question

For a service business, the revenue reported on an income statement includes components for total expenses and net income.

answer

True

question

The formula for calculating the total expenses component percentage is: total expenses divided by total sales equals total expenses component percentage.

answer

True

question

The Adequate Disclosure accounting concept is applied when financial statements contain all information necessary to understand a business's financial condition.

answer

True

question

The Matching Expenses with Revenue accounting concept is applied when the revenue earned and the expenses incurred to earn that revenue are reported in the same fiscal period.

answer

True

question

The work sheet is used to assist in preparing the revenue, expenses, and net income sections of an income statement.

answer

True

question

Preparing a work sheet at the end of each fiscal period to summarize the general ledger information needed to prepare financial statements is an application of the accounting concept Accounting Period Cycle.

answer

True

question

Permanent accounts are also referred to as temporary accounts.

answer

False

question

At the end of a fiscal period, the balances of temporary accounts are summarized and transferred to the owner's capital account.

answer

True

question

To close a temporary account, an amount equal to its balance is recorded in the account on the side opposite to its balance.

answer

True

question

A source document is prepared for closing entries.

answer

False

question

The balances of the expense accounts must be reduced to zero to prepare the accounts for the next fiscal period.

answer

True

question

The income summary account balance must be reduced to zero to prepare the account for the next fiscal period.

answer

True

question

The capital account's new balance after all closing entries are posted is verified by checking it with the amount of capital shown on the balance sheet at the end of the fiscal period.

answer

True

question

A special journal used to record only purchases of merchandise on account is called a purchases journal.

answer

True

question

A journal is proved and ruled only at the end of a fiscal period.

answer

False

question

The normal account balance of Purchases Returns and Allowances is a debit.

answer

False

question

Buying supplies on account is recorded in the general journal.

answer

True

question

To begin a new journal page, the totals from the previous journal page are carried forward to the next journal page.

answer

True

question

Purchases and sales of merchandise are the two major activities of a merchandising business.

answer

True

question

Very few states in the United States require collecting a tax on sales of merchandise to customers.

answer

False

question

A customer who uses a credit card promises to pay the bank that issued the credit card at a later date.

answer

True

question

The bank that issues the credit card bills the customer and collects the amount owed.

answer

True

question

An invoice used as a source document for recording a sale on account is a purchase invoice.

answer

False

question

A person or business to whom merchandise or services are sold is a customer.

answer

True

question

The Realization of Revenue accounting concept is applied when a sale is recorded at the time the sale is made.

answer

True

question

The source document for a cash sale is a cash register tape.

answer

True

question

For weekly cash and credit card sales, the asset account Cash is debited for the total of sales and sales tax, but the revenue account Sales is credited only for the total of sales.

answer

True

question

The revenue account Sales has a normal credit balance.

answer

True

question

Charge customer accounts are summarized in a general ledger account titled Accounts Receivable.

answer

True

question

The report that summarizes the cash and credit card sales of a point-of-sale terminal is called a batch report.

answer

False

question

A sales journal is used to record both cash sales and sales on account.

answer

False

question

The sales discount is calculated by multiplying the sales invoice amount by the sales discount rate.

answer

True

question

A business's size, number of transactions, and type of transactions determine the number of ledgers used in an accounting system.

answer

True

question

When the balance of a vendor account in an accounts payable ledger is changed, the balance of the controlling account is unaffected.

answer

False

question

The heading of the balance column of an account in the accounts payable ledger is titled Debit Balance.

answer

False

question

The total amount of the purchases journal is posted to the purchases and accounts receivable accounts.

answer

False

question

Each amount in the general columns of a cash payments journal is posted to a general ledger account.

answer

True

question

The totals of the general columns of the cash payments journal are posted.

answer

False

question

The total of all customer account balances in the accounts receivable ledger equals the balance of the general ledger controlling account Accounts Payable.

answer

False

question

Entries in a sales journal affect account balances in both the accounts receivable ledger and the general ledger.

answer

True

question

Businesses use payroll records to inform employees of their annual earnings and to prepare payroll reports for the government.

answer

True

question

All deductions from employee wages are recorded in a payroll register.

answer

True

question

The first task in preparing a payroll is to determine the number of days worked by each employee.

answer

False

question

Total earnings are sometimes referred to as net pay or net earnings

answer

False

question

Payroll taxes withheld represent a liability for an employer until payment is made.

answer

True

question

When an employee's earnings exceed the tax base, no more social security tax is deducted.

answer

True

question

The amount of income tax withheld from each employee's total earnings is determined from the number of withholding allowances and by the employee's marital status.

answer

True

question

Employee total earnings are calculated as regular hours x regular rate, plus overtime hours x overtime rate.

answer

True

question

A business is required by law to withhold certain payroll taxes from employee salaries.

answer

True

question

A single person will have less income tax withheld than a married employee.

answer

False

question

Social security tax is paid by the employer only.

answer

True

question

The information used to prepare payroll checks is taken from a payroll register.

answer

True

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