Accounting II final – Flashcards
64 test answers
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What is recorded in the general amounts columns of the cash payments journal?
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Cash payment transactions that do not occur often
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What is the difference between purchasing merchandise and buying supplies?
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A business purchases merchandise to sell but buys supplies for use in the business. Supplies are not intended for sale.
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When cash is paid on account, what is the effect on the cash account?
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Cash is decreased by a credit.
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When journalizing a cash payment to replenish petty cash, what is entered in the Account title column of cash payments journal?
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The titles of the accounts for which the petty cash fund was used.
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Why are withdrawals by partner not recorded as debits directly to the partners' capital accounts?
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Withdrawals are normally recorded in separate accounts so that the total amounts are easily determined for each accounting period.
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List the five steps for ruling a cash payments journal at the end of the month.
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1. rule a single line cross all amount columns. 2. Write the date in the Date column. 3. Write totals in the account title column. 4. Write each column total below the single line. 5. rule a double line across all amount columns.
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What journal is used to record transactions that cannot be recorded in special journals?
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General Journal
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Why is a memorandum used as the source document when supplies are bought on account?
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To note that the invoice is for store supplies and not for purchases, ensuring that no mistake is made
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Why are two account titles written for the credit amount when supplies are bought on account?
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Because the single credit amount is posted to two accounts.
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When is the equality of debits and credits proved for a general journal?
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After each general journal entry is recorded.
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Why is the cash payments journal not used when a partner withdraws merchandise for personal use?
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The withdrawal is of merchandise and not cash.
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How does a merchandising business differ from a service business?
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A merchandising business sells merchandise; a service business sells service.
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How are sales tax rates usually stated?
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As a percentage of sales.
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Why is sales tax collected considered a liability?
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The amount of sales tax collected is a business liability until paid to the government.
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What is the title of a general ledger account used to summarize the total amount due from all charge customers?
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Accounts Receivable
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What accounts are increased and decreased when cash is received on account?
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Cash is debited, Accounts receivable is credited.
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What is written in the cash receipts journal's Account Title column for a cash and credit card sales transaction?
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A check mark
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Describe how to prove cash
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Cash on hand at the beginning of the month, plus total cash received during the month, less total cash paid during the month, equals cash balance on hand at the end of the month. Cash is proved if the balance on the next unused check stub is the same as the cash proof.
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What accounts are contained in an accounts payable ledger?
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Accounts for vendors from whom items are purchased or bought on account.
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What is the relationship between a controlling account and a subsidiary ledger?
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The balance of a controlling account equals the total of all account balances in its related subsidiary ledger.
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What is the title of the balance amount column of an accounts payable ledger form?
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credit balance
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In which column of the cash payments journal are the amounts that are posted individually to the accounts payable ledger?
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Customer accounts
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What accounts are listed on a schedule of accounts payable?
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The customer accounts listed in the Account Debited column.
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What accounts are contained in an accounts receivable ledger?
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Accounts receivable credit column
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To which accounts are the separate amounts in the sales journal posted individually?
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All customer accounts that have balances
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Which amounts in a general journal are posted individually?
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Amounts in the Debit and Credit Columns
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List the five steps for posted to a general ledger account.
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1. Write the date in the Date column of the account. 2. Write the journal page number in the post reference column of the account. 3. Write the amount in the Debit or Credit column of the account. 4. Calculate and write the new account balance in the balance debit or balance credit column of the account. 5. Write the general ledger account number in the Post Reference column of the general journal.
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For which columns of a special journal are the column totals posted to the general ledger?
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Each special amount column.
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In what order should special journals be posted to the general ledger?
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1. Sales journal, 2. Purchases journal, 3. General journal, 4. Cash receipts journal, 5. cash payments journal.
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What is a payroll?
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The total amount earned by all employees for a pay period.
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How many hours were worked by an employee who arrived at 8:29 and departed at 12:02?
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3.5 hours
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How does Omni calculate overtime earnings?
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overtime earnings x the overtime rate
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What are the total earnings of an employee who worked 40 hours and earned $11.00 per hour?
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$440.00
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Where does an employer get the information used to determine the amount of federal income tax to withhold from employees' earnings?
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Form W-4, Employee's Withholding Allowance Certificate
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Employee federal income tax withholdings are based on what two factors?
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Employee marital status and number of withholding allowances.
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Does the employer or employee pay social security tax and medicare tax?
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Both the employee and the employer.
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What does the payroll register summarize?
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The payroll register summarizes the payroll for one pay period and shows total earnings, payroll withholdings, and net pay of all employees.
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How is net pay calculated?
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By subtracting total deductions from total earnings.
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Why do companies complete employee earnings records?
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Because a business must send a quarterly report to federal and state governments showing employee taxable earnings and taxes withheld from employee earnings.
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Omni Import have a separate checking account for payroll checks?
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To help protect and control payroll payments
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What is the source of the information that is recorded on each employee's payroll check stub?
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The payroll register
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How do payroll procedures differ for an employee who requests that her pay be deposited through electronic funds transfer.
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Individual checks are not written and do not have to be distributed.
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What account title is used to journalize the Total Earnings column of the payroll register?
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Salary expense
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What account title is used to journalize the Federal Income Tax column of the payroll register?
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Employee Income Tax Payable
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What account title is used to journalize the Social Security column of the payroll register?
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Social security tax payable
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What account title is used to journalize the Medicare Tax column of the payroll register?
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medicare tax payable
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What is the rate Omni Import must pay on employees for each of the following taxes: social security, Medicare, federal unemployment and state unemployment?
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social security: 6.5% of earnings up to a maximum of $65,400.00 in each calendar year; medicare: 1.5% of total employee earnings; federal unemployment: 0.8% of the first $7,000.00 earned by each employee; state unemployment: 5.4% on the first $7,000.00 earned by each employee
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What is the amount of each employee's earnings that is subject to federal and state unemployment taxes at Omni Import?
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The first $7,000
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When must employers furnish a W-2 statement to their employees?
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By January 31
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What taxes are included int he quarterly federal tax return filed by the employer?
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federal income tax, social security tax, and medicare tax
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For a monthly schedule depositer, wen are payroll taxes paid to the federal government?
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By the 15th day of the following month
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What two different uses for Form 8109?
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For the paying payroll taxes and for paying federal unemployment tax.
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In what order should general ledger accounts be listed on a work sheet?
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In the same order they appear in the general ledger
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What accounts are used for the adjustment for merchandise inventory?
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Merchandise inventory and income summary
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What accounts are used for the adjustment to office supplies?
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Supplies - office and supplies expense - office
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What accounts are used for the adjustment to prepaid insurance?
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Prepaid insurance and insurance expense
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In what column is the Income Summary amount extended?
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Income statement Debit or Credit column
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When does a net loss appear on a worksheet?
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When the income statement debit column total (costs and expenses) is larder than the credit column total (revenue)
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To which Balance sheet column is a net loss amount extended?
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Balance sheet debit.
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What extra step is required when a 10-column work sheet is prepared instead of an 8-column work sheet?
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Trial balance amounts after adjustments are extended to the Adjusted Trial balance columns, and the adjusted trial balance columns are proved before extending amounts to the income statement and balance sheet columns.
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