Question: Explain the meaning of the following terms

> What are the major weaknesses of the direct charge-off method?

> Explain the direct charge-off method for recording uncollectible accounts expense.

> How is Allowance for Doubtful Accounts shown in the balance sheet?

> 1. Suppose that a vertical analysis of the income statement shows an item to be 18 percent of net sales. How would this information be used in order to make it meaningful? With what would it be compared? 2. In 2022, the cost of goods sold was 66 percent

> How is Uncollectible Accounts Expense shown on the income statement?

> Suppose that the estimate of uncollectible accounts is based on the aging of accounts receivable and that the Allowance for Uncollectible Accounts has a credit balance before the adjustment is made. Explain how this situation is handled.

> Explain the purpose of the allowance method of accounting for losses from uncollectible accounts.

> It can be argued that the cost principle is dependent on the going concern assumption. Why?

> How is the matching concept related to the accrual basis of accounting?

> Explain the qualitative characteristic of comparability.

> What is meant by the concept of neutrality in accounting?

> How will U.S. companies be affected by IFRS?

> Why is it desirable to have a set of fundamental concepts to be used in developing accounting standards and rules?

> What are the two most important bodies or organizations involved in developing generally accepted accounting principles in the United States?

> 1. What would cause corporate management to obtain cash by issuing bonds instead of selling stock? 2. Which type of bonds would give management greater flexibility in formulating and controlling a corporation’s financial affairs? 3. In what situations wo

> What is meant by full disclosure?

> What criteria must exist in order for revenues to be recognized by public entities for reporting periods beginning after December 15, 2017?

> What two tests must be met in order for revenues to be recognized by public entities for reporting periods beginning before December 15, 2017?

> Many current assets are not shown at historic cost in the financial statements. For example, inventories are usually shown at the “lower of cost or market.” What concepts or conventions warrant this practice?

> In recent years, there have been many charges, some of them substantiated, that large companies have manipulated business transactions and accounting records to move income from one year to another in order to change the income reported in different year

> What is the periodicity of income concept?

> How are the concepts of materiality and cost-benefit related?

> How does the materiality convention affect day-to-day accounting?

> Why is a conceptual framework necessary in developing accounting standards and rules?

> What is the purpose of the postclosing trial balance?

> 1. Three individuals are planning to form a new business. What are the five major types of entities that they can use to operate their business? 2. Assume that you are the controller of a corporation. Some members of the board of directors have asked you

> What account balances or other amounts are included on two different financial statements for the period? Which statements are involved?

> What information is provided by the statement of owner’s equity?

> How do current liabilities and long-term liabilities differ?

> Give examples of some current assets that usually are classified as Current Assets on the balance sheet.

> What is the purpose of the balance sheet?

> What are operating expenses? Are financing expenses included in operating expenses?

> Which section of the income statement contains information about the purchases made during the period and the beginning and ending inventories?

> Fuji Company had a current ratio of 2.0 in 20X1 and 2.2 in 20X2. Does this signify an improvement or decline in Fuji Company’s liquidity from 20X1 to 20X2?

> Jarrett Company’s inventory turnover ratio was nine times in 20X1 and eight times in 20X2. Did Jarrett Company sell its inventory more quickly, or more slowly, in 20X2 compared to 20X1?

> What are the steps in the accounting cycle?

> 1. Anna Claire and Baker are establishing a new restaurant and discussing whether to organize as a partnership or a corporation. What are some of the most important characteristics of these two types of organizations that they should weigh in making the

> 1. After examining financial data for a monthly period, the owner of a small business expressed surprise that the firm’s cash balance had decreased during the month even though there was substantial net income. Do you think this owner i

> If the owner invests additional capital in the business during the month, how would that new investment be shown in the financial statements?

> Various adjustments made at Adams Company are listed below. Which of the adjustments would normally be reversed? a. Adjustment for accrued payroll taxes expense b. Adjustment for supplies used c. Adjustment for depreciation on the building d. Adjustment

> On December 31, Klein Company made an adjusting entry debiting Interest Receivable and crediting Interest Income for $300 of accrued interest. What reversing entry, if any, should be recorded for this item on January 1?

> What types of adjustments are reversed?

> If the totals of the adjusted trial balance Debit and Credit columns are equal, but the postclosing trial balance does not balance, what is the likely cause of the problem?

