64 terms

Chapter 14 Accounting

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Terms in this set (...)

A stockholder is an owner of one of more shares of a corporation
True
Owners equity accounts for a corporation normally are listed under a major chart of accounts division titled capital stock
False
Retained earnings are earnings distributed to stochholdefs
False
A dividend is an amount earned by a corporation and not yet distributed to stockholders
False
A dividend account has a normal debit balance and is increased by a debit
True
A group of persons elected by the stockholders to manage a corporation is called a board of directors
True
A board of directors distributes earnings of a corporation to stockholders by declaring a dividend
True
A declared dividend is classified as an exoense
False
The accounts used to record the declaration of a dividend are Dividends Payable and Dividends Expense
False
When a declared dividend is paid, Dividends Payable is debited
True
The purpose of a work sheet is to plan adjustments and summarize the information necessary to prepare financial statements
True
The Prepaid Insurance account is adjusted to show the value of insurance that has been used
True
During a fiscal period, the amount of merchandise on hand increases and decreases
True
Most accounts needing adjustment at the end of a fiscal period have a related temporary account
True
The risk of uncollectible accounts should be recorded as an expense in the same accounting period that the revenue is earned
True
The account Allowance for Uncollectible Accounts is a contra account
True
Many businesses use a percentage of total sales on account to estimate uncollectible accounts expense
True
Assets that will be used for a number of years in the operation of a business are called current assets
False
Accumulated depreciation is in the depreciation expense that has been recorded since the purchase of a plant asset
True
Federal income tax is an expense of a corporation
True
The Supplies- Office amount in a work sheets trial balance debit column represents the value of supplies...
at the beginning of a fiscal period plus office supplies bought during the fiscal period
the two accounts used to adjust the Office Supplies account are...
Supplies- Office and Supplies Expense- Office
the portion of the insurance premium that has expired during a fiscal period is classified as...
an expense
the two accounts used to adjust the prepaid insurance account are...
Prepaid Insurance and Insurance Expense
the amount of goods on hand for sale to customers is called...
merchandise inventory
the merchandise inventory amount in a work sheets trial balance debit column represents the merchandise inventory...
at the beginning of a fiscal period
the two accounts used to adjust the merchandise inventory account are...
merchandise inventory and income summary
the income summary amount in a work sheets adjustments debit column represents the...
decrease in merchandise inventory
recording expenses in the accounting period in which the expenses contribute to earning revenue is an application of the accounting concept...
matching expenses with revenue
the two accounts used to adjust the uncollectible accounts are...
uncollectible accounts expense and allowance for uncollectible accounts
the two accounts used to adjust the depreciation of store equipment are..
accumulated depreciation- store equipment and depreciation expense- store equipment
the two accounts used to record the adjustment for federal income tax are..
federal income tax payable and federal income tax expense
AYU- under what major chart of accounts division are the owners equity accounts for a corporation normally listed?
stockholders equity
AYU- how many accounts are kept for the investment of all owners of a corporation?
one account- capital stock
AYU- What account does a corporation use to record earnings not yet distributed to stockholders?
retained earnings
AYU- what action is required before a corporation can distribute income to its stockholders?
the board of directors has to declare a dividend
AYU- what accounts are used for the adjustment to office supplies?
supplies- office and supplies expense- office
AYU- what accounts are used for the adjustment to prepaid insurance?
prepaid insurance and insurance expense
AYU- what accounts are used for the adjustment for merchandise inventory?
merchandise inventory and income summary
AYU- what adjusting entry is entered on a worksheet when the ending merchandise inventory is less than the beginning value?
credit merchandise inventory, debit income summary
AYU- when is the temporary account income summary used?
to adjust the merchandise inventory account at the end of a fiscal period
AYU- why is an uncollectible account recorded as an expense rather than a reduction in revenue?
it is recorded as an expense in the same accounting period that the revenue is earned because it is a risk of doing businesss
AYU- when do businesses normally estimate the amount of their uncollectible accounts expense?
end of a fiscal period
AYU- why is allowance for uncollectible accounts called a contra account?
it reduces the related account accounts receivable
AYU- what are the two categories of assets?
current assets and plant assets
AYU- what three factors are used to calculate a plant assets annual depreciation expense?
original cost, estimated salvage value, and estimated useful life
AYU- in what column is the income summary amount extended?
income statement debit
AYU- to which balance sheet column is a net loss amount extended?
balance sheet debit
AYU- what extra step is required when a 10- column worksheet is prepared instead of an 8- column worksheet?
it includes an additional paid of amount columns titled Adjusted Trial Balance
Dividends
earnings distributed to stockholders
Board of Directors
a group of persons elected by the stockholders to manage a corporation
declaring a dividend
action by a board of directors to distribute corporate earnings to stockholders
merchandise inventory
the amount of goods on hand for sale to customers
uncollectible accounts
accounts receivable that cannot be collected
allowance method of recording losses from uncollectible accounts
crediting the estimated value of uncollectible accounts to a contra account
book value
the difference between an assets account balance and it's related contra account balance
book value of accounts receivable
the difference between the balance of accounts receivable and it's contra account, allowance for uncollectible accounts
current assets
cash and other assets expected to be exchanged for cash or consumed within a yeat
plant assets
assets that will be sued for a number of years in the corporation of a businesss
depreciation expense
the portion of a plant assets cost that is transferred to an expense account in each fiscal period during a plant assets useful life
estimated salvage value
the amount an owner expects to receive when a plant asset is removed from use
accumulated depreciaiton
the total amount of depreciation expense that had been recorded since the purchase of a plant asset
book value of a plant asset
the original cost of a plant asset minus accumulated depreciation
straight line method of depreciation
charging an equal amount of depreciation expense for a plant asset in each year of useful life