True/False
Indicate whether the
statement is true or false.
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1.
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A business with many daily transactions has little use for special
journals.
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2.
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Revenue accounts have normal debit balances.
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3.
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Invoice terms of 2/10, n/30 mean that the customer may take a 10% discount if
the invoice is paid within 2 days. If the discount is not taken, the entire amount of the invoice is
due within 30 days.
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4.
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A cash discount on sales is called a purchases discount.
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5.
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The form prepared by the vendor showing the amount deducted for returns and
allowances is known as a credit memorandum.
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6.
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Only a few states require vendors to collect sales tax from their
customers.
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7.
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The typical overtime rate is $1.00 more than the regular hourly rate.
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8.
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Depositing payroll checks directly to an employee's checking or savings
accounts in a specific bank is called an automatic check deposit.
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9.
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The only deductions that may be legally made from an employee's pay are
those required by the federal, state, or local governments.
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10.
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The payment of the payroll is journalized in the cash payments journal.
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11.
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Financial statements are prepared at least once a year.
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12.
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In responsibility accounting, operating expenses are classified as either direct
or indirect expenses.
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13.
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The two sections of a statement of stockholders' equity are capital stock
and retained earnings.
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Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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An amount owed by a business is called a(n) ____.
A. | asset | C. | equity | B. | liability | D. | none of the
above |
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2.
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An account balance that is opposite the normal balance is called a(n)
____.
A. | contra balance | C. | liability | B. | opposite balance | D. | none of the
above |
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3.
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The source document for most cash payments is a(n) ____.
A. | memorandum | C. | check | B. | invoice | D. | none of the
above |
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4.
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When journalizing a cash receipt transaction for cash and credit card sales,
what appears in the Account Title column?
A. | Cash | C. | the cash register tape number | B. | a check mark | D. | nothing (it is left
blank) |
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5.
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All time worked in excess of ____ hours in any one week is considered
overtime.
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6.
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The social security tax provides insurance for ____.
A. | old age | C. | disability | B. | survivors | D. | all of the
above |
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7.
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The yearly report of each employee's total salary earned and the total
taxes withheld is provided on which form?
A. | Form W-2 | C. | Form EFT | B. | From W-4 | D. | none of the
above |
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8.
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When employees are paid a percentage of sales in addition to their regular
salary, the earnings are often referred to as ____.
A. | commissions | C. | pensions | B. | salary | D. | wages |
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9.
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An amount earned by a corporation and not yet distributed to stockholders is
called ____.
A. | capital stock | C. | retained earnings | B. | dividends | D. | undivided
earnings |
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10.
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The portion of a plant asset's cost that is transferred to an expense
account in each fiscal period during a plant asset's useful life is ____.
A. | accumulated depreciation | C. | plant asset
expense | B. | depreciation expense | D. | salvage value |
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11.
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Journal entries used to prepare temporary accounts for a new fiscal period are
____.
A. | adjusting entries | C. | general journal entries | B. | closing
entries | D. | updating
entries |
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12.
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Assets that will be used for a number of years in the operation of a business
are called ____.
A. | current assets | C. | equity assets | B. | depreciable assets | D. | plant assets |
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13.
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Total shares of ownership in a corporation are called ____.
A. | capital stock | C. | ownership shares | B. | common stock | D. | equity |
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14.
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A financial statement showing the revenue and expense for a fiscal period is the
____.
A. | balance sheet | C. | statement of stockholders' equity | B. | income
statement | D. | trial
balance |
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15.
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The adjusting entry for supplies involves a ____.
A. | debit to Supplies and a credit to Supplies Expense | B. | debit to Supplies
Expense and a credit to Supplies | C. | debit to Supplies and a credit to Income
Summary | D. | debit to Supplies Expense and a credit to Income
Summary |
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Matching
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A. | Automatice Check Deposit | F. | Payroll
Register | B. | Electronic Funds Transfer | G. | Payroll Taxes | C. | Employee Earnings Record | H. | Salary | D. | Pay
Period | I. | Tax
Base | E. | Payroll | J. | Withholding Allowance |
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1.
