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Sales are recorded under accrual basis accounting when:

a. The goods or services are provided regardless of whether the payment is collected from customers
b. The costs are incurred to earn the revenue
c. The actual cash is collected from customers
d. The bookkeeper has time to record the transactions
   
At the end of an accounting period, adjusting entries are made to:

a. To ensure a profit
b. Bring the accounts up to date
c. Debit or credit the checking account
d. Prove that debits equal credits
   
QuickBooks Online uses which basis of accounting?

a. Accrual
b. Cash
c. Both a and b
d. Neither a nor b
   
Adjusting entries are typically made:

a. At the beginning of the accounting period
b. Whenever an error is found and a correction is required
c. At the beginning of each month
d. On the last day of the accounting period
   
Accrued revenues are:

a. Revenues that have been earned, but not collected
b. Payment received in advance of receiving the service
c. Revenues that have been collected, but not yet earned
d. Revenues that have been recorded
   
The Journal entry to update the Office Supplies account for office supplies used is which of the following types of adjusting entry?

a. Prepaid item
b. Unearned Revenue
c. Accrued Expense
d. Accrued Revenue
e. Not an adjusting entry
   
The Journal entry to update the accounts for prepaid insurance that has expired is which of the following types of adjusting entries?

a. Prepaid item
b. Unearned Revenue
c. Accrued Expense
d. Accrued Revenue
e. Not an adjusting entry
   
The Journal entry to update the accounts for rent expense recorded that has not expired is which of the following types of adjusting entries?

a. Prepaid item
b. Unearned Revenue
c. Accrued Expense
d. Accrued Revenue
e. Not an adjusting entry
   
Sales are recorded under cash basis accounting when:

a. The goods or services are provided regardless of whether the payment is collected from customers
b. The costs are incurred to earn the revenue
c. The cash is collected from customers
d. The bookkeeper has time to record the transactions
   
The Journal entry to update the accounts for interest expense incurred but not recorded is which of the following types of adjusting entries?

a. Prepaid item
b. Unearned Revenue
c. Accrued Expense
d. Accrued Revenue
e. Not an adjusting entry
   
The Journal entry to update the accounts for interest earned but not recorded is which of the following types of adjusting entries?

a. Prepaid item
b. Unearned Revenue
c. Accrued Expense
d. Accrued Revenue
e. Not an adjusting entry
   
The Journal entry to update the accounts for customer subscriptions that are prepaid but not yet earned is which of the following types of adjusting entries?

a. Prepaid item
b. Unearned Revenue
c. Accrued Expense
d. Accrued Revenue
e. Not an adjusting entry
   
Rochdale & Co. sold six computer tables in January. All six customers wrote them checks for their purchases. The company recorded the six sales as
February transactions, even though they were paid for in January, because the checks were only cleared on February 25th. This implies that the
firm uses a(n) _____ accounting system.
 
Cash-based
   
Lefarge Office Supplies received a bulk order for paper weights in October. They were written a check when the order was placed and recorded the sale
as an October transaction, even though the check only cleared mid-November. This shows that the firm uses a(n) _____ accounting system.
 
Accrual
   
Under the _____ accounting system, transactions are recorded when they occur.
 
Accrual
   
The accounting system that provides appropriate information to the external community—bankers, angel investors, venture capitalists, and/or the
government—is called _____ accounting.
 
Financial
   
In a bid to raise their levels of efficiency, the management of Darkwood Timber, Inc. has implemented an accounting system that provides them with
information about their business and aids in internal controls. The system that they've implemented is known as _____ accounting.
 
Managerial
   
Which of the following is true of current assets?
 
Current assets are listed according to the degree of liquidity of each asset.
   
_____ is a noncash expense that specifically recognizes that assets decline in value over time.
 
Depreciation
   
Assets that provide economic value to a business but do not have a physical presence are known as:
 
Intangible assets
   
Which of the following is true of current liabilities?
 
Current liabilities are debts and obligation that are to be paid within a year
   
The accounting staff of Macro Savings & Co. computed a particular component of the income statement by subtracting the total cost of goods sold from the total income. The staff had calculated the:
 
Gross profit
   
Under the accrual accounting system, transactions are recorded when they occur.
 
True
  Accounting systems may be divided into two major types: cash basis and tax basis.
 
False
   
A statement that accounts for all differences between the balances on the bank statement and the books balance of cash.
 
Bank Reconciliation Statement
   
A signature of the payee written on the back of the check that transfers ownership of the check without specifying to whom or for what purpose.
 
Blank Endorsement
   
The process by which employees are investigated by an insurance company that will insure the business
against losses through employee theft or mishandling of funds.
 
Bonding
   
A check paid by the bank on which it was drawn.
 
Canceled Check
   
In accounting, currency, coins, checks, money orders, and funds on deposit in a bank.
 
Cash
   
An account used to record any discrepancies between the amount of currency and coins in the Cash Register and the amount shown on the Audit Tape.
 
Cash-Short or Over Account
   
A written order signed by an authorized person instructing a bank to pay a specific sum of money to a designated person or business.
 
