The accounting theory which states that each organization stands apart from other organizations or individuals is the:
Income Statement and statement of retained earnings
Net income appears on which financial statements?
The dividend account
The account used to record the transfers of assets from a business to its owner is:
A record of the increases and decreases in a specific asset, liability, equity, revenue or expense is:
Source documents include all of the following except:
The revenue has been earned
According to generally accepted accounting principles, revenue should be recorded when:
--> Investments by owners
Debts to creditors
Economic obligations to creditors
All of the following terms describe a liability except
An information and measurement system that identifies, records and communicates relevant, reliable, and comparable information about an organization's business activities
Accounting Cycle (Process)
The recurring steps performed each accounting period, starting with analyzing and record transactions in the journal and continuing through the post-closing trial balance, is referred to as the:
The assumption that a business will continue operating instead of being closed or sold is the:
The difference between the total debits and total credits for an account including the beginning balance
An account balance is
The normal balance of accounts receivable is a debit
The normal balance of dividends is a debit
The normal balance of unearned revenues is a credit
-->The normal balance of an expense account is a credit
Which of the following statements is incorrect?
Chart of accounts
A list of all accounts used by a company, and the identification number assigned to each account, is called:
During a period of steadily rising costs, the inventory valuation method that yields the lowest reported net income is:
First in, First out
-->Last in, First in
Last in, First out
Which of the following is not an inventory costing method permitted by GAAP?
It is sometimes said to be Self-Correcting
An error in the period-end inventory causes an offsetting error in the next period and therefore:
The most recently purchased unites
When the LIFO method of inventory valuation is used, cost of goods sold consists of:
Requires that when more than one etiolate of amounts to be received or paid in the future are equally likely then the less optimistic amount should be used.
The conservatism principle:
A purchase return involves the return of inventory to the vender
The difference between a purchase return and a purchase allow is that:
Current replacement cost
In applying the lower of cost or market method to inventory valuation, market is defined as:
Cost of Goods Sold, Sales Discounts, and Sales Returns and Allowances
Closing entries are being prepared for Sailing Co. for the ear ended September 30th, 2002. Which accounts would be credited?
The inventory valuation method that tends to smooth our erratic changes in costs is:
Income Summary Account
The special account used only in the closing entries process to temporarily hold the amounts of revenues and expenses before the net difference is added to( or subtracted from) the owner's capital account is the:
2% cash discount if the amount is paid in 10 days, with the full balance due in 30 days
The credit terms 2/10, n/30 are interpreted as:
A term used by a seller to describe a cash discount granted to customers for prompt payment
A sales discount
Invoice price minus any discount
Costs included in the Merchandise Inventory account can include:
Gross Margin (gross profit) divided by net sales
The gross margin (gross profit) percent (ratio) is equal to:
To prepare revenue, expense, and dividend accounts for the start of the next accounting period
The purpose of closing entries is to:
--> Clearing and grading the land prior to construction
Cost of repairs made to an old building to get it ready for occupancy
The cost of a building would include all of the following except:
Florida Co. purchased office furniture on Jan 3, 1998 for $250,000. The estimated residual value was $25,000 and the estimated useful life was 5 years. Florida Co. uses straight-line depreciation. On Jan 2, 2000, the company revised its original estimate and now believes the useful life of the furniture will be a total of 10 years. The estimated salvage value remains unchanged. What is the depreciation expense for this furniture for 2002.
Current market value
In order to calculate depreciation expense, all of the following must be known except:
Debit: Accounts receivable, Credit: Allowance for Doubtful Accounts
Under the allowance method, the entry to record the recovery of a previously written-off account receivable would be:
Less likely to be collected than accounts 30 days old.
Accounts receivable which are 90 days old are:
The balance in Allowance for Doubtful Accounts before adjustment is $658 (credit balance). An aging schedule reveals $3,500 of uncollectible accounts. The ending balance in Allowance for Doubtful Accounts should be:
If write-offs of uncollectible accounts during the year exceed the beginning balance in Allowance for Doubtful Accounts, and there are no recoveries of previous write-offs, then the balance in Allowance for Doubtful Accounts before year-end adjustment will be:
The person who signs a note and promises to pay the amount specified by the note is called for:
Harvest Co.'s October 31, 1999 Balance Sheet reported net accounts receivable of $105,460. The Allowance for Doubtful Accounts had a balance of $3,200 at October 31, 1999 (after adjustment). What is the October 31, 1999 balance in Accounts Receivable?
Sales tax on the purchase price
--> Repairs made in the normal course of operations
The cost of an asset includes all of the following except:
Scarecrow Co. purchased land and a building for $1,500,000. The appraised value of the land is $650,000 and the appraised value of the building is $975,000. The amount that will be debited to the Building account on Scarecrow''s books is:
A machine was purchased on May 18, 1996 for $7,500. The estimated useful life is 6 years and the residual (salvage) value is estimated to be $300. Straight-line depreciation is chosen for this asset. What is the depreciation expense for the year ended December 31, 1996?
The total amount of employee compensation before taxes and other deductions is referred to as:
Federal Insurance Contributions Act taxes
Which of the following payroll-related taxes is levied on both the employer and the employee?
--> State Income Tax
State unemployment tax
Federal unemployment tax
All of the following are payroll taxes that are an expense of the employer except:
--> Federal income tax
All of the following are optional payroll deductions except:
In the same period as the related sale
The matching principle requires that a company record warranty expense:
Credit to Gain on Sale of Equipment for $700
Georgia Co. sold a piece of equipment for $3,200. The equipment cost $9,000 and accumulated depreciation to the date of sale totaled $6,500. The journal entry to record this sale will include a:
Allowance for Doubtful Accounts had a credit balance of $18,000 at the beginning of the year. During the year, recoveries of previous write-offs were $1,500 and uncollectible accounts of $30,000 were written off. The current year provision for bad debts is $22,500. What is the ending balance in the Allowance account?