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Bookkeeping Certification
The review of financial statements to assess their fairness and adherence to GAAP is - correct answer ✔✔auditing An independent accountant who performs financial audits is a - correct answer ✔✔Certified Public Accountant (CPA) To become a CPA, an individual - correct answer ✔✔must have a certain number of college credits in accounting courses. pass the Uniform CPA Examination. fulfill the experience requirements of the state of practice. Which of the following is not a service typically provided by a public accounting firms? - correct answer ✔✔Investing services The entity that has final authority over the financial reporting of publicly owned corporations is the - correct answer ✔✔Securities and Exchange Commission (SEC). Which of the following is not a provision of the Sarbanes-Oxley Act? - correct answer ✔✔The Sarbanes- Oxley Act allows accountants from offering a broad range of consulting services to publicly traded companies that they audit. The following are all government agencies except - correct answer ✔✔American Institute of Certified Public Accountants (AICPA). The following are all characteristics of a sole proprietorship except: - correct answer ✔✔A sole proprietorship is legally separate from its owner.
The financial statements submitted by a corporation to the SEC include the auditor's report. The auditor's report: - correct answer ✔✔confirms that the financial information is prepared in conformity with generally accepted accounting principles. The group of accounting educators who perform research to determine the possible effects on financial reporting and the economy and then offer their opinions about proposed FASB statements is the - correct answer ✔✔American Accounting Association (AAA). When J. Simmons, the owner, invests in her business, the transaction would be entered on the - correct answer ✔✔right side of the J. Simmons, Capital T account. Modern products paid cash to a creditor. To record this transaction, the accountant would - correct answer ✔✔debit Accounts Payable and credit Cash. The normal balance of an account is the - correct answer ✔✔increase side of the account. Which of the following types of accounts normally have debit balances? - correct answer ✔✔Expenses and assets Which of the following groups contain only accounts that normally have credit balances? - correct answer ✔✔Fees Income and John Smith, Capital Which of the following decreases owner's equity? - correct answer ✔✔Expenses If the trial balance totals are not equal, the error may have been caused by a transposition if the difference is divisible by - correct answer ✔✔ 9 The three financial statements are linked together because the - correct answer ✔✔net income from the income statement is used on the statement of owner's equity and the ending balance of the capital account, computed on the statement of owner's equity, is used on the balance sheet. Which of the following accounts is not a permanent account? - correct answer ✔✔Salaries Expense
When an entry is made in the general journal, - correct answer ✔✔accounts to be debited should be listed first. The journal entry to record the sale of services on credit should include a - correct answer ✔✔debit to Accounts Receivable and a credit to Fees Income. The journal entry to record the payment of a monthly utility bill would include a - correct answer ✔✔debit to Utilities Expense and a credit to Cash. The journal entry to record the receipt of cash from clients on account would include a - correct answer ✔✔debit to Cash and a credit to Accounts Receivable. The journal entry to record the withdrawal of cash by Sue Snow, the owner, to pay a personal utility bill would include a - correct answer ✔✔debit to Sue Snow, Drawing and a credit to Cash. The journal entry to record a payment made in January for rent for the months of February and March would include a - correct answer ✔✔debit to Prepaid Rent and a credit to Cash. The Accounts Payable account has a $5,000 credit balance. An entry for the payment of $2,000 on the amount owed is recorded and posted. The new balance of the Accounts Payable account is - correct answer ✔✔a $3,000 credit balance. The Posting Reference column of a journal is used to - correct answer ✔✔record the number of the ledger account to which the information is posted. The process of transferring data from the journal to the ledger is known as - correct answer ✔✔posting. A firm purchased telephone equipment for cash. By mistake, the person who recorded the transaction debited Utilities Expense instead of Office Equipment. The error was discovered after the data posted. The correcting entry should contain - correct answer ✔✔a debit to Office Equipment and a credit to Utilities Expense. If a worksheet is prepared, there is no need to separately prepare a(n) - correct answer ✔✔trial balance.
