Which of the following is the proper sequence for end-of-the-month work with the
combination journal?
a. complete the individual postings, total and rule the columns, prove the journal,
complete the summary postings
b. prove the journal, total and rule the columns, complete the individual posting,
complete the summary postings
c. total and rule the columns, complete the individual postings, complete the summary
postings, prove the journal
d. total and rule the columns, complete the summary postings, complete the individual
postings, prove the journal
In completing the work sheet, what is the reason for adding the net income for the year
to the Balance Sheet Credit column?
a. Owner’s equity is not up-to-date.
b. Cash is not up-to-date.
c. Owner’s withdrawal is not up-to-date.
d. Sales is not up-to-date.
The total revenue of the month of June amounted to $6,500; total expenses amounted to
$3,500; and withdrawals amounted to $600. The net income for the month amounted to
a. $6,000.
b. $2,400.
c. $3,000.
d. $3,500.
The fifth pair of columns on a 10-column work sheet prepared at the end of the period
would be the
a. Income Statement columns.
b. Adjustments columns.
c. Balance Sheet columns.
d. Adjusted Trial Balance columns.
A corporation is usually managed by
a. stockholders.
b. a professional manager.
c. a proprietor.
d. two or more partners.
The self-employment tax rate is double the rate of
a. Social Security and Medicare taxes.
b. FUTA taxes.
c. SUTA taxes.
d. property taxes.
Sal’s Surf Shop deposits all receipts in the bank and makes all payments by check. On
July 31 the cash account had a balance of $6,105.4 The bank statement on July 31
reported a balance of $4,146.46. Upon comparing the bank statement to the books, the
following items were found.
a. A bank debit memo issued for an NSF check from a customer of $21.25.
b. A bank credit memo issued for interest of $8.50 earned during the month.
c. During the evening of July 31, a deposit of $1,948.25 was made, which is not shown
on the bank statement.
d. A bank debit memo issued for $18.50 for bank service charges.
e. Checks for the amounts of $34.00, $17.85, and $93.25 were written during July but
have not yet been received by the bank.
f. The reconciliation from the previous month, June, showed outstanding checks of
$260.80. One of these checks in the amount of $7.38 has not yet been received by the
bank.
g. After comparing the canceled checks to the bank statement, it was discovered that a
check written for the amount of $18.90 was deducted as $19.80 by the bank.
h. It was discovered that a check written to a creditor in the amount of $145.60 was
recorded in the books as $14.56. Required:
Falana pays wages in the amount of $3,147. This transaction
a. decreases Wage Expense.
b. increases Cash.
c. increases owner’s equity.
d. decreases Cash.
The journal entry to close the drawing account includes
a. debiting the owner’s capital account and crediting the drawing account.
b. debiting the drawing account and crediting the owner’s capital account.
c. debiting Income Summary and crediting the drawing account.
d. debiting the drawing account and crediting Income Summary.
Transactions and journal entries are shown below. Read the transaction and determine if
the correct journal entry has been made. If a correction is necessary, use the ruling
method to make the correction.
Journalize the necessary year-end adjusting entries based on the following account
balances before adjustments.
a. The inventory of supplies on hand at December 31, 20–, was $230.
b. The 4-month insurance premium of $1,800 was purchased on December 1, 20–.
c. The $34,000 of equipment was purchased on January 1, two years ago. It has a
salvage value of $2,000. Straight-line depreciation was used to compute depreciation at
the end of last year.
d. Wages accrued at December 31, 20–, were $3,700.
Net income is shown on the work sheet as a
a. debit in the Balance Sheet column.
b. credit in the Income Statement column.
c. debit in the Income Statement column.
d. debit in the Adjustments column.
An increase in an asset account may be offset by a(n)
a. decrease in a liability account.
b. increase in an expense account.
c. increase in owner’s equity.
d. decrease in owner’s equity.
Capital at the beginning of the month amounted to $4,000; net income for the month
amounted to $1,000; and withdrawals for personal use during the month amounted to
$2,000. Capital at the end of the month is
a. $3,000.
b. $2,000.
c. $7,000.
d. $5,000.
End-of-period activities include all of the following EXCEPT
a. adjusting entries.
b. closing entries.
c. a work sheet.
d. appointment records.
Payment of office rent represents a decrease in
a. a liability account.
b. expenses.
c. cash.
d. a revenue account.
Which of the following is a payroll tax normally paid by both the employee and the
employer?
a. FICA tax
b. FUTA tax
c. property tax
d. SUTA tax
A separate record of each employee’s earnings is known as a(n)
____________________.
The general ledger is kept to supply management with desired information in summary
form.
____________________ is bringing the various items of information together to
determine a result.
Selected information from the payroll register of Barbara’s Stables for the week ended
September 28, 20–, is as follows: Social Security tax is 6.2% on the first $110,100 of
earnings for each employee. Medicare tax is 1.45% of gross earnings, FUTA tax is
0.8%, and SUTA tax is 5.4% each on the first $7,000 of earnings.
Calculate the amount of taxable earnings for unemployment and Social Security taxes,
and prepare the journal entry to record the employer’s payroll taxes as of September 28,
20–.
Tracing the employee’s gross pay for a specific time period into the appropriate
wage-bracket table provided by the Internal Revenue Service is called using the
wage-bracket method to determine the amount of tax to be withheld from an employee’s
pay.
____________________ is the process by which accountants help managers develop a
financial plan.
A statement of owner’s equity is a statement summarizing all of the changes in owner’s
equity during a specified period of time.
Employees usually pay the entire cost of workers’ compensation insurance.
The FUTA tax applies to all employee earnings throughout the year.