Term
| Purchases Discounts and Purchases Returns and Allowances increase the cost of merchandise bought for resale. |
|
Definition
|
|
Term
| A work sheet is prepared to organize all the data to update the accounts and prepare the financial statements and end-of-period journal entries. |
|
Definition
|
|
Term
| An adjusting entry affects one temporary account and one permanent account. |
|
Definition
|
|
Term
| When a business buys insurance protection, the Insurance Expense account is debited. |
|
Definition
| FALSE (debit IE when insurance expires) |
|
|
Term
| In the Trial Balance section of the work sheet, the Income Summary has a normal credit balance. |
|
Definition
| FALSE (doesn't have a normal balance) |
|
|
Term
| The amount of beginning inventory plus net purchases is the cost of merchandise sold. |
|
Definition
| FALSE (Cost of Merchandise Available - Ending Merchandise Inventory) |
|
|
Term
| The Balance Sheet section of the work sheet contains the balances of all general ledger accounts. |
|
Definition
| FALSE (permanent accounts: asset, liability, and capital accounts (Capital Stock and Retained Earnings)) |
|
|
Term
| Retained Earnings and Capital Stock are two stockholders' equity accounts. |
|
Definition
|
|
Term
| The ownership of a corportaion is represented by shares of stock. |
|
Definition
|
|
Term
| On the Trial Balance section of the work sheet, the account Federal Income Tax Payable has a credit balance. |
|
Definition
|
|
Term
| Corporations are required to estimate in advance their federal income taxes for the year and then pay the estimated amount in quarterly installments. |
|
Definition
|
|
Term
| The Federal Corporate Income Tax Expense account is included in the Operating Expenses section of the income statement because it is considered an operating expense for a corporation. |
|
Definition
| FALSE (expense due to revenue earned/ depends on amount of revenue/income earned) |
|
|
Term
| The balance of the Capital Stock account changes only when shares of stock are issued by the corporation. |
|
Definition
|
|
Term
| The value of the ending merchandise inventory must be less than its beginning balance. |
|
Definition
|
|
Term
| A trial balance can be prepared anytime during the fiscal period even if all postings have not been made to general ledger accounts. |
|
Definition
|
|
Term
| The debit and credit columns of the Trial Balance section of the work sheet do not have to be equal. |
|
Definition
|
|
Term
| The work sheet is the source of information for preparing financial statements for the accounting period. |
|
Definition
|
|
Term
| The ending inventroy for one accounting period becomes the beginning inventory for the next period. |
|
Definition
|
|
Term
| If the balance of an account on the work sheet is not up-to-date as of the last day of the fiscal period, then that account balance is removed from the work sheet until it is adjusted. |
|
Definition
|
|
Term
| The Income Statement section of the work sheet contains the balances of all the temporary general ledger accounts of the business. |
|
Definition
|
|
Term
| The purpose of all end-of-period reports is to prove the accuracy of the ledger accounts after the adjustments have been entered. |
|
Definition
| FALSE (TO REPORT CHANGES THAT HAVE TAKEN PLACE OVER THE PERIOD) |
|
|
