question

covered completely

answer

Corrections in accounts should NOT be

question

a description of special entries

answer

The Item column in the general ledger is used for

question

enter the balance

answer

The steps in the journalizing process include all of the following EXCEPT

question

False

answer

A list of all the accounts used by a business is called a trial balance.

question

as the first entry on a page

answer

The month in the journal is recorded

question

False

answer

An account in the chart of accounts is assigned a number at random.

question

debiting Drawing and crediting Cash

answer

Cash is used to pay for a car for personal use by the owner. The transaction includes

question

False

answer

When the trial balance indicates that the ledger is in balance, you can assume there are no errors in the ledger.

question

False

answer

A two-column journal has only two amount columns?one for the amount of the entry and one for the running balance.

question

the ruling method

answer

Corrections in accounts should be made by

question

False

answer

The posting reference, amount, and description are the three items of information about each transaction that should be entered in the ledger accounts.

question

debiting Rent Expense and crediting Cash

answer

If cash is paid for office rent, the transaction includes

question

True

answer

Firms are more likely to use a four-column ledger account than T accounts.

question

False

answer

It is permissible to enter information about a transaction in the ledger accounts first, before entering the information in the journal.

question

True

answer

Each entry in the journal affects two or more accounts.

question

numerical order

answer

The accounts in the chart of accounts are arranged in

question

source documents

answer

Forms and papers that provide information about a business transaction are called

question

debiting Telephone Expense and crediting Cash

answer

The payment of a telephone bill for the month would include

question

True

answer

A separate line in the two-column journal should be used for each account title.

question

False

answer

An account in the chart of accounts is assigned a number at random.

question

True

answer

Source documents begin the process of entering transactions in the accounting system.

question

True

answer

Source documents provide objective, verifiable evidence of business transactions.

question

False

answer

When entering titles of accounts in the two-column journal, the account to be credited is entered first and the account to be debited is entered second.

question

False

answer

Almost any document that provides information about a business transaction is included in the chart of accounts.

question

debiting Drawing and crediting Cash

answer

Cash is used to pay for a car for personal use by the owner. The transaction includes

question

debiting Accounts Payable and crediting Cash

answer

The transaction to record payment for delivery equipment that was purchased on account in the previous month would include

question

False

answer

A list of all the accounts used by a business is called a trial balance.

question

True

answer

The journal provides the information needed to transfer the debits and credits to the accounts in the ledger.

question

False

answer

Entering transactions in a journal is called posting.

question

erase questionable entries

answer

To find an error, you should do all of the following EXCEPT

question

debiting Cash and crediting Service Revenue

answer

Service revenue received in cash is entered by

question

four-column account

answer

Instead of T accounts, businesses are more likely to use a

question

debiting Rent Expense and crediting Cash

answer

If cash is paid for office rent, the transaction includes

question

covered completely

answer

Corrections in accounts should NOT be

question

sales of goods or services

answer

Copies of sales tickets or sales invoices issued to customers or clients provide information about

question

False

answer

A two-column journal has only two amount columns?one for the amount of the entry and one for the running balance.

question

cash payments

answer

Check stubs and carbon copies of checks provide information about

question

True

answer

The general ledger is kept to supply management with desired information in summary form.

question

True

answer

It is permissible to enter information about a transaction in the ledger accounts first, before entering the information in the journal.

question

False

answer

The main advantage of a two-column account is that it maintains a running balance.

question

cash receipts

answer

Receipt stubs, carbon copies of receipts, cash register tapes, or memos of cash register totals provide information about

question

enter the balance

answer

The steps in the journalizing process include all of the following EXCEPT

question

day

answer

For EVERY transaction, the accountant enters the

question

Enter the description of the entry

answer

Posting from the journal to the ledger does NOT involve which of the following steps?

question

no entry is required

answer

To record wages earned but not paid under the modified cash accounting method,

question

False

answer

A contra-asset appears on the income statement.

question

True

answer

Depreciation matches the cost of an asset against the revenues it will produce.

question

contra-account

answer

An account used with a related account to bring about a decrease in the net amount of the two account balances is called a(n)

question

True

answer

If the debits in the Income Statement columns of the work sheet total $50,000 and the credits total $60,000 before net income or net loss has been determined, the business has a net income of $10,000.

question

revenue earned with the expenses incurred to produce the revenue

answer

The matching principle in accounting requires the matching of

question

True

answer

The original cost of an asset added to its salvage value represents the depreciable cost of an asset.

question

depreciation

answer

Matching the cost of an asset with the revenue it is expected to produce is called

question

False

answer

A contra-asset has a debit balance.

question

False

answer

The owner's capital account in the last two columns of the work sheet is an up-to-date account and includes net income and withdrawals of the current period.

question

True

answer

When an account balance is not affected by an adjusting entry, the amount shown in the Trial Balance columns is extended directly to the Adjusted Trial Balance columns.

question

True

answer

"Adjusting" is written in the Item column of the general ledger when posting adjusting entries.

question

False

answer

Accounting for expenses on the cash basis generally means that expenses are entered in the accounts even though they may have been charged and not paid for in cash.

question

True

answer

A computer workstation cost $28,000, has an expected life of 7 years, and an expected salvage value of $7,000. Depreciation expense using the straight-line method will be $3,000 per year.

question

True

answer

The historical cost principle allows for assets to be recorded at actual cost.

question

True

answer

Depreciation expense is recorded for a specific period of time.

question

Balance Sheet columns

answer

The fifth pair of columns on a 10-column work sheet prepared at the end of the period would be the

question

True

answer

A computer workstation cost $28,000, has an expected life of 7 years, and an expected salvage value of $7,000. Depreciation expense using the straight-line method will be $3,000 per year.

