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Questions and Answers
What is the total amount of assets for ABC Company if the equity is $160,000 and the total liabilities are $90,000?
What is the total amount of assets for ABC Company if the equity is $160,000 and the total liabilities are $90,000?
- $300,000
- $160,000
- $250,000 (correct)
- $210,000
What is the primary purpose of posting in accounting?
What is the primary purpose of posting in accounting?
- To record transactions in the journal.
- To close the accounting period.
- To create financial statements.
- To transfer data to the ledger. (correct)
What effect does a debit have on liabilities and revenues?
What effect does a debit have on liabilities and revenues?
- They increase.
- They decrease. (correct)
- They remain unchanged.
- They become assets.
If ZYX Tax Planning Service prepaid rent for six months, what is the balance in the Prepaid Rent account as of April 30, 2024?
If ZYX Tax Planning Service prepaid rent for six months, what is the balance in the Prepaid Rent account as of April 30, 2024?
What is the correct journal entry for a cash payment of $750 to settle an Accounts Payable?
What is the correct journal entry for a cash payment of $750 to settle an Accounts Payable?
Which of the following statements accurately defines residual value?
Which of the following statements accurately defines residual value?
What journal entry is needed to record annual depreciation if equipment purchased for $155,000 has a zero residual value over five years?
What journal entry is needed to record annual depreciation if equipment purchased for $155,000 has a zero residual value over five years?
What type of liability is unearned revenue?
What type of liability is unearned revenue?
What is the annual depreciation expense for an equipment that costs $155,000 with a useful life of 5 years and a residual value of $0?
What is the annual depreciation expense for an equipment that costs $155,000 with a useful life of 5 years and a residual value of $0?
What is the ending balance in the Accounts Receivable account if the initial balance is $25,000 with additional postings of $3,000 and a payment of $5,000?
What is the ending balance in the Accounts Receivable account if the initial balance is $25,000 with additional postings of $3,000 and a payment of $5,000?
How much interest expense must be accrued on a $12,000 note payable at 8% for three months?
How much interest expense must be accrued on a $12,000 note payable at 8% for three months?
What is the accrued interest for a 5-month note of $6,500 at an 11% interest rate by the end of 2025?
What is the accrued interest for a 5-month note of $6,500 at an 11% interest rate by the end of 2025?
What is the maturity value of a 75-day note for $230,000 at a 4% interest?
What is the maturity value of a 75-day note for $230,000 at a 4% interest?
What is the amount of Supplies Expense during the accounting period if the beginning balance of Office Supplies is $6,000, purchases total $5,500, and inventory shows $2,200?
What is the amount of Supplies Expense during the accounting period if the beginning balance of Office Supplies is $6,000, purchases total $5,500, and inventory shows $2,200?
Which journal entry is correct for the purchase of $800 of office supplies on account?
Which journal entry is correct for the purchase of $800 of office supplies on account?
If an office supply account receives an additional debit posting of $5,500, what is the total value of office supplies after this posting?
If an office supply account receives an additional debit posting of $5,500, what is the total value of office supplies after this posting?
What is the purpose of a post-closing trial balance?
What is the purpose of a post-closing trial balance?
What is the amount of the Supplies Expense after adjustments?
What is the amount of the Supplies Expense after adjustments?
Which of the following is considered a temporary account?
Which of the following is considered a temporary account?
What will the Prepaid Insurance account balance be after adjustments on January 1, 2025?
What will the Prepaid Insurance account balance be after adjustments on January 1, 2025?
How is Gross Profit calculated?
How is Gross Profit calculated?
If a company purchases inventory for $20,000 with terms of 2/10, n/30, how much is the purchase discount available if paid within 10 days after returning $3,000 in defective inventory?
If a company purchases inventory for $20,000 with terms of 2/10, n/30, how much is the purchase discount available if paid within 10 days after returning $3,000 in defective inventory?
By how much will the capital account decrease if the owner withdraws $51,000 and the net income is $40,000?
By how much will the capital account decrease if the owner withdraws $51,000 and the net income is $40,000?
Which of the following is classified as a liability account?
Which of the following is classified as a liability account?
In a perpetual inventory system, which journal entry correctly records a payment made for purchased inventory after the discount period?
In a perpetual inventory system, which journal entry correctly records a payment made for purchased inventory after the discount period?
Which account would appear in the balance sheet debit column of the worksheet?
Which account would appear in the balance sheet debit column of the worksheet?
What is the correct journal entry to record the return of defective inventory valued at $800?
What is the correct journal entry to record the return of defective inventory valued at $800?
