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Accounting Section II

Accounting Section II

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A comprehensive testing of accounting terms, concepts, and methods. Great resource for studying for your next accounting test! (Continuation of Accounting)

Items (75)

  • The special amount column totals of the cash receipts journal are

    posted to the general ledger controlling account at the end of each month

  • A general ledger sorts and summarizes all information affecting

    income statement and balance sheet accounts

  • The period covered by a salary payment is a

    pay period

  • A business form used to record payroll information is

    a payroll register

  • When a semimonthly payroll is paid, the credit to Cash is equal to the

    net pay of all employees

  • To record the total federal tax payment for employee income, social security, and Medicare tax, the account credited is


  • To record the payment of federal unemployment tax, the account debited is

    a liability account

  • Preparing a work sheet at the end of each fiscal period is an application of the accounting concept

    Accounting Period Cycle

  • On a work sheet, Accounts Payable is extended to the

    Balance Sheet Credit column

  • When a work sheet is completed, a net loss will appear in the

    Income Statement Credit and Balance Sheet Debit columns

  • Acceptable component percentages should be determined

    based on industry standards and comparisons with prior fiscal periods

  • The two types of journal entries needed to change general ledger account balances at the end of the fiscal period are

    adjusting and closing entries

  • To close the revenue account, the revenue account balance for the fiscal period is transferred into

    the income summary account

  • Each unit of ownership in a corporation is

    a share of stock

  • Total shares of ownership in a corporation is

    capital stock

  • Using a copy of the sales invoice as the source document for recording a sale on account is an application of the accounting concept

    Objective Evidence

  • When the percentage of total sales on account method is used, the estimated uncollectible accounts expense is calculated by

    multiplying total sales on account times the percentage

  • Estimating uncollectable accounts expense at the end of a fiscal period is an application of the accounting concept

    Matching Expenses with Revenue

  • The journal entry to reopen an account that has been written off is debit Accounts Receivable and credit

    Allowance for Uncollectable Accounts

  • Total current assets should always equal total liabilities.


  • The matching concept states expenses should be offset against revenue to determine net income.


  • The balance sheet shows the financial position of a business over a period of time.


  • Analysis paper on which the financial condition of a business is conveniently summarized is a trial balance.


  • Journal entries made to bring general ledger accounts up to date are adjusting entries.


  • The complete series of activities involved in double-entry accounting during a fiscal period is the accounting cycle.


  • If the debit part of a journal entry is not posted but the credit side is, assets will be understated.


  • A change in the balance of a customer's account also changes the balance of the controlling account, Acounts Receivable.


  • Each amount in the General Debit column of the combination journal is posted separately to an account in the general ledger.


  • If an adjusting entry is not recorded for supplies used during the accounting period, net income for the current period will be overstated.


  • If an adjustment is not recorded for unearned revenue that has been earned by year-end, net income for the current period will be overstated


  • The purchases account does not provide a continuous record of the cost of the goods on hand.


  • When prices are falling, LIFO generally results in a higher cost of goods sold and therefore helps reduce tax liability.


  • Overstating ending inventory in the current period will understate the following year's net income.


  • The endorsement on the check represents a promise to pay.


  • The matching concept requires that the income statement for a time period be matched with the balance sheet of the same time period.


  • A deficit is reported in the stockholder's equity section of the balance sheet.


  • The best definition of assets is

    economic resources owned by a company that are expected to benefit future business periods

  • An example of a business document that indicates a transaction has occurred is

    a memo

  • In accounting, a prepaid expense

    is an asset account amount

  • The business entity concept means that

    the business' and owner's personal records should not be mixed

  • Expecting a business to remain in operation indefinitely is a referral to the accounting concept

    going concern

  • The person or business to whom the signer of a promissory note promises future payment is called the


  • Which of the following statements is true?

    Accumulated depreciation represents a portion of a plant asset's cost that has been recorded

  • The expected cash value of a plant asset at the end of its useful life is called all of the following except

    current book value

  • Depreciable cost is defined as

    cost minus scrap value

  • The total of a one-column purchases journal is posted to the account

    Purchases and Accounts Payable

  • If the credit amount of an entry to record the payment for advertising fees was not posted,

    assets would be overstated

  • the ending balance in capital appears on the

    balance sheet and the statement of changes in owner's equity

  • When a balance sheet lists assets on the left and equities on the right, the balance sheet is prepared in ___ form.


  • In a worksheet, which of the following errors will not cause the debit and credit columns of the trial balance to be unequal?

    a debit entry was recorded in the wrong account

  • The form that accompanies the payment of taxes to the federal government is

    Form 8109

  • The form that contains information necessary to determine the employee's net earnings is a

    Form W-4

  • The form that summarizes the information reported on each employee's report of income and taxes is a/an

    Form W-2

  • The form used by the employer to report his/her annual unemployment tax is a

    Form 940

  • The purchase of a delivery van for cash would

    not affect the total of debits or credits on the trial balance

  • Performing carpet cleaning services on account would increase

    net income and capital

  • The collection of cash from a charge customer would

    have no effect on net income or capital

  • The adjusting entry for the depreciation of a plant asset such as equipment involves a credit to

    accumulated depreciation

  • The entry to journalize the replinishment of petty cash includes a

    credit to cash

  • Under the direct write-off method of accounting for bad debts, the entry to record the estimated bad debts includes a

    does not require a journal entry

  • Under the allowance method, the entry to record the estimated bad debts expense

    reduces total assets

  • Current assets should be listed on the balance sheet of a company in order of the

    liquidity of the assets

  • On a balance sheet, a delivery truck is classified as a

    plant and equipment asset

  • The computation of the Cost of Goods Sold on the Income Statement may be summarized as

    beginning inventory plus net cost of purchases minus ending inventory

  • A net income will result if gross profit exceeds

    operating expenses

  • An income statement reports the

    financial progress of a business for the fiscal period

  • Which of the following is required for computing cost of goods sold but not for cost of goods available for sale?

    ending merchandise inventory

  • If ending inventory for the current period is overstated by $5,000,

    net income for the next period will be understated by $5,000

  • The one item that does not cause a difference between the check stub cash balance and the bank statement balance is

    canceled checks

  • In reconciling a bank statement, an NSF check is

    deducted from the book balance

  • When reconciling a bank statement, an NSF check is included for $480. The entry to record this reconciling item would include a

    credit to cash for $480

  • What is the formula for straight line depreciation?

    total aquisition cost - salvage value / useful life

  • What is the formula for unit-of-production depreciation?

    total aquisition cost - salvage value / estimated total units

  • What is the formula for accelerated depreciation?

    ((n - i + 1) / n!) * (total aquisition cost - salvage value)

  • What is the formula for double-declining-balance depreciation?

    (2 / n) * (total aquisition cost - accumulated depreciation)