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Accounting Part 2

Chapters 9-16 Questions

QuestionAnswer
What is the purpose of the post-closing trial balance? to prove the general ledger equality of debits and credits
How are temporary accounts closed? Transferring the balance out of the account
Does the closing entry for income statement accounts with debit balances only close the expense accounts? NO
Where is information found to journalize the closing entries? The Income Statement columns of a work sheet
The amount recorded in the Income Summary account is extended to which column of the Work sheet? Income Statement Debit or Credit Column
What creates a net loss? When a business's expenses are more than the gross profit on sales
What impact would there be if you increased sales revenue while keepign cost of merchandise sold the same? Increase gross profit on sales
What is the purpose of a work sheet? Used to plan adjustments and sort financial statement information
Would a corporation with a net income before federal income tax of $90,000 pay a higher rate of tax than a company with $40,000 of net icnome before federal income tax? yes
What are assets that will be used for a number of years in the operation of a business called? Plant Assets
What is the difference between a Purchases Return and a Purchases Allowance? Purchases Allowances - the merchandise does not have to be returned, it is to account for damaged goodsPurchases Returns - is to account for the return of merchandise due to ordering error on either the customer or vendors side
Does a corporation have the legal rights of a person? Yes
An error in posting may cause what impact to the income? to be understated or overstated on the income statement
Payroll taxes withheld from employees represent what to an employer until payment is made? A liability
What affects the amount of federal income tax withheld from a employees paycheck? Martial Status, Withholding Allowances, and Amount Earned
What does the trial balance of the merchandise inventory account represent? Merchandise Inventory as of the beginning of the fiscal period
If a company has determined that the acceptable component percentage for cost of merchandise sold is not more than 55.6%, is the current year's actual component percentage of 45.7% acceptable? Yes
What should the total of the schedule of accounts receivable be equal to? The Accounts Receivable account balance in the general ledger
Withholding Allowances only impact which Employee payroll Tax? Federal Income tax
A company purchases office equipment for $800 with a 3 year useful life and a $200 salvage value. Using the straight-line mehtod of depreciation, depreciation in year 2 of the asset's useful life would be? $200 (for each of the 3 years)$800 - $200 = $600 / 3 years = $200 each year
The Matching Expenses with Revenue accoutning concept refers to what? Recording expenses in the fiscal period in which the expenses contributed to earning revenue
Prepaid insurance is a ________ account. Therefore, any unused or prepaid insurance not expired during a fiscal period also represents a ______. Asset
What statemetn is the par value of common stock reported on? The statement of stockholder's equity
When dividends are declared, how is the transaction recorded in the journal? debit dividends, credit dividends payableNo impact to cash until dividends are paid
If a company has revenue of $200,000, gross profit of $150,000 and expenses of $40,000. What is the component percentage for net income? 150,000 - 40,000 = 110,000 / 200,000 = 55%
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
What two accounts are used to record the depreciation adjustment for office equipment? Depreciation Expense - Office Equipment and Accumulated Depreciation - Office Equipment
Revenue accounts start each fiscal period with what type of balance? Zero balance, they are temporary account
How are uncollectible accounts accounted for? Uncollectible accounts should be estimated and reocrded as an expense int he fiscal period in which the related sales are recorded
what is the next step after adjusting and closing entries have been posted? Post closing trial balance
Accumulated earnings refers to what? The total earnings since the first of the year
What are advantages of using a POS terminal? Enables management to prepare a reports, uses UPC symbols to increase the efficiency an accuracy
Created by: mryan396