Centrum Services purchased $36,000 worth of equipment. The equipment has an estimated useful life of five years and no salvage value. Using the straight-line method, the depreciation for the first month is - correct answer ✔✔$600. On a worksheet, the adjusting entry to account for depreciation of equipment consists of a - correct answer ✔✔debit to Depreciation Expense and a credit to Accumulated Depreciation. The adjusting entry to account for use of prepaid insurance consists of - correct answer ✔✔a debit to Insurance Expense and a credit to Prepaid Insurance. If an adjusting entry relating to prepaid insurance is not entered onto the worksheet, assets on the balance sheet - correct answer ✔✔will be overstated. The adjusting entry to account for use of supplies consists of a - correct answer ✔✔debit to Supplies Expense and a credit to Supplies. If an account has a debit balance in the Trial Balance section of the worksheet, the amount (that is, the adjusted account balance) that will be entered in the Adjusted Trial Balance section - correct answer ✔✔depends on the nature of the entry in the Adjustments section. After all account balances have been transferred from the Adjusted Trial Balance section of the worksheet to the financial statement sections, the Income Statement section of the worksheet includes the following totals. The Credit column total is $120,000 and the total of the Debit column is $80,000. The Income Statement section of the worksheet - correct answer ✔✔would be completed by entering $40,000 in the Debit column with the words "Net Income" in the Account Name column. On the worksheet, the Balance Sheet columns should balance - correct answer ✔✔after the net income amount is added to the Balance Sheet Credit column. The book value of long-term assets is reported on - correct answer ✔✔the balance sheet. One purpose of closing entries is to - correct answer ✔✔transfer the results of operations to owner's equity.
The Sales Returns and Allowances account is classified as a(an) - correct answer ✔✔contra revenue account. If Morgan Industries issued a Credit Memorandum 1204 on January 20 for a return of $400 merchandise purchased on account by Doug Bowen, plus 8 percent sales tax, the credit memorandum would total: - correct answer ✔✔$432. Assuming that no sales tax is collected, a business credit card sale is recorded as a - correct answer ✔✔debit to Accounts Receivable and a credit to Sales. Suppose the list price of goods is $1,000 and the trade discount is 20 percent. What is the amount of the discount and what is the net price the wholesaler records as sales? - correct answer ✔✔$200; $ If an invoice lists "2/10, n/30," these numbers and letters are known as: - correct answer ✔✔the credit terms. Connor Company sells merchandise for $2,000 on account to Market Industries on January 21, at 1/10, n/30, Invoice 190. Market returns $200 of the merchandise on January 23, receiving credit memorandum 120 from Connor. What amount would Market pay if they submit payment on January 29?
- correct answer ✔✔$1,782. Merchandise is sold on credit for $500 plus 6 percent sales tax. The entry in the general journal will include a debit to Accounts Receivable for - correct answer ✔✔$530.00. When a sales tax return is prepared, the amount of a firm's taxable gross sales for the month are computed as - correct answer ✔✔Cash sales plus Credit sales less Sales returns and allowances. Sampson Company collected $1,300 in sales taxes from customers in March 2010. Sampson is allowed to keep 1.5 percent of sales tax collected. The journal entry to record the discount kept by Sampson would include: - correct answer ✔✔debit to Sales Tax Payable for $19.50 and a credit to Miscellaneous Income for $19.50. The entry to record a purchase of merchandise on credit includes - correct answer ✔✔a debit to Purchases and a credit to Accounts Payable.
Which of the following statements is correct? - correct answer ✔✔The credit terms, 2/10, n/30, allow the customer to take a 2 percent discount if payment is made within 10 days. The Purchases account is a - correct answer ✔✔temporary account. If Gordon Company purchases merchandise on account and the invoice includes freight and the price of goods, the journal entry to record this will affect how many accounts? - correct answer ✔✔three. Credit terms of 1/10, n/30 mean that - correct answer ✔✔if the invoice is paid within 10 days of its date, a 1% discount may be taken; otherwise the total amount is due in 30 days. The net delivered cost for purchases is calculated as follows: - correct answer ✔✔Purchases plus Freight In less Purchases Returns and Allowances less Purchases Discounts. Detailed information about the individual accounts for all creditors is provided by - correct answer ✔✔an accounts payable ledger. A balance with parentheses ( ) around the amount indicates - correct answer ✔✔a non-normal or negative balance. The schedule of accounts payable is prepared from the - correct answer ✔✔accounts payable subsidiary ledger. Which of the following is an objective of internal control of purchases? - correct answer ✔✔To create written proof that purchases and payments are authorized. Discount Store, a retail business, keeps a $100 change fund in its cash register. If Discount started business on September 29 and had cash sales per the cash register on that day of $1,200, but the cash count showed $1,307, then the cash register was: - correct answer ✔✔over by $7. Upon collection of the amount due on an interest-bearing promissory note from a customer, the accountant would debit Cash, credit Notes Receivable, and - correct answer ✔✔credit Interest Income.
