cooley 2012-13. an equation showing the relationship among assets, liabilities, and owner’s equity
TRANSCRIPT
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AccountingUnit 1Review
Cooley2012-13
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An equation showing the relationship among assets, liabilities, and owner’s equity.
Accounting Equation
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An increase in owner’s equity resulting from the operation of a business
Revenue
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A business paper from which information is obtained for a journal entry
Source Document
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Accounts used to accumulate information until it is transferred to the owner’s capital account
Temporary Account
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A business that performs an activity for a fee.
Service Business
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Journal entries recorded to update general ledger accounts at the end of the fiscal period
Adjusting Entries
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A columnar accounting form used to summarize the general ledger information needed to prepare financial statements
Work Sheet
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A list of accounts used by a business
Chart of Accounts
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Journal entries used to prepare temporary accounts for a new fiscal period.
Closing Entries
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A financial statement that reports assets, liabilities, and owner’s equity on a specific date.
Balance Sheet
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Transferring information from a journal entry to a ledger account.
Posting
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An accounting device used to analyze transactions.
T Account
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A proof of the equality of debits and credits in a general ledger.
Trial Balance
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A business owned by one person
Proprietorship
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A trial balance prepared after the closing entries are posted
Post-Closing Trial Balance
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TRUE or FALSE?TRUE or FALSE?
Making adjustments to general ledger accounts is an application of the Matching Expenses with Revenue accounting concept.
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TRUE or FALSE?TRUE or FALSE?The posting reference should always be recorded in the journal’s Post. Ref. column before amounts are recorded in the ledger
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TRUE or FALSE?TRUE or FALSE?The current capital to be reported on a balance sheet is calculated as the capital account balance plus net income equals current capital.
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TRUE or FALSE?TRUE or FALSE?
Blank endorsements should be used when sending checks through the mail.
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TRUE or FALSE?TRUE or FALSE?
Temporary accounts must start each fiscal period with a zero balance.
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TRUE or FALSE?TRUE or FALSE?The balances of the expense accounts must be reduced to zero to prepare the accounts for the next fiscal period.
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TRUE or FALSE?TRUE or FALSE?Net income on a work sheet is calculated by subtracting the Income Statement Credit column total from the Income Statement Debit column total.
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TRUE or FALSE?TRUE or FALSE?The formula for calculating the total expenses component percentage is total expenses divided by total sales equals total expenses component percentage
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TRUE or FALSE?TRUE or FALSE?
The value of the prepaid insurance coverage used during a fiscal period is an expense.
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TRUE or FALSE?TRUE or FALSE?
When the petty cash fund is replenished, the balance of the petty cash account increases.
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TRUE or FALSE?TRUE or FALSE?The only reason for the Post. Ref. Columns of the journal and general ledger is to indicate which entries in the journal still need to be posted if posting is interrupted.
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TRUE or FALSE?TRUE or FALSE?The current capital to be reported on a balance sheet is calculated as the capital account balance plus net income equals current capital.
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TRUE or FALSE?TRUE or FALSE?The account number is placed in the Post. Ref. column of the journal as the last step in the posting procedure.
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TRUE or FALSE?TRUE or FALSE?A double line ruled across both Trial Balance columns shows that the two columns are to be totaled.
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TRUE or FALSE?TRUE or FALSE?The balance of the supplies account plus the value of the supplies on hand equals the up-to-date balance of the supplies account.
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A.
B.
C.
D.
A petty cash fund is always replenished
None of these
daily
weekly
At the end of the month
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A.
B.
C.
D.
An account number in the journal’s Post.Ref. column shows
None of these
The work on that journal page is completed
The date of the entry
The account to which an amount is posted.
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A.
B.
C.
D.
A net loss is entered in the work sheet’s
Income Statement Debit and Trial Balance Credit columns
Balance Sheet Debit and Trial Balance Credit columns
Income Statement Debit and Balance Sheet Credit columns
Income Statement Credit and Balance Sheet Debit columns
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A.
B.
C.
D.
Preparing financial statements at the end of each monthly fiscal period is an application of the accounting concept
Going Concern
Objective Evidence
Adequate Disclosure
Accounting Period Cycle
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A.
B.
C.
D.
On a work sheet, the balance of the Sales account is extended to
Balance Sheet Credit column
Income Statement Debit column
Balance Sheet Debit column
Income Statement Credit column
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A.
B.
C.
D.
The journal entry to adjust Supplies is
Debit Supplies Expense; credit Income Summary
Debit Income Summary; credit Supplies
Debit Supplies; credit Supplies Expense
Debit Supplies Expense; credit Supplies
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A.
B.
C.
D.
Posting references in a journal are
Always placed in an account’s Post. Ref. column
The first item recorded when posting
Not necessary
None of these
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A.
B.
C.
D.
The bank statement shows an account balance of $5,500.00. There are outstanding checks totaling $600.00 and an outstanding deposit of $400.00. The adjusted bank balance should be
None of these
$5,285.00
$5,700.00
$5,300.00
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A.
B.
C.
D.
An endorsement on the back of a check indicating that the check is to be accepted for deposit only is a
Deposit Endorsement
Special Endorsement
Blank Endorsement
Restrictive Endorsement
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A.
B.
C.
D.
The formula for calculating the net income component percentage is
None of these
Total sales minus total expenses divided by net income equals total net income percentage
Total sales divided by total expenses equals net income component percentage
Net income divided by total sales equals net income component percentage
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A.
B.
C.
D.
After the adjusting entry for Supplies has been posted, Supplies Expense has an up-to-date balance that is the
Value of supplies bought during the fiscal period
Same as the ending balance for Supplies
Same as the beginning balance for Supplies
Value of supplies used during the fiscal period
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A.
B.
C.
D.
The journal entry to close the expense accounts is
None of these
Debit each expense account; credit Income Summary
Debit Income Summary; credit owner’s capital
Debit Income Summary for the total expense; credit each expense account
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A.
B.
C.
D.
The last step in the posting procedure is writing
The entry amount in the debit or Credit column of the account
The journal page number in the Post.Ref. column of the account
The entry date in the Date column of the account
None of these
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A.
B.
C.
D.
Following the same accounting procedures in the same way in each accounting period is an application of the account concept
Going Concern
Accounting Period Cycle
Matching Expenses with Revenue
Consistent Reporting
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A.
B.
C.
D.
A lost check with a blank endorsement on it can be cashed by
No one
Only the person who endorsed the check.
Only the person whose name follows the words “Pay to the order of.”
Anyone who has the check
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A.
B.
C.
D.
After the adjusting entry for Prepaid Insurance has been posted, Insurance Expense has an up-to-date balance that is the
Value of insurance premiums bought during the fiscal period
Same as the ending balance for Prepaid Insurance
Same as the beginning balance for Prepaid Insurance
Value of insurance premiums used during the fiscal period
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A.
B.
C.
D.
The journal entry to close Sales is
None of these
Debit Income Summary; Credit Sales
Debit Income Summary; credit Owner’s Capital
Debit Sales; credit Income Summary
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A.
B.
C.
D.
The entry to establish a $200.00 petty cash fund is
Debit Petty Cash, $200.00; credit Miscellaneous Expense $200.00
Debit Miscellaneous Expense, $200.00; credit Cash, $200.00
Debit Cash, $200.00; credit Petty Cash, $200.00
Debit petty Cash, $200.00; credit Cash, $200.00
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You will be journalizing and totaling one journal page as your problem.