decrease and owner's equity decreases.

    True

  • The right side of a balance sheet presents liabilities and assets.

    False

  • Sandra Stern, Drawing is increased with a credit.

    False

  • The source document for cash payments is a check.

    True

  • The Objective Evidence accounting concept requires that there be proof that a transaction did occur.

    True

  • A journal shows in one place all the changes in a single account.

    False

  • A chart of accounts is a list of account titles and numbers showing the location of each account in a ledger.

    True

  • If a bank does not receive payment from the person who signed the check, each endorser of the check is individually liable for the payment.

    True

  • Blank endorsements should be used when sending checks through the mail.

    False

  • Most banks will accept postdated checks.

    False

  • Anytime a payment is made from the petty cash fund, a petty cash slip is prepared showing proof of a petty cash payment.

    True

  • The petty cash slip is the source document for the entry to replenish petty cash.

    False

  • All general ledger account titles are listed on a trial balance even if some accounts do not have a balance.

    True

  • Making adjustments to general ledger accounts is an application of the Matching Expenses with Revenue accounting concept.

    True

  • When the Income Statement Credit column total is greater than the Income Statement Debit column total on a work sheet, there is a net income

    True

  • Information used to prepare the liabilities section of a balance sheet is in the work sheet's Account Title and Balance Sheet Credit columns

    True

  • The Adequate Disclosure concept is applied when financial statements contain all info needed to understand a business's financial condition.

    True

  • Only revenue accounts and expense accounts are used in preparing the income statement.

    True

  • The net income on an income statement is verified by checking the balance sheet.

    False

  • An amount written in parentheses on a financial statement indicates an estimate.

    False

  • A balance sheet reports information about the elements of the accounting equation.

    True

  • A cash sale is a sale in which a credit card is used for the total amount of the sale at the time of the transaction.

    False

  • A listing of customer accounts, account balances, and total amount due from all customers is a schedule of accounts receivable.

    False

  • Medicare is funded by the federal government but not under the social security law.

    False

  • Employers in many states are required to withhold state, city, or county income tax from employee earnings.

    True

  • The information used to prepare payroll checks is taken from a payroll register.

    True

  • Employers must pay to the government the taxes withheld from employee earnings.

    True

  • The employer social security tax rate is not the same as the employee social security tax rate.

    False

  • Work sheets for service and merchandising businesses are very different.

    False

  • The inventory of supplies at the end of a fiscal period is determined by actually counting the amount of supplies on hand.

    True

  • Data needed to prepare the liabilities section of a balance sheet are obtained from a work sheet's Balance Sheet Debit column.

    False

  • Indicating a source document is not necessary when journalizing adjusting entries.

    True

  • Amounts needed for the closing entries are obtained from the Trial Balance columns of a work sheet.

    False

  • Expense accounts are closed by debiting the expense accounts and crediting Income Summary.

    False

  • Only one type of accounting system can be used to record, summarize, and report a business's financial information.

    False

  • The amount on each line of a purchases journal is posted as a credit to the named vendor account in the accounts payable ledger.

    True

  • When many journals are used, an abbreviation is used in the Post. Ref. column of a ledger to show the journal from which the posting is made

    True

  • Purchases on account are recorded in a purchases journal at list price.

    False

  • A schedule of accounts receivable is prepared before financial statements are prepared to prove the accounts receivable ledger.

    True

  • A sales invoice is the source document for journalizing a sales on account transaction.

    True

  • When the allowance account has a previous credit balance, it is subtracted from the adjustment amount for uncollectible accounts expense.

    False

  • Realization of Revenue explains why not collecting an account at a later date than the original sale cancels the sale and reduces revenue.

    False

  • Canceling the balance of a customer account because the customer does not pay is called writing off an account.

    True

  • When an account is written off, the account balance is transferred to Allowance for Uncollectible Accounts.

    False

  • When the owner withdraws cash for personal use

    assets decrease and owner's equity decreases

  • When the owner invests cash in a business, the owner's capital account is

    increased by a credit

  • When a business receives revenue, Sales is

    increased by a credit

  • Debits must equal credits

    in all transactions

  • The normal balance side of any revenue account is

    the credit side

  • A sale on account

    increases an owner's equity account and increases an asset account

  • If an error is discovered in a general journal entry

    all options listed

  • When the previous balance of an account is zero and a credit amount is posted to the account, the new balance is

    A credit

  • When the previous balance of an account is a debit and a debit amount is posted to the account, the new balance is

    a debit

  • A business form ordering a bank to pay cash from a bank account is

    a check

  • An endorsement on the back of a check consisting of only of a signature is

    a blank endorsement

  • An endorsement on the back of a check consisting of the words, "For deposit only to the account of..."

    restrictive endorsement

  • An endorsement on the back of a check consisting of the words, "Pay to the order of..."

    special endorsement

  • A lost check with a blank endorsement on it can be cashed by

    anyone who has the check

  • On a worksheet, the balance of Cash is extended to the

    Balance Sheet Debit column

  • If the Trial Balance columns are not equal and the difference is 1, the error often is

    in addition

  • If the Trial Balance columns are not equal and the difference is divisible by 9, the error most likely is

    transposed numbers or a "slide"

  • The sections of an income statement are

    heading, revenue, expenses, and net income or loss

  • After the adjusting entry for Prepaid Insurance has been posted, Insurance Expense has an up-to-date balance, which is the

    calue of insurance premiums used during the fiscal period

  • Temporary accounts begin each new fiscal period with a

    zero balance

  • When the total expenses are greater than the total revenue,

    the income summary has a debit balance

  • The journal entry to close the expense accounts is

    debit Income Summary for the total expenses; credit each expense account

  • Information needed to journalize a closing entry for the owner's drawing account is obtained from the

    work sheet's Balance Sheet Debit column

  • The last step in the accounting cycle is

    none of the options listed

  • Keeping the reports and financial records of a business separate from personal records is an application of the accounting concept

    Business Entity

  • The entry to journalize a purchase of merchandise on account is

    debit Purchases; credit Accounts Payable

  • An increase in revenue resulting from a sale on account should be recorded

    at the time of the sale

  • A sale for which cash will be received at a later date is a

    sale on account

  • A subsidiary ledger containing only accounts for vendors from whom items are purchased or bought on account is

    an accounts payable ledger

  • An account in a general ledger that summarizes all accounts in a subsidiary ledger is

    a controlling account