Bookkeeping Certification (Accounting Fundamentals)

Flash cards for bookkeeping certification

The process of recording transactions in a journal is referred to as:

journalizing

Currently, generally accepted accounting principles are developed by the American Institute of Certified Public Accountants (AICPA)

False

The difference between net sales and the cost of goods sold is called the:

gross profit on sales

The Income Summary account is classified as what type of account?

Owner’s equity account

The amount of sales tax due is usually required to be paid:

monthly

The monthly bank statement should be received and reconciled by the employee who deposits cash receipts and writes the checks.

False

The account used to record amounts that are owed for goods or services purchased on credit is known as:

accounts payable

The final closing entry transfers the balance(s) of which account(s) to the owner's capital account?

drawing accounts

All of the following accounts will appear on the post-closing trial balance except:

depreciation expense - equipment

When recording a business transaction into the general ledger, certain steps are followed. Identify the statement below that is NOT CORRECT regarding this process

care must be taken to complete the posting process correctly, as account information cannot be traced back to the original journal entry after it has been posted

The owners of a corporation are called

stockholders or shareholders

Which of the following is not a requirement for becoming a Certified Bookkeeper?

obtain a certain number of college credits in accounting courses

Good internal control requires a(n)

separation of duties

Under a periodic inventory system, the adjustment for merchandise inventory removes the beginning inventory from the books within which step?

1

When preparing the trial balance, the total debits MUST equal the total credits.

True

The entry to record the deposit of federal income taxes withheld includes a:

debit to the employee income tax payable account

A balance that is circled in the accounts payable ledger is:

a debit balance

When a transaction is entered in a general journal, the account title for which account is indented about half an inch from the left margin of the Description column?

the credited account

When is a quarterly deposit required for federal unemployment tax required?

when $500 or more of federal unemployment tax is owed

The entry to record a sale to a credit customer on which sales tax was charged includes:

a credit to sales tax payable

Assuming that all accounts of Automobile Advertisers have normal balances at year-end, which of the following accounts could be both debited and credited during the four-step closing process?

Y Lucas, Capital

A firm purchased furniture on account. To record this transaction, the accountant would:

debit furniture and credit accounts payable

One purpose of closing entries is to zero out the balances in the:

revenue and expense accounts

The trial balance of Premier Lighting Company shows Merchandise Inventory of $35,000. Based on a count taken on December 31, merchandise inventory at the end of the year actually totaled $28,000. The adjusting entry to record the new merchandise inventory balance assuming the company uses the periodic inventory system would be:

a debit to merchandise inventory of $28,000 and a credit to income summary for $28,000

When an entry is made in the general journal:

the accounts to be credited should be indented

Identify the entry below that records the payment of an amount owed as a result of the purchase of equipment two months earlier.

debit accounts payable and credit cash

Which of the following accounts is closed at the end of each accounting period?

the owners drawing account

Thyme Company reported revenues of $12,000, supplies expense of $3,000, and net income of $2,000 for the most recent period. If the company’s only other expense was Rent Expense, what was its balance at the end of the period?

$7,000

To interpret the financial statements means to understand and explain the meaning and importance of information in accounting reports.

true

FICA tax is commonly referred to as:

social security

The corporations whose stock can be bought and sold on stock exchanges and in over-the-counter markets are referred to as

publicly owned corporations

Kay Sadia sold merchandise for $4,400 subject to 9% sales tax. The entry in the general journal to record the sale will include:

a credit to sales for $4,400

Listed below in random order are the steps in the accounting cycle.

(1) prepare the financial statements

(2) post the journal entries to the ledger

(3) record journal entries

(4) prepare a trial balance

What is the proper order of these steps?

3,2,4,1

Social Security taxes are paid by:

both the employee and employer

Which of the following cash discounts is being offered if the credit terms are 3/10, n/60?

