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42 terms

Accounting Exam Review

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accouting equation
an equation showing the re;ationship among assets, liabilities, and owner's equity.
source document
a business paper from which information is obtained for a journal entry
service business
a business that performs an activity for a fee
work sheet
a columnar accounting form used to summarize the getneral ledger information needed to prepare financial statements
closing entries
journal entries used to prepare temporary accounts for a new fiscal period
posting
transferring information from a ournal entry to a ledger account
trial balance
a proof of the equality of debits and credits in a general ledger
proprietorship
a business owned by one person
post-closing trial balance
a trial balance prepared after the clsing entries are posted
temporary accounts
Accounts used to accumulate information until it is transferred to the owner's capital account.
T account
an accounting device used to analyze transactions
balance sheet
a financial statement that reports assets, liablities, and owner's equity on a specific date
chart of accounts
a list of accounts used by a business
revenue
an increase in owners equity resulting from the operations of a business
adjusting entries
journal entries recorded to update general ledger accounts at the end of a fiscal peirod
False
The posting reference should always be recorded int he journal's Post. Ref. column before amounts are recorded in the ledger.
False
Blank endorsements should be used when sending checks through the mail
False
When the petty cash fund is replenished, the balance of the petty cash account increases.
True
Making adjustments to general ledger accounts is an application of the Matching Expenses with Reveue accounting concept.
True
The value of the prepaed insurance coverage used during a fiscal period is an expense.
False
Net income on a work sheet is calculated by subtracting the Income Statement Credit column total from the Income Statement Debit column total.
True
The formula for calculating the toal expenses compenet percentage is total expenses divided by total sales equals total expenses component percentage.
False
The current capital to be reporte don abalance sheet is calulated as the capital account balance plus net income equals current capital.
True
Temporary accounts must start each fiscal period with a zero balance
True
The blances of the expense accounts must be reduced to zero to prepare the accounts for the next fiscal period.
the post reference number in the Post Ref column of the Journal
The last step in the posting procedure is writing
The account to which an amount is posted
An account number in the journal's Post. Ref. Column shows
Always placed in account's Pos. Ref. column
Posting references in a journal are
At the end of the month
a petty cash fund is always replenished
$5,300
The bank statement shows an account balance of $5,500. There are outstanding checks totaling $600 and an outstanding deposit of $400. The adjusted bank balance should be
Income Statement Credit Column
On a work sheet, the balance of the Sales account is extended to the
Income Statement Credit and Balance sheet Debit columns
A net loss is entered int he work sheet's
Accounting Period Cycle
Prepareing financial statements at the end of each monthly fiscal period is an application of the accounting concept
debit Supplies Expense; credit Supplies
The journal entry to adjust Supplies is
value of supplies used during the fiscal period
after the adjusting entry for Supplies has been psoted, Supplies Expense has an up-to-date balance that is the
value of insurance premiums used during the fiscal period
After the adjusting entry for Prepaid Insurance has been posted, Insurance Expanese has an up-to-date balance that is the
debit Sales; credit Income Summary
The journal entry to close Sales is
debit Income Summary for the total expenses; credit each expense account
The journal entry to close the expense accounts is
restrictive endorsement
An endorsement on the back of a check indicating that the check is to be accepted for deposit only is a
debit Petty Cash, $200; credit Cash, $200
The entry to establish a $200 petty cash fund is
Net cinome divided by total sales equals net income component percentage
The formula for calculating the net income component percentage is
Consistent Reporting
Follwing the same acccounting procedures int he same way in each accoutning period is an application of the accounting concept