> What types of accounts, permanent or temporary, appear on the postclosing trial balance?

> Give an example of an expense that is classified as Other Expense in the income statement.

> What adjustment is made to record accrued salaries?

> What is an accrued expense? Give three examples of items that often become accrued expenses.

> What adjustment is made for depreciation on office equipment?

> 1. The owner of an accounting practice is considering establishing a partnership with two other persons to carry on the business. What are the major disadvantages of the partnership form of organization that she should consider in making her decision? 2.

> What types of assets are subject to depreciation? Give three examples of such assets.

> Why is depreciation recorded?

> Income Summary amounts are extended to which statement columns on the worksheet?

> How does the worksheet help the accountant to prepare financial statements more efficiently?

> Unearned Fees Income is classified as which type of account?

> When a specific account receivable is deemed uncollectible, it is written off by debiting __________ and crediting __________.

> What is the alternative method of handling unearned income?

> What adjustment is made to record income earned during a period?

> How is unearned income recorded when it is received?

> 1. Suggest three key procedures involving internal control of property, plant, and equipment that do not relate specifically to accounting records. 2. Suggest three key procedures involving internal control of property, plant, and equipment that relate t

> What is unearned income? Give two examples of items that would be classified as unearned income.

> What adjustment is made for accrued interest on a note receivable?

> What is accrued income? Give an example of an item that might produce accrued income.

> What is the alternative method of handling prepaid expenses?

> What adjustment is made to record expired insurance?

> How is the cost of an insurance policy recorded when the policy is purchased?

> What is a prepaid expense? Give three examples of prepaid expense items.

> What adjustment is made to record the estimated expense for uncollectible accounts?

> When must Form W-2 be issued? To whom is it sent?

> What is the purpose of Form W-3? When must it be issued? To whom is it sent?

> 1. In what special situations are inventory estimation procedures extremely useful? 2. The manager of a retail store has become concerned about the time taken to count the merchandise on hand each quarter. She argues that too much time is spent on this a

> What is the lookback period?

> What are the four taxes levied on employers?

> What is a business tax identification number?

> What is EFTPS? When is EFTPS required?

> What does “semiweekly” refer to in the Semiweekly Deposit Schedule Rule?

> What does “monthly” refer to in the Monthly Deposit Schedule Rule?

> Why was the unemployment insurance system established?

> What is the purpose of allowing a credit against the FUTA for state unemployment taxes?

> What is the purpose of Form 940? How often is it filed?

> A state charges a basic SUTA tax rate of 5.4 percent. Because of an excellent experience rating, an employer in the state has to pay only 1.0 percent of the taxable payroll as state tax. What is the percentage to be used in computing the credit against t

> 1. You are a member of Arrow Company’s internal audit staff. A review of office practices indicates that an accounting assistant routinely makes arrangements with the bank for short-term notes payable and signs the notes. Evaluate this

> Is the employer required to deposit the federal unemployment tax during the year? Explain.

> What is Form 941? How often is the form filed?

> Who pays for workers’ compensation insurance?

> When is the premium for workers’ compensation insurance usually paid?

> How can an employer keep informed about changes in the rates and bases for the social security, Medicare, and FUTA taxes?

> What happens if the employer fails to deduct enough employee income tax or FICA tax from employee earnings?

> Which of the following are withheld from employees’ earnings? a. FUTA b. income tax c. Medicare d. social security e. SUTA f. workers’ compensation

> What is the purpose of the Medicare tax?

> How are earnings determined when employees are paid on the hourly rate basis?

> Give two examples of common payroll fraud.

> 1. Why would managers use the allowance method for recording uncollectible accounts instead of the direct charge-off method? 2. Should the sales department be given final authority for approving credit applications? Why? 3. Why is an account receivable t

> Does the employee bear any part of the SUTA tax? Explain.

> How are the federal and state unemployment taxes related?

> What is an exempt employee?

> What aspects of employment are regulated by the Fair Labor Standards Act? What is another commonly used name for this act?

> What factors affect how much federal income tax must be withheld from an employee’s earnings?

> How does the salary basis differ from the hourly rate basis of paying employees?

> What publication of the Internal Revenue Service provides information about the current federal income tax rates and the procedures that employers should use to withhold federal income tax from an employee’s earnings?

> What is the simplest method for finding the amount of federal income tax to be deducted from an employee’s gross pay?