56 terms

Accounting Final Exam Pt 2

Cumulative chapters 1-11 Matching
T account
A way of depicting the basic form of an account
Gross increases in owners equity resulting from business activities
The revenue recognition principle dictates that revenue should be recognized in the accounting records
When it is earned
After a business transaction has been analyzed and entered in the book of original entry, the next step in the recording process is to transfer the information to
ledger accounts
Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause
an understatement of expenses and an understatement of liabilities.
Sources of increases to owners equity are
Additional investments by owners
Decrease assets and increase liabilities
If a company fails to make an adjusting entry to record supplies, then
expense will be understated
An unacceptable way to make a correcting entry is to
Erase the incorrect entry
The primary accounting standard setting body in the united states is the
Financial Accounting Standards Board
An accounting record where transactions are initially recorded in chronological order is called a
The process of entering an amount on the left side of an account is called
Making an entry on the right side of an account is called
After all closing entries have been journalized and posted, the final step in the accounting cycle is to prepare a ______ trail balance
Post closing
A twelve month accounting period
Fiscal year
Expenses paid before they are incurred
Prepaid expenses
Cost less accumulated depreciation
Book value
Divides the economic life of a business into artificial time periods
Time period assumption
Expenses are matched to revenues
Matching principle
A contra asset account
Accumulated depreciation
Recognition of revenue when it is recorded when earned
Revenue recognition principle
Revenues earned but not yet received
Accrued Revenues
Expenses incurred but not yet paid
Accrued Expenses
A cost allocation process
Cash discount
1/10 n/30
For most companies, the gross profit percentage
Changes little from year to year
Inventory held by a business is a _______ and when sold becomes a _____
The entry to record the sale of merchandise for cash includes a
Credit to sales revenue
The entry to record the return of $25 of inventory to a supplier under the perpetual inventory system is recorded with a debit to
purchase returns and credit inventory
If a purchaser returns goods purchased on account to the supplier under a perpetual inventory system, the purchaser would debit
accounts payable and credit inventory
The gross profit percentage is calculated as
gross profit divided by net sales revenue
Which accounts are affected in the closing process under a perpetual inventory system?
Cost of goods sold, sales returns and allowances, and sales discounts
Under the perpetual inventory system, the adjusting entry to account for inventory shrinkage would include a
credit to inventory
Ever subsidiary ledger must have its own
control account
customers individual accounts are included in a subsidiary ledger referred to as the
accounts receivable ledger
Assuming the use of special journals, the sales of merchandise to Jerri Blackwell on account would be recorded in the
general journal
A purchase of supplies for cash is recorded in the
cash payments journal
certified public accountants are expected to maintain higher standards than society in general
because their ability to attract business depends entirely upon their reputation
A _____ limits access to a local network
Internal control over cash receipts is demonstrated by
a mailroom employee sending all customer checks to the treasurer who makes a bank deposit
The controller is responsible for
approving invoices for paymentq
Under the perpetual inventory system, the entry to record a sale on account would include a debit to
accounts receivable and a credit to sales revenue for the retail price of the inventory
The buyer is responsible for shipping costs when the shipping terms are
FOB shipping point
The system for electronic linkages that allows different computers to share the same information is
To update the inventory records for the sale of merchandise under a perpetual inventory system, the entry would include a
Debit to cost of goods sold
The three parties to a check are the
Maker, payer and bank
Gross profit minus operating expenses
Income from operations
A contra account to sales revenue
sales returns and allowances
Revenue that originates outside the main operations of a business
other revenue
A list of options for choosing computer functions
Set of programs or instructions that cause the computer to perform the work desired
Devises that enable members of a local network to access the internet but keep nonmembers out of the network
expenses, other than cost of goods sold, that are incurred in the entity's major line of business
operating expenses
An accounting Journal designed to record one specific type of transaction
Special journal
Fund containing a small amount of cash that is used to pay minor expenditures
Petty cash
Gross profit divided by net sales revenue
Gross profit percentage