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Accounting-Sanders

Test 2

QuestionAnswer
The expense recognition principle matches: Expenses with revenues
An adjusting entry: Affects a balance sheet account and an income statement account
Boyce Company purchased office supplies costing $5000 and debited Office Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $1400 still on hand. The appropriate adjusting journal entry 2 be made Debit Office Supplies Expense, $3600; credit Office Supplies $3600
The difference between the balance of a plant asset account and the related accumulated depreciation account is termed: Book Value
Mary Richardo, CPA, has billed her clients for services performed. She subsequently receives payments from her clients. What entry will she make upon receipt of the payments? Debit Cash and credit Accounts Receivable
Adjusting entries are made to ensure that: expenses are recognized in the period they are incurred, rev recorded in the period they are earned, balance sheet and income statement accounts have correct balances at the end of an accounting period
Unearned revenue is classified as a(n): liability
Adjusting entries are: needed to ensure that the expense recognition principle is followed
An accumulated depreciation account: has a normal credit balance
Under the perpetual inventory system, which of the following accounts would not be used? Purchases
Indicate which one of the following would appear on the income statement of both a merchandising company and a service company, Operating expenses
Generally, the revenue account for a merchandising enterprise is called Sales Revenue or Sales
The collection of a $900 account beyond the 2 percent discount period will result in a: Debit to Cash for $900
During the year, Sarah's Pet Shop's merchandise inventory decreased by $30,000. If the company's cost of goods sold for the year was $450,000 purchases would have been: $420,000
Assets purchased for resale are recorded in which of the following accounts? Inventory
If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales Allowance
When using a periodic inventory system, which statement concerning the computation of cost of goods sold is correct? The amount of ending inventory is determined on the last day of the accounting period
Two categories of expenses in merchandising companies are Cost of goods sold and operating expenses
Which of the following expressions is incorrect? Operating expenses- cost of goods sold= gross profit
Ace Company is a retailer operating in an industry that experiences inflation. Ace wants the most realistic ending inventory. Which inventory costing method should Ace consider using? FIFO because ending inventory represents the latest costs
Which of the following is not a common cost flow assumption used in costing inventory? Middle-in, first-out
The consistent application of an inventory costing method enhances Comparability
Which of the following items will increase inventoriable costs for the buyer of goods? Freight charges paid by the purchaser
The LIFO reserve is the difference between the value of the inventory under LIFO and the value under FIFO
When a perpetual inventory system is used, which of the following is a purpose of taking a physical inventory? To check the accuracy of the perpetual inventory records
Accountants have developed two principles to use as guidelines in determining the amount of revenues and expenses to be reported in a given period. These principles are the: Revenue and expense recognition principle
Which of the following is not true concerning cash basis accounting? Matches expenses with the revenues they help to produce
In order for revenues to be recorded in the period in which they are earned, and for expenses to be recognized in the period in which they are incurred: Adjusting entries are made
Unearned revenues are: Deferrals and liabilities
All of the following are examples of prepaid expenses except: Unearned revenues
Depreciation is: The process of allocating the cost of an asset to expense over its useful life
Accumulated depreciation is a: Contra asset account
Which of the following companies would probably not have unearned revenues? Papa Johns
Adjusting entries for accruals: Are required in order to record revenues earned and expenses incurred in the current accounting period that havent been recognized through daily entries and thus arent yet reflected in the accounts and will increase a balance sheet/incomestatement account
An assumption that the economic life of a business can be divided into artificial time periods is the: Periodicity assumption
Created by: jacobbehel