The account to which the drawing account is closed is called
a. Revenue.
b. Income Summary.
c. Owner’s Capital.
d. Cash.
What is the correct sequence for closing the temporary accounts?
a. revenue accounts, expense accounts, Income Summary, drawing account
b. expense accounts, revenue accounts, Income Summary, drawing account
c. revenue accounts, expense accounts, drawing account, Income Summary
d. drawing account, revenue accounts, expense accounts, Income Summary
The first pair of columns on a 10-column work sheet would be the
a. Income Statement columns.
b. Balance Sheet columns.
c. Adjusted Trial Balance columns.
d. Trial Balance columns.
A key source of information for computing employer payroll taxes is the
a. statement of owner’s equity.
b. end-of-period balance sheet.
c. payroll register.
d. employees’ check stubs.
What does the credit balance in the Accumulated Depreciation account represent?
a. the cost of additional equipment purchased this year
b. the amount of depreciation taken in past years
c. the cost of existing equipment sold during the year
d. the amount of depreciation taken in the current year
After the accounts are closed and the journal entries have been posted, which of the
following accounts would have a balance?
a. Payroll Taxes Expense
b. Miscellaneous Expense
c. Professional Expense
d. Supplies
The trial balance
a. shows the current date.
b. shows only debit balances.
c. shows only credit balances.
d. lists only accounts that are used to prepare the balance sheet.
Each employee is required to furnish the employer with which of the following forms?
a. W-2
b. 941
c. W-4
d. 1040
The cost of workers’ compensation insurance for the employer depends on all of the
following EXCEPT
a. the number of employees.
b. the riskiness of the jobs the employees perform.
c. the company’s accident history.
d. the amount of FICA, FUTA, and SUTA taxes due.
The account that is credited for the Social Security tax withheld from employee’s
earnings and the Social Security tax imposed on the employer is
a. Social Security Tax Expense.
b. Social Security Tax Payable.
c. Payroll Taxes Expense.
d. Payroll Expense.
The payroll register for the week ended February 14 for Luxury Homes Construction
Company indicates gross earnings of $4,000 and total deductions of $1,200. The entry
for the Wages and Salaries Expense ending February 14 would be a
a. $1,200 debit.
b. $2,800 credit.
c. $4,000 debit.
d. $5,200 debit.
An example of an expense is
a. prepaid insurance.
b. advertising.
c. accounts payable.
d. cash.
Since financial information is communicated in accounting terms, accounting is said to
be
a. the language of business.
b. public.
c. private.
d. nonprofit.
Bringing together various items of information to determine or explain a result is
a. summarizing.
b. interpreting.
c. recording.
d. classifying.
A check involves three parties. The person directed to receive the money is called the
a. drawer.
b. drawee.
c. payee.
d. endorser.
Which of the following tax programs often has a merit-rating system to encourage
employers to provide regular employment for workers?
a. FICA
b. FUTA
c. SUTA
d. workers’ compensation insurance
Changes in owner’s equity that result from investments or withdrawals of assets by the
owner are included in the
a. statement of owner’s equity.
b. income statement.
c. balance sheet.
d. chart of accounts.
Number in their proper order the following steps in the accounting cycle. a. Prepare a
trial balance. b. Post to the general ledger accounts. c. Journalize and post the closing
entries. d. Complete an end-of-period work sheet. e. Prepare a post-closing trial
balance. f. Journalize and post the adjusting entries. g. Analyze source documents. h.
Record the adjusting entries on a work sheet. i. Journalize the transactions. j. Prepare
the financial statements.
The total payroll cost to an employer of an employee who has gross earnings of
$78,000 is
a. $78,000 plus 30 percent.
b. less than $78,000.
c. exactly $78,000.
d. more than $78,000.
(Appendix) A utility bill for $315 was paid. This activity is classified as
a. operating.
b. investing.
c. financing.
d. paying.
The Item column in a general ledger is used to provide ____________________ for
special entries.
Owner’s equity includes four types of accounts: Owner’s Capital, Revenues, Expenses,
and Owner’s Drawing.
Analyze the following transactions using the T account approach. Place the dollar
amounts on the debit and credit sides. Indicate next to each entry the number for that
transaction. After all transactions have been recorded, foot the accounts where
necessary and enter the balance in the proper place for each account.
The main advantage of a two-column account is that it maintains a running balance.
The process of copying the debits and credits from the journal to the ledger accounts is
known as journalizing.
Other terms used for owner’s equity include net worth and capital.