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MOR 260: National Board Exam Review > Accounting Comprehensive Exam > Flashcards

Flashcards in Accounting Comprehensive Exam Deck (55):
1

Journal in which the transaction should be recorded:

Purchased store supplies on credit for $485

Purchases Journal

2

Journal in which the transaction should be recorded:

Sold $230 of merchandise to a customer on account

Sales Journal

3

Journal in which the transaction should be recorded:

A customer returned a $260 item purchased on account

General Journal

4

Journal in which the transaction should be recorded:

Paid supplier on due date for merchandise originally purchased on account

Cash Disbursements Journal

5

Journal in which the transaction should be recorded:

Recorded depreciation for the year

General Journal

6

Journal in which the transaction should be recorded:

Returned defective merchandise originally purchased on account

General Journal

7

Journal in which the transaction should be recorded:

Paid the $540 monthly utilities

Cash Disbursements Journal

8

Journal in which the transaction should be recorded:

The owner invested $10,000 in the business

Cash Receipts Journal

9

Balance sheet category:

Current assets

Accounts Receivable

10

Balance sheet category:

Current liabilities

Interest Payable

11

Balance sheet category:

Long-tern liabilities

Bonds payable in more than one year

12

Balance sheet category:

Owner's equity

Owners name, Capital

13

Balance sheet category:

Plant and equipment

Buildings

14

Balance sheet category:

Investments

Shares of stock in another company

15

Balance sheet category:

Intangible assets

Goodwill

16

Balance sheet category:

Long-term liabilities

Bonds payable in more than one year

17

Balance sheet category:

Owner's equity

Owners name, Capital

18

Balance sheet category:

Current liabilities

Unearned Revenues

19

Balance sheet category:

Investments

Stocks

20

Balance sheet category:

Intangible assets

Patents

21

Balance sheet category:

Plant and equipment

Accumulated Depreciation

22

Balance sheet category:

Current assets

Building

23

The statement containing three sections which describe the operating, investing, and financing activities of a business during a period

Statement of Cash Flows (CF)

24

The statement that lists the types and amounts of the assets of a business on a given date

Balance Sheet (BS)

25

The statement that explains the items affecting owner's equity from the beginning of a period to the end of the period

Statement of Changes in Owner's Equity (COE)

26

The statement that shows all expenses incurred by a business during a specific period of time

Income Statement (IS)

27

Product warranties are usually treated as contingent liabilities. (T/F)

True

28

Federal income taxes are withheld from each paycheck during the year until the tax-exempt limit is reached. (T/F)

False

29

Deferred income taxes result from temporary differences between taxable income on the tax return and income before taxes on the income statement. (T/F)

True

30

The costs of patents are amortized over 40 years. (T/F)

True

31

The process of systematically writing off the cost of an intangible asset to expense over its estimated useful life is:

Amortization

32

If a business's inventory on hand was destroyed by fire, but the accounting records were saved, the method that would probably be used to estimate the amount of inventory lost would be the:

Gross profit method

33

What is the final step in the accounting cycle?

Preparing a post-closing trial balance

34

A condition in which, because of new inventions and improvements, a plant asset can no longer be used to produce goods or services with a competitive advantage is called:

Obsolescence

35

An error is indicated if the following account has a balance appearing on the post-closing trial balance:

Depreciation Expense, Law Library

36

A debit is used to record:

A increase in the balance of the owner's withdrawals account

37

The portion of a corporation's equity that represents its cumulative net incomes, less net losses and dividends, is called:

Retained earnings

38

A company that uses a Sales Journal, a Purchase Journal, a Cash Receipts Journal, a Cash Disbursements Journal, and a General Journal purchased a truck and signed a promissory note for the purchase price. In which journal should the transaction be recorded?

General Journal

39

When a company updates the Merchandise Inventory account in the process of making closing entries, one closing entry will include a credit to Merchandise Inventory equal to the:

Amount of beginning inventory

40

Which of the following statements is incorrect?

* Prepaid expenses, depreciation, and unearned revenues involve previously recorded assets and liabilities
* Accrued expenses and accrued revenues involve assets and liabilities that have not yet been recorded
* Prepaid expenses, depreciation, and unearned revenues require adjusting entries to record the effects of the passage of time
* Adjusting entries are used to record both accrued expenses and accrued revenues

All of the following statements are correct

41

Double-entry accounting is:

* An accounting system in which the sum of the debit account balances in the ledger must always equal the sum of the credit account balances
* An accounting system which uses the accounting equation, A = L + OE
* An accounting system in which every transaction affects and is recorded in at least two accounts
* An accounting system in which errors cannot always be avoided

42

When a market value decline occurs in a company's portfolio of long-term investments in debt and equity securities available for sale, the company would report this decline on the:

Balance sheet

43

When a single-column Sales Journal's Amount column is totaled at the end of the month, the total is:

Debited to Accounts Receivable and credited to Sales

44

Using special journals in addition to a General Journal:

Saves posting labor

45

Cash investments by owners are listed on which statement?

???

46

Instead of extending credit to customers, a business may allow customers to use credit cards issued by banks or credit card companies because:

* The business does not have to evaluate the credit standing of each customer
* The business often receives cash from the credit card company sooner than if credit were extended to the customer
* The business avoids the risk of extending credit to customers who cannot pay

47

The Stanley Company's beginning inventory for 1991 was $32,000. During 1991 Stanly made purchases of $24,700 and returned $400 of merchandise. Purchases discounts totaled $3,600. If Stanley's ending inventory was $30,000 for 1991, what was the cost of goods sold?

$22,700

48

The method of estimating bad debts expense that involves classifying accounts receivable by how long they have been outstanding, and which is usually the most reliable, is the:

Aging of accounts receivable method

49

What would be reported as a liability in the financial statements or in the footnotes?

* Discounted notes receivable
* Deferred income taxes
* Potential legal claims
* Product warranties

50

An asset, such as cash, that is easily converted into other types of assets or used to buy services or pay liabilities is a:

Liquid asset

51

Brandenburg Corp. depreciated a machine that cost $40,000 on a straight-line basis for three years under the assumption it would have a five-year life and a $6,000 trade-in value. At that point, the manager realized that the machine had three years of remaining useful life, after which it would have an estimated $4,600 trade-in value. Determine the amount of depreciation to be charged against the machine during each of the remaining years in its life.

$5,000

52

Which of the following assets is not depreciated?

* Boats
* Land
* Land improvements
* Professional library

Land

53

Accounts that are closed at the end of each accounting period (the revenue, expense, Income Summary, and withdrawals accounts) are known as:

???

54

If the liabilities of a business increased $8,000 during a period of time and owner's equity in the business decreased $3,000 during the same period, the assets of the business must have:

Increased $5,000

55

Gross profit (from sales) is:

The difference between net sales and the cost of goods sold

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