Distinguish between a cash discount and a trade discount.
> What are the three major ways of disposing of a plant asset?
> Explain what is meant by the “replacement” of a component of a plant asset.
> For assets acquired after 1986, what depreciation methods are allowed for federal income tax purposes?
> Why are both the debit and credit amounts in the Adjustments columns on the Income Summary line of the work sheet extended to the Adjusted Trial Balance columns?
> Explain how the depreciation method selected affects the balance sheet and income statement.
> Which depreciation method provides the fastest write-off of an asset?
> What is meant by the “depreciable cost” of a plant asset?
> If a note receivable that was discounted at a bank is dishonored by its maker, what is the responsibility of the person or business discounting the note?
> If a note receivable is discounted at a bank, on what amount and for what time period does the bank compute the discount?
> What is the primary purpose of reversing entries?
> What number of days is considered as a year by most banks and businesses in computing interest?
> What is the formula for calculating interest on notes?
> Who is the payee of a note?
> What are generally accepted accounting principles (GAAP)?
> What work sheet amounts are used to compute cost of goods sold?
> What is the function of a balance sheet?
> Who is the maker of a note?
> What is the function of an income statement?
> List the three basic questions that must be answered when analyzing the effects of a business transaction on the accounting equation.
> What is the purpose of the Sarbanes-Oxley Act?
> What is the name of the organization that issues accounting standards followed by many firms in countries outside the United States?
> How accrued interest receivable and accrued interest are payable reported on the balance sheet?
> What is the appropriate entry for accrued interest on notes payable for an interest-bearing note? For a non-interest-bearing note from a bank?
> What kind of account is Discount on Notes Payable, and how is it reported on the balance sheet?
> When a business borrows money from a bank on a non-interest-bearing note, how are the bank discount and proceeds calculated?
> List the five steps followed under the retail method of estimating inventory.
> What information appears on Form W-2, the employee’s Wage and Tax Statement?
> On which notes receivable and notes payable is it necessary to record accrued interest at the end of the period?
> How does a note receivable differ from an account receivable?
> What adjusting entries should be reversed?
> What is the customary date for reversing entries?
> What is the purpose of a post-closing trial balance?
> Where is the information obtained that is needed in journalizing the closing entries?
> Describe how to calculate the following ratios: (a) Return on owner’s equity (b) Accounts receivable turnover (c) Inventory turnover
> Name and describe the calculation of two measures that provide an indication of a business’s ability to pay current obligations.
> What is the correcting entry method?
> Describe the nature of the two forms of an income statement.
> What is the ruling method of correcting an error?
> What is the purpose of workers’ compensation insurance, and who must pay for it?
> What is the purpose of Form I-9, Employment Eligibility Verification?
> If the total of the schedule of accounts payable does not agree with the Accounts Payable balance, what procedures should be used to search for the error?
> Identify the major documents commonly used in the purchasing process.
> What is the purpose of Form 941, Employer’s Quarterly Federal Tax Return?
> What steps are followed in posting cash payments from the general journal to the general ledger?
> Explain why an employee whose gross salary is $20,000 costs an employer more than $20,000 to employ.
> Describe the information contained in the payroll register.
> What is the purpose of the state unemployment tax, and who must pay it?
> Give three examples of unearned revenue.
> What is the purpose of the FUTA tax, and who must pay it?
> What is the purpose of the EFTPS?
> At what rate and on what earnings base is the employer’s Social Security tax levied?
> What is the purpose of Form 940, Employer’s Annual Federal Unemployment Tax Return?
> Why do employer payroll taxes represent an additional expense to the employer, whereas the various employee payroll taxes do not?
> Explain what an employer does with the amounts withheld from an employee’s pay.
> Distinguish between the payroll register and the employee earnings record.
> Name three types of temporary accounts.
> Identify the three payroll records usually needed by an employer.
> A firm is preparing to make adjusting entries at the end of the accounting period. The balance of the merchandise inventory account is $200,000. If the firm is using the periodic inventory system, what does this balance represent?
> In general, an employee is entitled to withholding allowances for what purposes?
> Identify the four factors that determine the amount of federal income tax that is withheld from an employee’s pay each pay period.
> Name three major categories of deductions from an employee’s gross pay.
> What is a transposition error?
> Identify the five major column headings on a work sheet.
> Explain the purpose of the work sheet.
> Explain why payroll processing centers and electronic systems are commonly used in payroll accounting.
> Why is it important for payroll accounting purposes to distinguish between an employee and an independent contractor?
> What is an asset’s depreciable cost?
> What is the purpose of depreciation?
> When lower-of-cost-or-market is assigned to the items that comprise the ending merchandise inventory, what does “cost” mean? What does “market” mean?
> What is a permanent account? On which financial statement are permanent accounts reported?
> Describe a plant asset.
> If additional investments were made during the year, what information in addition to the work sheet would be needed to prepare the statement of owner’s equity?
> Explain the matching principle.
> Describe two approaches to listing the expenses in the income statement.
> What is the book value of an asset?
> Identify the source of the information needed to prepare the income statement.
> What is the useful life of an asset?
> What is a contra-asset?
> Explain the historical cost principle.
> Which inventory method always follows the actual physical flow of merchandise?
> Explain the expense recognition principle.
> Explain the revenue recognition principle.
> What are the main functions of an accounting clerk?
> Explain the primary advantage of a general ledger account.
> In what order are the accounts customarily placed in the ledger
> Describe the four steps required to journalize a business transaction in a general journal.
> Where the first formal accounting record of a business transaction is usually made?
> Name the five types of financial statement classifications for which it is ordinarily desirable to keep separate accounts.
> Explain the purpose of a chart of accounts.
> Identify four user groups normally interested in financial information about a business.
> What two factors are taken into account by the weighted-average method of merchandise cost allocation?
> Give three reasons why a corporation may distribute a stock dividend.
> What is a slide error?
> Explain why the ledger can still contain errors even though the trial balance is in balance. Give examples of two such types of errors.
> What information is entered in the Posting Reference column of the journal as an amount is posted to the proper account in the ledger?
> What is the purpose of accounting?
> Identify three types of businesses according to activities.
> What is impairment?
> What is the most important value reported on the statement of cash flows when evaluating the financial health of a company?
> List the two supplemental disclosures required under the indirect method.
