Office and Store Equipment Quiz

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Questions and Answers

What is the term for the structure used to house an office, store, or factory?

Building (correct)

Leasehold

Equipment

Furniture

Which of the following is NOT an example of equipment used in a business?

Typewriter

Air conditioner

Calculator

Curtains (correct)

What does the term 'accumulated depreciation' refer to?

The current market value of the equipment

The cost of new plant and property

A deduction from the property, plant, and equipment account (correct)

An account for liabilities of the business

Which type of liability is expected to be liquidated within one year?

Current Liabilities Signup and view all the answers

What type of liability is described as money owed supported by a promissory note?

Notes Payable Signup and view all the answers

What does the term 'leasehold or lease right' refer to?

The right to use property for a fee Signup and view all the answers

What is an example of a current liability?

Accounts Payable Signup and view all the answers

Which of the following is classified as furniture and fixtures?

Chairs Signup and view all the answers

What was the total book value of the assets listed for Jepsy’s science tutorials store?

P590,000 Signup and view all the answers

What was the current market value of the merchandise inventory?

P138,000 Signup and view all the answers

How much did Carl Angelo initially invest to buy the store?

P208,000 Signup and view all the answers

What is the net assets value after accounting for liabilities?

P440,000 Signup and view all the answers

What was the book value of the office furniture and equipment?

P250,000 Signup and view all the answers

How much is the accounts payable listed in the transaction?

P150,000 Signup and view all the answers

Which asset had the highest current market value?

Accounts Receivable Signup and view all the answers

What amount did Jepsy decrease from the value of merchandise inventory?

P102,000 Signup and view all the answers

What is a credit memorandum?

A document issued by the seller for a return or price reduction Signup and view all the answers

In FOB Destination, Freight Collect, who is responsible for the transportation costs?

The buyer pays for the costs upon delivery Signup and view all the answers

Who assumes title to goods in a FOB Shipping Point agreement?

The buyer at the point of shipment Signup and view all the answers

What does Freight Prepaid indicate in shipping terms?

The seller has already covered the transportation costs Signup and view all the answers

Which type of memorandum does a buyer issue to indicate a return?

Debit Memorandum Signup and view all the answers

In which scenario does the seller shoulder the transportation costs?

FOB Destination, Freight Prepaid Signup and view all the answers

What is the responsibility of the buyer in FOB Shipping Point, Freight Collect?

To bear the transportation costs at the delivery point Signup and view all the answers

What are doubtful accounts primarily concerned with?

Accounts that may become bad debts Signup and view all the answers

Which freight term indicates the buyer receives title at the shipping point?

FOB Shipping Point, Freight Collect Signup and view all the answers

Which method recognizes bad debts only when it is certain?

Direct write-off method Signup and view all the answers

What is the formula for calculating simple interest?

Interest = (Principal)(Rate)(Time) Signup and view all the answers

How is depreciation calculated?

Depreciation = [Cost – salvage value] / estimated useful life Signup and view all the answers

What type of account adjustment is necessary if the periodic inventory system is in use?

Adjustment for merchandise inventory Signup and view all the answers

Which financial statement is also known as the Profit or Loss Statement?

Income Statement Signup and view all the answers

What does Freight Collect indicate in a transaction?

The buyer pays the transportation costs at the destination. Signup and view all the answers

In which account is depreciation expense recorded?

Depreciation expense Signup and view all the answers

Which account represents the cumulative amount of depreciation that has been expensed up to a specific date?

Accumulated depreciation Signup and view all the answers

What is the main purpose of posting in accounting?

To transfer debits and credits from journal to ledger. Signup and view all the answers

Which type of ledger shows both debits and credits alongside balances?

Three Column Ledger Signup and view all the answers

What facilitates the tracing of an entry to and from the journal and ledger?

Cross reference Signup and view all the answers

What is a T-Account primarily used for in accounting?

To analyze transaction effects on accounts. Signup and view all the answers

What does the Chart of Accounts provide for a bookkeeper?

Guidance on how to record transactions. Signup and view all the answers

What is 'footing' in the context of ledger accounts?

Calculating totals for debits and credits. Signup and view all the answers

In the context of ledger accounts, what does 'posting' help to achieve?

Updates account balances. Signup and view all the answers

Study Notes

Business Assets

Building: Structure for housing offices, stores, or factories.
Equipment: Includes typewriters, air conditioners, calculators, computers, and vehicles (trucks, cars) for business operations.
Furniture and Fixtures: Comprises tables, chairs, curtains, lighting fixtures, and wall decor.
Leasehold Rights: Lessee obtains long-term usage rights of a property for a fee.
Accumulated Depreciation: Contra asset account reflecting reduced value of property, plant, or equipment due to usage over time, deducted from total asset value.

Liabilities

Current Liabilities: Debts due to be settled within a year or in the operating cycle, typically paid using current assets.
- Accounts Payable: Liabilities to suppliers for goods/services received on credit.
- Notes Payable: Liabilities established via promissory notes to creditors.
- Loans Payable: Borrowings from banks or financial institutions.

Investment Scenario

Jepsy offers Jepsy’s Science Tutorials Store to Carl Angelo for P208,000.
Adjustments made due to decreased values in merchandise inventory and office furniture/equipment.
Asset Valuations:
- Accounts Receivable: P100,000
- Merchandise Inventory: P138,000 (declined from P240,000)
- Office Furniture & Equipment: P120,000 (declined from P250,000)
- Total Assets: P358,000 after liabilities.

Returns and Allowances

Credit Memorandum: Issued by seller to inform buyer of adjustments to their account due to returns or price reductions.
Debit Memorandum: Issued by buyer for reductions.

Freight Terms

FOB Destination, Freight Prepaid: Seller bears freight cost.
FOB Destination, Freight Collect: Seller bears freight cost; buyer picks up.
FOB Shipping Point: Buyer assumes transportation costs from shipment point; title transfers at this point.

Ledger Management

Ledger: Records all changes to account balances.
General Ledger: Final record book for transactions.
Posting: Transferring journal entries to the ledger.
T-Account: Tool for analyzing the impact of transactions on accounts.

Chart of Accounts

Records transactions affecting assets, liabilities, and owner's equity.
Guides bookkeepers in transaction recording.

Doubtful Accounts

Represents potentially uncollectible customer accounts.
- Allowance Method: Estimates bad debts based on historical data.
- Direct Write-off Method: Recognizes bad debts only when they are considered uncollectible.

Depreciation

Systematic allocation of the cost of a non-current asset over its useful life.
Depreciation Formula: [ \text{Depreciation} = \frac{(\text{Cost} - \text{Salvage Value})}{\text{Estimated Useful Life}} ]

Financial Statements

Income Statement: Also known as Profit or Loss Statement; outlines revenues and expenses to show business performance.

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Description

Test your knowledge on various types of office and store equipment. This quiz covers essential tools and furniture like typewriters, calculators, and office furniture. Dive in to see how well you understand the assets used in business environments!