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The money paid for employee services.
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2.
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The period covered by a salary payment.
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3.
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The total amount earned by all employees for a pay period.
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4.
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Taxes based on the payroll of a business.
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5.
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A deduction from total earnings for each person legally supported by a
taxpayer.
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6.
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The maximum amount of earnings on which a tax is calculated.
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7.
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A business form used to record payroll information.
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8.
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A business form used to record details affecting payments made to an
employee.
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9.
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Depositing payroll checks directly to an employee’s checking or savings
account in a specified bank.
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10.
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A computerized cash payments system that transfers funds without the use of
checks, currency, or other paper documents.
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A. | Account | E. | Contra Account | B. | Accounting Equation | F. | Controlling Account | C. | Asset | G. | Debit
Memorandum | D. | Cash Discount | H. | Departmental Accounting System |
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11.
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A form prepared by the customer showing the price deduction for purchase
returns and allowances.
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12.
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An account that reduces a related account on a financial statement.
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13.
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Anything of value that is owned.
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14.
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A record summarizing all the infomation pertaining to a single item in the
accounting equation.
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15.
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An account in a general ledger that summarizes all acccounts in a subsidiary
ledger.
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16.
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An accounting system showing accounting information for two or more
departments.
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17.
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An equation showing the relationship among assets, liabilities, and
owner’s equity.
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18.
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A deduction that a vendor allows on the invoice amount to encourage prompt
payment.
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A. | Double Entry Accounting | E. | Journal | B. | Equities | F. | Ledger | C. | File Maintenance | G. | Liability | D. | General
Ledger | H. | Merchandising
Business |
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19.
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An amount owed by a business.
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20.
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Financial rights to the assets of a business.
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21.
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The recording of debit and credit parts of a transaction.
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22.
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A form for recording transactions in chronological order.
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23.
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A group of accounts.
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24.
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A ledger that contains all accounts needed to prepare financial
statements.
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25.
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The procedure for arranging accounts in a general ledger, assigning account
numbers, and keeping records current.
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26.
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A business that purchases and sells goods.
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A. | Owner’s Equity | E. | Source Document | B. | Petty Cash | F. | Special Journal | C. | Posting | G. | Stockholder’s Equity | D. | Purchases Discount | H. | Subsidiary
Ledger |
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27.
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The amount remaining after the value of all liabilities is subtracted from the
value of all assets.
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28.
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The owners’ equity in a corporation.
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29.
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Business papers from which information is obtained for a journal entry.
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30.
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A journal used to record only one kind of transaction.
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31.
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A ledger that is summarized in a single general ledger account.
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32.
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Transferring transaction information from a journal entry to a ledger
account.
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33.
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A cash discount on purchases taken by a customer.
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34.
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An amount of cash kept on hand and used for making small payments.
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A. | Consignment | E. | Merchandise Inventory Turnover Ratio | B. | FIFO Inventory
Costing Method | F. | Purchase
Order | C. | Inventory Record | G. | Stock Ledger | D. | LIFO Inventory Costing
Method | H. | Stock
Record |
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35.
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A form used during a periodic inventory to record information about each item
of merchandise on hand.
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36.
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A form used to show the kind of merchandise, quantity received, quantity sold,
and balance on hand.
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37.
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A file of stock records for all merchandise on hand.
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38.
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Using the price of merchandise purchased first to calculate the cost of
merchandise sold first.
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39.
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Using the price of merchandise purchased last to calculate the cost of
merchandise sold first.
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40.
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The number of times the average amount of merchandise inventory is sold during
a specific period of time.
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41.
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Goods which are given to a business to sell, but for which title to the goods
remains with the vendor.
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42.
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A completed form authorizing a seller to deliver goods with payment to be made
later.
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