The account that should be credited for the total income tax withheld from employee’s
earnings is
a. FICA Tax Payable.
b. FICA Tax Expense.
c. Employee Income Tax Payable.
d. Employee Income Tax Expense.
A chart of accounts does NOT include
a. assets.
b. liabilities.
c. owner’s equity.
d. names of customers.
The adjustment to journalize an additional premium due at the end of the year for
workers’ compensation insurance (WCI) is
a. debit WCI Expense and credit Cash.
b. debit WCI Expense and credit Insurance Refund.
c. debit WCI Expense and credit WCI Payable.
d. debit Insurance Payable and credit WCI Payable.
Matching the cost of an asset with the revenue it is expected to produce is called
a. adjusting.
b. expensing.
c. depreciation.
d. contra-valuing.
Asset and expense accounts normally have
a. credit balances.
b. large balances.
c. debit balances.
d. negative balances.
A balance sheet that groups similar items is called a(n)
a. report form of balance sheet.
b. account form of balance sheet.
c. classified balance sheet.
d. temporary balance sheet.
Jan Olsen is a lawyer specializing in estate law. A trial balance was taken on December
31, 20–. Complete the year-end adjusting entries and extend the appropriate balances to
the Adjusted Trial Balance columns of the work sheet. Journalize the four adjusting
entries exactly as shown in the Adjustments column of the work sheet. Entries should
be in proper journal form and dated December 31.
a. Office supplies on hand at year-end amounted to $650.
b. Expired insurance amounted to $900.
c. Depreciation on the computer equipment, $1,150.
d. Wages earned but not paid as of December 31, $1,230.
Increases to owner’s equity may be from
a. expenses that are incurred.
b. expenses exceeding revenue for the period.
c. withdrawals of cash from the business by the owner.
d. revenue that is derived from sales of goods or services.
Employers may deposit Social Security and Medicare taxes at a Federal Reserve Bank
or other authorized commercial bank using
a. Form W-2.
b. Form 940.
c. Form 941.
d. Form 8109.
The financial statement that should be completed first is the
a. balance sheet.
b. statement of financial position.
c. statement of financial condition.
d. income statement.
The amounts in the general columns of the combination journal should be posted
a. daily.
b. weekly.
c. at the end of the accounting period.
d. whenever there is time.
A debit
a. is on the left side.
b. decreases assets.
c. increases liabilities.
d. increases owner’s equity.
If a business records revenue when it is received and records the purchase of a building
as an asset and makes adjustments to allocate the cost of the building over many
accounting periods, the business accounting system is a(n)
a. accrual basis of accounting.
b. adjustment basis of accounting.
c. cash basis of accounting.
d. modified cash basis of accounting.
If owner’s equity and liabilities increased during the period, then assets must also have
increased.
If the owner has not made any additional investments during the period, the financial
statements can be prepared directly from the work sheet.
The fact that each transaction has a dual effect on the accounting elements provides the
basis for what is called complex-entry accounting.
The ____________________ balance sheet shows the liabilities and owner’s equity
sections below the asset section.
An account in the chart of accounts is assigned a number at random.
The end-of-period work sheet is completed after adjusting entries have been recorded
and posted.
The report which shows a firm’s assets, liabilities, and owner’s equity as of a specific
date is called the ____________________.
The following information relates to the bank account of Doug’s Sky Diving Supply
Store on June 30.
Error: Check written and recorded by bank as $454 was subtracted from the checkbook
as $445.
The check was used to pay the telephone bill.
Required:
Prepare a bank reconciliation as of June 30.
A trial balance can only be accurately prepared on the first day of the accounting period
before any new transactions have been entered.