Check
   
A form that explains any addition, other than a deposit, to a checking account.
 
Credit Memorandum
   
A form that explains any deduction, other than an a check, from a checking account.
 
Debit Memorandum
   
A deposit that is recorded in the General Journal bu that reaches the bank account too late to be shown on the monthly bank statement.
 
Deposit in Transit
   
A form prepared to record the deposit of cash or checks to a bank account.
 
Deposit Slip
 
   
A check returned to the depositor unpaid because of insufficient funds in the drawer’s account.
 
Dishonorable Check
   
Another term for Dishonorable Check.
 
NSF Check
   
The bank on which a check is written.
 
Drawee
   
The person or firm issuing a check.
 
Drawer
  An electronic transfer of money from one account to another.
 
Electronic Funds Transfer
   
Another term for Electronic Funds Transfer.
 
EFT
   
A written authorization that transfers ownership of a check.
 
Endorsement
   
A signature transferring a check to a specific person, firm, or bank.
 
Full Endorsement
   
A financial instrument whose ownership can be transferred to another person or business.
 
Negotiable
   
Checks that have been recorded in the General Journal but have not yet been paid by the bank.
 
Outstanding Checks
   
The person or firm to whom a check is payble.
 
Payee
   
A form used to record transactions involving Petty Cash.
 
Petty Cash Analysis Sheet
   
A form used to record the payments made from a Petty Cash Fund.
 
Petty Cash Voucher
   
A check dated sometime in the future.
 
Postdated Check
   
A written promise to pay a specified amount of money on a specific date.
 
Promissory Note
   
A signature that transfers a check to a specific party for a stated purpose.
 
Restrictive Endorsement
   
A fee charged by a bank to cover the costs of maintaining accounts and providing services.
 
Service Charge
   
A form sent to a firm's customers showing transactions during the month and the balance owed.
 
Statement of Account
   
What is Cash Shortage and how is it recorded?
 
This occurs when cash in the register, less the change fund, is less than the sales per the cash register tape.
The cash shortage is debited to the Cash Short or Over account.
   
Why would a business accept a Promissory Note?
 
To grant credit in certain sales transactions or replace open-account credit when a customer has an overdue balance.
   
How would the receipt of a $62 refund for suppliers returned be recorded in a General Journal?
 
Debit Cash Account $62, credit Supplies Account $62.
   
Tara's Beauty Salon keeps a $100 change fund. At the end of the day sales per the register tape were $885, and Cash count was $992.
What is the amount of the cash shortage or overage?
 
$7 overage.
 
($100 + $885 = $985
$992 - $985 = $7)
   
Why does a business use a Petty Cash fund?
 
To make small expenditures that require currency or coins.
   
What Journal Entry records the establishment of a Petty Cash fund?
 
Debit Petty Cash Account, credit Cash Account.
   
What account would be credited in the issuance of a Promissory Note to purchase store equipment?
 
Credit to Notes Payable Account.
   
Which Bank Reconciliation items require Journal Entries?
 
Items in the second section of the Bank Reconciliation Statement require entries in the firms financial records to correct the Cash Account
Balance and make it equal to the Checkbook Balance. These may include bank fees, debit memorandums, NSF Checks, and Interest Income.
   
What is the Classification for Notes Payable Account?
 
Liability Account.
  The journal entry to update the accounts for customer subscriptions that are prepaid but not yet earned is which of the following types of adjusting entries?
Unearned item
 
The journal entry to update the accounts for prepaid insurance that has expired is which of the following types of adjusting entries ?
Prepaid item
 
The journal entry to update the accounts for customer services provided but not yet recorded is which of the following types of adjusting entries?
Accrued Revenue
 
The journal entry to update the Office Supplies account for office supplies used is which of the following types of adjusting entry?
Prepaid item
 
The journal entry to update the accounts for interest expense incurred but not recorded is which of the following types of adjusting entries?
Accrued Expense
 
The journal entry to update the accounts for interest earned but not recorded is which of the following types of adjusting entries ?
Accrued Revenue
 
QuickBooks uses which basis of bookeeping?
Both accrual and cash
 
The journal entry to record payment of cash for office supplies is which of the following types of adjusting entries?
Not an adjusting entry
 
The journal entry to update the accounts for rent expense recorded that has not expired is which of the following types of adjusting entries ?
Prepaid item
 
At the end of an accounting period, adjusting entries are made to:
Bring the accounts up to date
 
Since cash is the most liquid of all assets,
a business cannot survive and prosper if it does not have adequate control over its cash.
 
In accounting, cash includes:
coins;
currency;
undeposited negotiable instruments such as checks, bank drafts, and money orders;
amounts in checking and savings accounts; and demand certificates of deposit.
 
Electronic cash receipts are:
Credit cards, debit cards, electronic transfers
 
Methods for controlling physical cash receipts
Mail receipts, cash register receipts, over-the-counter sales
 
Accrued Revenues are:
Revenues that have been earned, but not collected.
 
Sales are recorded under cash basis accounting when:
The cash is collected from customers
 
Sales are record under accrual basis accounting when:
The goods or services are provided regardless of whether the payment is collected from customers