Which statement correctly reflects a feature of the perpetual inventory system?
Which statement correctly reflects a feature of the perpetual inventory system?
What is the balance in the Income Summary account prior to closing if the company earns $12,000 in revenue and incurs $5,500 in expenses?
What is the balance in the Income Summary account prior to closing if the company earns $12,000 in revenue and incurs $5,500 in expenses?
Which of the following accurately describes the relationship shown in the balance sheet?
Which of the following accurately describes the relationship shown in the balance sheet?
What does Cost of Goods Sold (COGS) refer to?
What does Cost of Goods Sold (COGS) refer to?
What happens when a customer returns merchandise purchased with cash valued at $2,500 with a cost of $1,000?
What happens when a customer returns merchandise purchased with cash valued at $2,500 with a cost of $1,000?
What is the debit amount to Cash Short & Over based on the given cash balances?
What is the debit amount to Cash Short & Over based on the given cash balances?
How much bad debts expense will the company report on the income statement after analysis?
How much bad debts expense will the company report on the income statement after analysis?
Which accounting method is not acceptable for estimating bad debt expense under GAAP?
Which accounting method is not acceptable for estimating bad debt expense under GAAP?
How should the company record the $200 payment received from A.Dorothy after writing off her receivable?
How should the company record the $200 payment received from A.Dorothy after writing off her receivable?
What is referred to as 'freight in' in accounting terms?
What is referred to as 'freight in' in accounting terms?
Which type of journal is used to record the purchase of computers on account?
Which type of journal is used to record the purchase of computers on account?
What does the Allowance for Bad Debts account represent in accounting?
What does the Allowance for Bad Debts account represent in accounting?
What is the purpose of source documents in an accounting information system?
What is the purpose of source documents in an accounting information system?
What does a subsidiary ledger provide?
What does a subsidiary ledger provide?
Which inventory costing method calculates a new average cost after each purchase?
Which inventory costing method calculates a new average cost after each purchase?
What is the market value for inventory valued at lower-of-cost-or-market under U.S. GAAP?
What is the market value for inventory valued at lower-of-cost-or-market under U.S. GAAP?
What is the calculated Cost of Goods Sold when using the last-in, first-out method for 200 units sold?
What is the calculated Cost of Goods Sold when using the last-in, first-out method for 200 units sold?
What requirement does the Sarbanes-Oxley Act impose on auditors?
What requirement does the Sarbanes-Oxley Act impose on auditors?
What would be reported as Merchandise Inventory if the cost of an item is $110 and the current replacement cost is $90?
What would be reported as Merchandise Inventory if the cost of an item is $110 and the current replacement cost is $90?
Which inventory costing method will minimize income tax expenses during rising inventory costs?
Which inventory costing method will minimize income tax expenses during rising inventory costs?
How should a company calculate the Weighted-Average Unit Cost?
How should a company calculate the Weighted-Average Unit Cost?
Flashcards
Accounting Equation
Accounting Equation
Assets equal the sum of liabilities and equity.
Posting
Posting
Transferring data from the journal to the ledger.
Unearned Revenue
Unearned Revenue
Liability created when cash is received for future services.
Prepaid Rent
Prepaid Rent
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Accumulated Depreciation
Accumulated Depreciation
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Residual Value
Residual Value
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Straight-Line Depreciation
Straight-Line Depreciation
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Journal Entry for Services and Cash
Journal Entry for Services and Cash
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Depreciation Expense
Depreciation Expense
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Calculate Ending Balance
Calculate Ending Balance
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Interest Expense
Interest Expense
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Accrued Interest
Accrued Interest
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Maturity Value
Maturity Value
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Office Supplies
Office Supplies
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Supplies Expense
Supplies Expense
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Office Supplies Expense
Office Supplies Expense
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Prepaid Insurance
Prepaid Insurance
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Owner, Capital
Owner, Capital
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Net Income
Net Income
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Worksheet
Worksheet
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Income Summary
Income Summary
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Adjusting Entry
Adjusting Entry
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Sales Returns
Sales Returns
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Post-Closing Trial Balance
Post-Closing Trial Balance
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Temporary Accounts
Temporary Accounts
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Cost of Goods Sold (COGS)
Cost of Goods Sold (COGS)
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Gross Profit
Gross Profit
