Accounting

Question 1

subsidiary ledger

Answer 1

A ledger that is summarized in a single general ledger account. Accountants often refer to a subsidiary ledger as a subledger

Question 2

accounts payable ledger

Answer 2

The subsidiary ledger containing vendor accounts.

Question 3

special journal

Answer 3

A journal used to record only one kind of transaction.

Question 4

purchases journal

Answer 4

A special journal used to record only purchases of merchandise on account.

Question 5

cash payments journal

Answer 5

A special journal used to record only cash payment transactions

Question 6

contra account

Answer 6

An account that reduces a related account on a financial statement

Question 7

What is the relationship between a controlling account and a subsidiary ledger?

Answer 7

A controlling account summarizes all accounts in a subsidiary ledger

Question 8

accounts receivable ledger

Answer 8

A subsidiary ledger containing all accounts for charge customers.

Question 9

sales journal

Answer 9

A special journal used to record only sales of merchandise on account.

Question 10

cash receipts journal

Answer 10

A special journal used to record only cash receipt transactions

Question 11

sales discount

Answer 11

A cash discount on a sale taken by the customer

Question 12

selling price

Answer 12

The amount a business receives from the sale of an item of merchandise.

Question 13

What is meant by 2/10, n/30 credit terms?

Answer 13

a trade credit extended to the buyer from the seller.

Question 14

general journal

Answer 14

A journal with two amount columns in which all kinds of entries can be recorded

Question 15

purchases return

Answer 15

Credit allowed for the purchase price of returned merchandise, resulting in a decrease in the customer’s account payable to the vendor

Question 16

purchases allowance

Answer 16

Credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease in the customer’s account payable to the vendor.

Question 17

sales return

Answer 17

Credit allowed to a customer for the sales price of returned merchandise, resulting in a decrease in the accounts receivable of the merchandising business

Question 18

sales allowance

Answer 18

Credit allowed to a customer for part of the sales price of merchandise that is not returned, resulting in a decrease in the accounts receivable of the merchandising business

Question 19

What action is required before a corporation can distribute income to its stockholders?

Answer 19

declare a dividend.

Question 20

pay period

Answer 20

The number of days or weeks of work covered by an employee’s paycheck.

Question 21

payroll

Answer 21

The total amount earned by all employees for a pay period

Question 22

payroll clerk

Answer 22

The accounting staff position that compiles and computes payroll data, then prepares, journalizes, and posts payroll transactions.

Question 23

payroll taxes

Answer 23

Taxes based on the payroll of a business

Question 24

payroll register

Answer 24

An accounting form that summarizes the earnings, deductions, and net pay of all employees for one pay period

Question 25

net pay

Answer 25

Earnings paid to an employee after payroll taxes and other deductions.

Question 26

payroll deduction

Answer 26

Any amount withheld from an employee’s gross earnings.

Question 27

accumulated earnings

Answer 27

The total gross earnings year to date for an employee.

Question 28

Where does an employer get the information used to determine the amount of federal income tax to withhold from employees’ earnings?

Answer 28

Withholding tables prepared by Internal Revenue Service.

Question 29

salary expense

Answer 29

The total of gross earnings for all employees earning hourly wages, salaries, and commissions.

Question 30

federal unemployment tax

Answer 30

A federal tax paid by employers to administer the unemployment program.

Question 31

state unemployment tax

Answer 31

A state tax paid by employers that is used to pay benefits to unemployed workers.

Question 32

What taxes are included in the quarterly federal tax return filed by the employer?

Answer 32

employment taxes (federal income tax withheld, social security and Medicare taxes withheld, and your share of

Question 33

uncollectible accounts

Answer 33

Accounts receivable that cannot be collected

Question 34

book value

Answer 34

The difference between an asset’s account balance and its related contra account balance

Question 35

writing off an account

Answer 35

Canceling the balance of a customer account because the customer does not pay

Question 36

note payable

Answer 36

A promissory note signed by a business and given to a creditor.

Question 37

note receivable

Answer 37

A promissory note that a business accepts from a person or business

Question 38

dishonored note

Answer 38

A note that is not paid when due

Question 39

Payee

Answer 39

The person or business to whom the amount of a note is payable

Question 40

Maker of note

Answer 40

The person or business that signs a note and thus promises to make payment.

Question 41

What is the advantage of a promissory note over an account receivable?

Answer 41

gives the holder a stronger legal claim

Question 42

unadjusted trial balance

Answer 42

A trial balance prepared before adjusting entries are posted.

Question 43

accrued revenue

Answer 43

Revenue earned in one fiscal period but not received until a later fiscal period

Question 44

current assets

Answer 44

Cash and other assets expected to be exchanged for cash or consumed within a year

Question 45

plant assets

Answer 45

Physical assets that will be used for a number of years in the operation of a business.

Question 46

depreciation

Answer 46

A loss in the usefulness of a plant asset as a result of wear or obsolescence.

Question 47

straight-line method of depreciation

Answer 47

Recording an equal amount of depreciation expense for a plant asset in each year of its useful life.

Question 48

book value of a plant asset

Answer 48

The original cost of a plant asset minus accumulated depreciation.

Question 49

adjusted trial balance

Answer 49

A trial balance prepared after adjusting entries are posted

Question 50

What three factors are used to calculate a plant asset’s annual depreciation expense?

Answer 50

Original cost. Salvage value. Useful life.

Question 51

net sales

Answer 51

The amount of sales, less sales discounts and sales returns and allowances.

Question 52

cost of merchandise sold

Answer 52

The original price of all merchandise sold during a fiscal period.

Question 53

gross profit

Answer 53

The operating revenue remaining after cost of merchandise sold has been deducted.

Question 54

statement of stockholders’ equity

Answer 54

A financial statement that shows changes in a corporation’s ownership for a fiscal period.

Question 55

par value

Answer 55

A value assigned to a share of stock and printed on the stock certificate.

Question 56

current liabilities

Answer 56

Liabilities due within a short time, usually within a year

Question 57

long-term liabilities

Answer 57

Liabilities owed for more than a year

Question 58

What are the twelve steps of the accounting cycle (in numeric order)?

Answer 58

``` Identify transactions. Record transactions. Post journal entries to ledger accounts. Prepare unadjusted trial balance. Prepare adjusting entries. Prepare an adjusted trial balance. Prepare financial statements. Prepare closing entries ```