3%

Infinity Lighting, a wholesaler, sold several crates of lighting for $1,500 on account, to a customer with credit terms of 1/10, n/30. If the customer pays within the discount period, the journal entry to record the receipt of payment would include

a debit to sales discounts for $15

When revenue is greater than expenses, the result is net:

income

Sales Tax Payable is classified as a(n)

liability account

Assuming a periodic inventory system is used, the journal entry to record the purchase of merchandise on account for $4,600 with freight of $280 prepaid and added to the invoice is

debit purchases $4,600, debit freight $280, and credit accounts payable $4,880

Tune Tones Instrument Tuning Company owes Mandy Lynn’s Music Studio $6,854 as of November 1. During November, Tune Tones purchased merchandise from Mandy Lynn totaling $9,548 and owes Mandy Lynn $9,152 on November 30. The total payments made by Tune Tones to Mandy Lynn during November were:

$7,250

The order in which financial statements are prepared is determined by the fact that information from one statement is needed to prepare the next. Which statement is prepared last?

balance sheet

One purpose of closing entries is to zero out the balances in the:

revenue and expense accounts

At the end of the first month of operations for Lightning Delivery Service, the business had the following accounts: Accounts Receivable, $11,350; Prepaid Insurance, $400; Equipment, $26,200 and Cash, $21,650. On the same date, Lightning owed the following creditors: Simpson Supply Company, $17,000; Allen Office Equipment, $14,500.

The total assets for the Lightning Delivery Service are:

$59,600

Identify the items below that would both appear as an addition or subtraction from the Book Balance side of a bank reconciliation statement.

bank services charges, customer NSF check

Which of the following is NOT an activity performed by managerial accountants?

conduction independent audits for financial statements

Which of the following statements is not correct?

in the closing process, the balance of the purchases account is transferred to the debits side of the owners capital account

The Ending Capital balance would appear on all of the following except the:

income statement

The normal balance of which of the following is on the credit side?

the owners capital account

The owner’s capital balance at the beginning of the period is required on the statement of owner’s equity.

true

A small pencil figure written at the base of an amount column showing the sum of the entries in the column is called a:

footing

When developing GAAP, one step undertaken by the FASB includes holding public hearings where interested parties can express their opinions.

true

Owners are not personally responsible for the debts of the business if the form of business organization is a

corporation

A withdrawal of funds by the owner for personal use decreases owner’s equity

true

The financial statement that is prepared first is:

the income statement

The balance sheet shows each of the following except the:

net income of the business

A decrease in a liability is recorded on which side of the T account?

debit

The error that occurs when the number $272.00 is written as $27.20 is called a:

slide error

If an error is discovered before the entry is posted, the incorrect amount can be erased and the correct amount recorded.

false

A permanent, classified record of all accounts used in a firm’s operation is called a(n):

general ledger

If the adjustment for supplies used is not recorded, the firm's assets will be overstated.

true

The account accumulated depreciation has a normal:

credit balance

The amount within an adjusting entry for supplies represents which of the following:

supplies used during the period

The postclosing trial balance lists only the:

permanent accounts

Anderson Company had the following account balances at the end of the most recent fiscal year: Cash: $4,300, Accounts Receivable: $1,200, Supplies: $200, Accounts Payable: $700, P. Anderson, Capital: $2,900, P. Anderson, Drawing: $300, Fees Income: $4,900, Rent Expense: $1,300, Advertising Expense: $1,000, Supplies Expense: $200. Assuming that these were the only accounts used by Anderson Company during the year, for which of the following steps in the closing process would a compound entry be necessary?

transfer expense account balances

Data for the first two closing entries is taken from which section of the worksheet?

income statement

Which of the following statements is not correct?

the owners drawing account is closed to the income summary account

The Sales Returns and Allowances account has a normal:

debit balance and is a contra revenue account

A company that earns income by buying merchandise then reselling it to its customers in the same condition in which it was purchased is a(n):

merchandising business

Cost of goods sold accounts follow the debit and credit rules of revenue accounts.

false

When an accounts payable subsidiary ledger is used, the Accounts Payable account in the general ledger becomes a(n):

control account

The amount of the purchases for a period is presented in:

the COGS section of the income statement

Which of the following statements is accurate?