question

True

answer

Recording adjustments on the work sheet has no effect on the ledger accounts.

question

the amount of depreciation taken in past years

answer

What does the credit balance in the Accumulated Depreciation account represent?

question

True

answer

The matching principle offers the best measure of net income.

question

True

answer

Under the modified cash basis of accounting, cash payments for assets with lives longer than one accounting period (buildings, equipment, insurance, etc.) are recorded as assets and adjustments are made each period.

question

True

answer

The cash basis of accounting is used by some small businesses and by most individuals for tax purposes.

question

True

answer

Accounting for revenue on a cash basis means that no entry of revenue is made in the account until the cash is received for the services performed.

question

$85,000

answer

Owner's equity at the start of the period is $35,000; net income for the period is $30,000; the total investments by the owner is $15,000; and total withdrawals by the owner is $5,000. The owner's equity at the end of the period is

question

True

answer

The historical cost principle allows for assets to be recorded at actual cost.

question

False

answer

Adjusting entries affect only the owner's equity accounts.

question

False

answer

The cost of plant assets less the accumulated depreciation is called the salvage value of the asset.

question

no entry is required

answer

To record wages earned but not paid under the modified cash accounting method,

question

False

answer

A contra-account is used with a related account to bring about an increase in the net amount of the two account balances.

question

False

answer

The statement of owner's equity is prepared from information from the asset and liability accounts.

question

True

answer

The income summary account is an account used only during the closing process.

question

False

answer

Obligations that need not be paid for a long time, usually more than one year, are classified as current liabilities.

question

True

answer

Assets, liabilities, and the owner's capital account are permanent accounts.

question

False

answer

A separate explanation of each closing entry is necessary.

question

Income Summary

answer

The account to which revenue and expenses are closed is called

question

investments by the owner

answer

Owner's equity can be increased through

question

False

answer

The income summary account appears on the income statement at the end of the accounting period.

question

True

answer

To close the drawing account with a debit balance, credit the account for its balance and debit the owner's capital account.

question

revenue accounts, expense accounts, Income Summary, drawing account

answer

What is the correct sequence for closing the temporary accounts?

question

debiting the owner's capital account and crediting Income Summary

answer

The journal entry to close the income summary account (showing a net loss) includes

question

prepare a trial balance, make adjustments, prepare financial statements

answer

Which of the following steps of the accounting cycle are in the correct order?

question

True

answer

A statement of owner's equity is a statement summarizing all of the changes in owner's equity during a specified period of time.

question

the accounting cycle

answer

The steps involved in handling all of the transactions and events completed during an accounting period, beginning with placing data in a book of original entry and ending with a post-closing trial balance, are referred to collectively as

question

$3,000

answer

The total revenue of the month of June amounted to $6,500; total expenses amounted to $3,500; and withdrawals amounted to $600. The net income for the month amounted to

question

True

answer

Property, plant, and equipment are assets that are expected to serve the business for many years.

question

income summary account

answer

The balance in an expense account is closed to a(n)

question

income statement, statement of owner's equity, balance sheet

answer

The order in which financial statements should be prepared is

question

False

answer

The statement of owner's equity is prepared from information from the asset and liability accounts.

question

False

answer

A mortgage on an office building is an example of a property, plant, and equipment asset.

question

False

answer

The heading for a balance sheet includes the name of the business, the title of the statement, and a period of time.

question

True

answer

Closing entries are made in the journal and posted to the ledger accounts.

question

debiting the owner's capital account and crediting the drawing account

answer

The journal entry to close the drawing account includes

question

report form

answer

A form of balance sheet that lists the liabilities and the owner's equity sections below the assets section is called the

question

False

answer

The end-of-period work sheet is completed after adjusting entries have been recorded and posted.

question

debiting the revenue accounts and crediting Income Summary

answer

The journal entry to close revenue accounts includes

question

True

answer

Current assets include cash and other assets that will be converted into cash or consumed within one year or the normal operating cycle of the business, whichever is longer.

question

False

answer

A separate explanation of each closing entry is necessary.

question

False

answer

An income statement is an itemized statement that provides information regarding the status of the assets, liabilities, and owner's equity of a business enterprise as of a specified date.

question

False

answer

To close an expense account with a debit balance, debit the account for its balance and credit the income summary account.

question

False

answer

The effect of drawing transactions on the capital account is formalized at any time during the accounting period.

question

income summary account

answer

The balance in an expense account is closed to a(n)

question

Owner's Capital

answer

The account to which the drawing account is closed is called

question

post-closing trial balance

answer

To prove the equality of the debit and credit balances in the general ledger accounts after the closing entries have been journalized and posted, prepare the

question

False

answer

The statement of owner's equity is prepared from information from the asset and liability accounts.

question

prepare a trial balance, make adjustments, prepare financial statements

answer

Which of the following steps of the accounting cycle are in the correct order?

question

False

answer

A separate explanation of each closing entry is necessary.

question

Delivery Fees

answer

After the closing entries are journalized and posted, which of the following accounts would NOT have a balance?

question

Miscellaneous Expense

answer

After the closing entries have been posted, which of the following accounts would NOT have a balance?

question

False

answer

The income summary account appears on the income statement at the end of the accounting period.

question

debiting Income Summary and crediting the expense accounts

answer

The journal entry to close expense accounts includes

question

report form

answer

A form of balance sheet that lists the liabilities and the owner's equity sections below the assets section is called the

question

debiting the owner's capital account and crediting the drawing account

answer

The journal entry to close the drawing account includes

question

False

answer

The income statement includes changes in owner's equity resulting from investments or withdrawals of assets by the owner.

question

True

answer

An income statement is an itemized statement for the purpose of providing information regarding the results of operations during a specified period of time.

Flashcards on STUDY Office Accounting Ch. 4-6

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