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Perpetual Inventory System
Perpetual Inventory System
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Inventory
Inventory
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Purchase Discount
Purchase Discount
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Returns of Goods
Returns of Goods
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Subsidiary Ledger
Subsidiary Ledger
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Accounts Payable Subsidiary Ledger
Accounts Payable Subsidiary Ledger
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Sarbanes-Oxley Act (SOX)
Sarbanes-Oxley Act (SOX)
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Market Value for Inventory
Market Value for Inventory
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Weighted-Average Inventory Costing
Weighted-Average Inventory Costing
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First-In, First-Out (FIFO)
First-In, First-Out (FIFO)
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Last-In, First-Out (LIFO)
Last-In, First-Out (LIFO)
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Cost of Goods Sold Calculation
Cost of Goods Sold Calculation
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Sales Discount Forfeited
Sales Discount Forfeited
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Allowance for Bad Debts
Allowance for Bad Debts
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Direct Write-Off Method
Direct Write-Off Method
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Freight In
Freight In
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Freight Out
Freight Out
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Source Documents
Source Documents
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Specific Identification
Specific Identification
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Special Journal
Special Journal
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Study Notes
Accounting Equation
- Assets = Liabilities + Equity
- Equity of ABC Company is $160,000
- Total liabilities are $90,000
- Total assets are $250,000 (160,000 + 90,000)
Posting
- Transferring data from the journal to the ledger is called posting
Journal Entry (Cash Received for Services)
- Cash 900
- Service Revenue 900
GAAP
- Generally Accepted Accounting Principles (GAAP)
- Liabilities and revenues decrease with debits
Unearned Revenue
- Liability created when customers pay in advance for services or goods
Journal Entry (Payment for Supplies)
- Accounts Payable 750
- Cash 750
Prepaid Rent
- ZYX Tax Planning service prepaid rent of $32,400
- Rent is $5,400 per month, beginning January 1, 2024
- Balance of Prepaid Rent account on April 30, 2024 was $10,800 (32,400 - 21,600)
Depreciation
- Accumulated Depreciation is a record of all depreciation expenses
- Residual value is the expected value of a depreciable asset at the end of its useful life.
- Equipment purchased for $155,000, depreciated over 5 years
- Straight-line depreciation: (Cost-Residual value) / Useful life,
- Depreciation expense for the first year is $31,000, and
- Accumulated depreciation is also $31,000
Accounts Receivable
- Balance of Accounts Receivable is $23,000 (25,000 + 3,000) – 5,000)
Notes Payable (Interest Calculation)
- One-year note payable of $12,000 at 8% interest
- Interest expense accrued on May 31 is $240
Account Receivable Note
- Note of $6,500 for 5 months at 11% accepted on October 1, 2025
- Accrued interest as of December 31, 2025 is $240. (6500 X 0.11 X (3/12))
Bank Note
- Maturity value of the note is $231,890. (230,000 X 0.04 X 75/365 = 1,890.41 + 230,000 = 231,890)
Office Supplies
- Office supplies purchased on account are $800
- Beginning balance of Office Supplies account is $6,000
- Purchases during the accounting period is $5,500
- Ending balance on hand is $2,200
- Supplies expense for the accounting period is $9,300 (6000 + 5500 – 2200)
Prepaid Insurance
- Prepaid insurance of $9,600 for one year, covering from Oct 1, 2024
- Balance in Prepaid Insurance account on Jan 1, 2025 is $7,200
Capital Account
- Net income of 40,000andownerwithdrawalof40,000 and owner withdrawal of 40,000andownerwithdrawalof51,000
- Capital account decreases by $11,000 (51,000 - 40,000)
Worksheet
- Helps prepare financial statements
- Net income is in the balance sheet credit column and debit column of income statement
- Balance in Income Summary account before closing is $6,500
Adjusting Entries
- Adjust for estimated returns, and merchandise returned by customer
- Returns payable and merchandise inventory accounts involved
Perpetual Inventory System
- Inventory system that maintains a running computerized record of merchandise
Cost of Goods Sold
- Cost of merchandise sold to customer.
- Gross profit = Sales Revenue - Cost of Goods Sold.
Bank Reconciliation
-
Reconciles the bank statement balance to the depositor’s book balance.
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Deposits in transit: Deposits recorded in the depositor's books but not yet by the bank
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Outstanding checks: Checks written by the depositor but not yet cashed by the bank
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Adjusted book balance is $6,935 (7000 - 100 + 35)
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NSF check: A check returned by a bank because of insufficient funds.
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Accounts Receivable and cash involved.
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Description
Test your knowledge on key accounting concepts such as the accounting equation, GAAP, and journal entries. This quiz covers topics like assets, liabilities, equity, unearned revenue, and depreciation. Ideal for accounting students and professionals looking to refresh their skills.