A credit memorandum explains any addition, other than a deposit, to the checking account

To arrive at an accurate balance on a bank reconciliation statement, an error made by the bank in which the bank deducted a check issued by another business from the balance of the company’s bank account should be:

added to the bank statement balance

Form W-4, which shows the number of withholding allowances that an employee is claiming for federal income tax withholding purposes, must be filed by the employee within how many days when there is a decrease in the number of withholding allowances?

10

An employee whose regular hourly rate is $12 and whose overtime rate is 1.5 times the regular rate worked 48 hours in one week. The total overtime earned by the employee for the week is:

$144

A business pays the social security tax at the same rate and on the same taxable wages as its employees.

true

The entry to record a deposit of federal income taxes withheld and social security and Medicare taxes would:

debit one or more liability accounts and credit an asset account

Under the accrual basis of accounting, only income that has been earned is included in the revenue total on the income statement.

true

On November 1, 20X1, a firm accepted a 7-month, 11 percent note for $6,300 from a customer with an overdue balance. The accrued interest recorded for this note for the year ended December 31, 20X1, is:

$115.50

Hugh Morris Company pays weekly wages of $15,000 every Friday for a five day week ending on that day. If the last day of the year is on Tuesday, the adjusting entry to record the accrued wages is:

debit Wages Expense $6,000 and credit Wages Payable $6,000.

Which of the following is NOT a task undertaken by the accountant within an organization?

create generally accepted accounting principles upon which the accounting system is based

Credits increase Liabilities, Owner's Equity, and Revenue.

true

A special type of owner's equity account set up to record withdrawals of assets by the owner for personal use is called a(n):

drawing account

When recording a transaction in a T account, which of the following is not accurate?

it is not necessary to record a credit for every transaction

If an error is discovered before the entry is posted, the incorrect amount can be erased and the correct amount recorded.

false

The first place a transaction is recorded is in the:

journal

After the closing entries are posted, the balance of the owner's capital account agrees with the amount of owner's equity shown on the balance sheet for the period.

true

The post closing trial balance lists only the:

permanent accounts

When taxable goods are sold on credit, the sale of the goods and which other item are recorded at the time of the sale?

sales tax

Bill Ford, the buyer, returned merchandise to Sandler Company, the seller. The entry on the books of Sandler company to record the return of merchandise from Bill Ford would include a:

debit to Sales Returns and Allowances

Cost of goods sold accounts follow the debit and credit rules of revenue accounts.

false

Assuming a periodic inventory system is used, purchases returns and allowances are recorded in the general journal as a debit to Accounts Payable and a credit to:

Purchases Returns and Allowances

When the sales department needs merchandise, it sends the purchasing department a form called:

a purchase requisition

A bank usually provides pre-printed deposit slips.

true

Which of the following is not a reason why the book balance of cash may not agree with the balance on the bank statement?

canceled checks

If an employee works for more than one employer during the year, the social security tax is deducted and matched by only one employer

false

An employee’s gross earnings minus the necessary payroll deductions equals the employee’s:

net pay

Assuming a Medicare tax rate of 1.45% and monthly gross wages of $5,000, the amount recorded in Medicare Tax Payable for one quarter for the employee’s payroll deduction is:

a credit for $217.50

Alfred Spindle earned gross wages of $1,850 for the week ended June 21, 20X1. His gross wages year to date, prior to his June 21 paycheck, were $42,620. He had $136 withheld from his pay for federal income taxes, and $86 for health insurance. Social Security is 6.2% and Medicare tax is 1.45%; the federal unemployment tax rate is 0.6% and the state unemployment tax rate is 4.2%, both on a maximum of $7,000 per each employee’s annual earnings. The journal entry to record the employer payroll tax expense associated with Alfred’s June 21, 20X1, paycheck would include:

a debit to Payroll Taxes Expense

The account "allowance for doubtful accounts" is a(n):

contra asset account