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Accounting Midterm
Chapter 1-9
| Question | Answer |
|---|---|
| The following questions are True/False | The following questions are True/False |
| Financial information may be reported any time a business needs it | True |
| If an amount is written in an incorrect column on a worksheet, the error should be erased and the amount should be written in the correct column | True |
| The two accounts affected by the adjustment for insurance are Prepaid Insurance Expense and Insurance | False |
| Net income on a work sheet is calculated by subtracting the Income Statement Credit column total from the Income Statement Debit column total | False |
| On a trial balance, all general ledger account titles are listed | True |
| A net loss is entered is in the worksheet's Balance Sheet Debit and Trial Balance Credit columns | True |
| If the Trial Balance columns are not equal and the difference is 1, the error often is in addition | True |
| A balance sheet has three sections: heading, assets, and liabilities | False |
| The net income calculated for the income statement and the net income on the worksheet must be the same | True |
| The formula for calculating the total expenses component percentage is: total expenses divided by total sales equals total expenses component percentage | True |
| The current capital to be reported on a balance sheet is calculated as: the capital account balance plus net income equals current capital | False |
| Component percentage on an income statement are calculated by dividing sales and total expenses by net income | False |
| An income statement reports information over a period of time, indicating the financial progress of a business in earning a net income or a net loss | True |
| A balance sheet reports financial information on a specific date and include the assets, liabilities, and owner's equity | True |
| When a business has two different sources of revenue, a separate income statement should be prepared for each kind of revenue | False |
| The amount of net income calculated on an income statement is correct if it is the same as net income shown on the worksheet | True |
| Information needed to prepare an income statement's revenue section is obtained from a worksheet's Account Title Column and Income Statement Credit Column | True |
| A balance sheet reports a business's financial condition on a specific date | True |
| When preparing a balance sheet, the amount of owner's capital is obtained from the work sheet's Balance Sheet column | True |
| The formula for calculating the net income component %age is net income divided by total sales squeals net income component percentage | True |
| Information needed to prepare a balance sheet liabilities section is obtained from a work sheet's Account Title Column and Balance Sheet Credit Column | True |
| A source document is prepared for adjusting entries | False |
| At the end of a fiscal period, the balances of temporary accounts are summarized and transferred to the owner's capital | True |
| Temporary accounts must start each fiscal period with a zero balance | True |
| To close a temporary account, an amount equal to its balance is recorded in the account on the side opposite to its balance | True |
| The balances of the expense accounts must be reduced to zero to prepare the accounts for the next fiscal period | True |
| The drawing account is a percent account | False |
| A post closing trial balance verifies the equality of debits and credits in a vernal ledger after the closing entries are posted | True |
| The journal entry to adjust Supplies i debit Supplies; credit Supplies Expense | True |
| After the adjusting entry for Supplies had been posted, Supplies Expense has an up to date balance which is the value of supplies used during the fiscal period | True |
| Temporary accounts begin each new fiscal period with a zero balance | True |
| The journal entry to close Income Summary when there is a net income is debit Income Summary; credit owner's capital | True |
| Income Summary is a temporary account | True |
| The purchases journal is increased by a credit and decreased by a debit | False |
| When several journals are used, an Abbreviation is used in the Post Reference column of a ledger to show the journal from which the posting is made | True |
| Trade discounts normally are recorded in the purchases discount column | False |
| Purchases Returns and Allowances is a contra account to Cost of Merchandise | True |
| The terms of sale 1/10, n/30 mean that the customer may deduct 1% of the invoice amount if payment is made within 30 days of the invoice date | False |
| The purchases account is classified as a cost account | True |
| The source document for a cash purchase is a check | True |
| Supplies bought for use in a business are recorded in supplies account | True |
| Since contra accounts are offsets to their related accounts, contra account normal balances are opposite the normal balance of their related accounts | True |
Created by:
mal_dixon98