Which of the following statements is not correct? - correct answer ✔✔The FUTA tax provides benefits for employees who become unemployed. The federal unemployment tax rate can be reduced by the rate charged by the state for the state unemployment tax. The earnings base for the federal and state unemployment taxes are the same, the first $7,000 of an employee's earnings for the year. An employee whose regular hourly rate is $10 and whose overtime rate is 1.5 times the regular rate worked 44 hours in one week. In the payroll register, the employer should record an overtime premium of - correct answer ✔✔$20. Which of the following is a factor in the determination of the amount of social security tax to withhold from an employee's pay? - correct answer ✔✔gross wages Which of the following statements is not correct? - correct answer ✔✔Assuming that the base amount has not yet been exceeded, to compute the Medicare tax to withhold from the employee's paycheck, multiply the wages by the Medicare tax rate of 1.45%. The amount of federal income tax to withhold from an employee's earnings depends on the - correct answer ✔✔earnings during the pay period and length of the pay period, marital status, and number of withholding allowances. Which of the following statements about the payroll register is not correct? - correct answer ✔✔The deductions are added to the gross earnings to compute Net Amount, which is the amount paid to each employee. The employer records the amount of federal income tax withheld from employees as - correct answer ✔✔Employee Income Tax Payable. All details related to an employee's earnings, deductions, and net pay throughout the year would be found in - correct answer ✔✔the individual earnings record.
Employees' payments for federal income taxes withheld and social security and Medicare taxes are periodically - correct answer ✔✔deposited in a government-authorized financial institutio The frequency of deposits of federal income taxes withheld and social security and Medicare taxes is most dependent on the - correct answer ✔✔amount of the tax liability. Both the employer and the employee are responsible for paying - correct answer ✔✔social security and Medicare taxes. The entry to record a deposit of federal income taxes withheld and social security and Medicare taxes would include a - correct answer ✔✔debit to one or more liability accounts and credit to an asset account. Form 941 is filed - correct answer ✔✔quarterly The Employer's Quarterly Federal Tax Return includes a calculation of the firm's liability for the quarter for - correct answer ✔✔federal income taxes withheld and social security and Medicare taxes. Each employee of a firm will receive several copies of the Wage and Tax Statement, Form W-2, from the - correct answer ✔✔employer once a year Which of the following forms is submitted with a copy of the Form W-2 for each employee to the Social Security Administration? - correct answer ✔✔Form W-3. Which of the following statements is not correct? - correct answer ✔✔The normal federal unemployment tax rate of 0.8% (or 6.2% less the state unemployment tax credit of 5.4%) changes if favorable experience ratings change the state unemployment tax rate. All of the following are internal control procedures that are recommended to protect payroll operations except - correct answer ✔✔assign new employees to work in payroll operations. The entry to place the ending inventory on the books would include a - correct answer ✔✔debit to the Merchandise Inventory account and a credit to the Income Summary account.
The Accounts Payable account has a $3,000 credit balance. An entry for the payment of $1,000 on the amount owed is recorded and posted. The new balance of the Accounts Payable account is - correct answer ✔✔a $2,000 credit balance. The cost of a long-term asset, such as equipment, is transferred to expense as it is used during its life. - correct answer ✔✔true The entry to close the revenue account Fees Income requires a debit to that account. - correct answer ✔✔true The balance of a customer's account in the accounts receivable ledger is circled to show that it is a debit amount. - correct answer ✔✔false Which of the following is not a reason why the book balance of cash may not agree with the balance on the bank statement? - correct answer ✔✔end of the month After both of the entries for the inventory adjustment have been posted the debit in the Income Summary account represents - correct answer ✔✔Beginning Inventory Interest on notes payable would be listed in the Other Income section of a classified income statement. - correct answer ✔✔false
