What is a compound journal entry?
> Healthy Hair Inc. makes and distributes hair products to retail stores, beauty salons, and barber shops. Early in 20X1, officers of the company decided to develop and market a line of shampoos and hair conditioners under their own private brand. They con
> What is the purpose of the Financial Accounting Standards Board?
> What are the three major areas of accounting?
> What types of services do public accountants provide?
> What is tax planning?
> What are the major functions or activities performed by accountants in private industry?
> What are the three types of business entities, and how do they differ?
> Why is it important for business records to be separate from the records of the business’s owner or owners? What is the term accountants use to describe this separation of personal and business records?
> What types of people or organizations are interested in financial information about a firm, and why are they interested in this information?
> Why is a sales return or allowance usually recorded in a special Sales Returns and Allowances account rather than being debited to the Sales account?
> How do retail and wholesale businesses differ?
> New Millennium Industries, a manufacturer of sports shoes, uses a standard cost system. When Michelle Nicole, the cost accountant for the company, started to analyze the labor variances for May, she discovered that some of the data had inadvertently been
> What purposes does the schedule of accounts receivable serve?
> What is a trade discount? Why do some firms offer trade discounts to their customers?
> What is open-account credit?
> Why are bank credit card sales similar to cash sales for a business?
> What is the discount on credit card sales? What type of account is used to record this item?
> When a firm makes a sale involving a credit card issued by a credit card company, does the firm have an account receivable with the cardholder or with the credit card company?
> What procedure does a business use to collect amounts owed to it for sales on credit cards issued by credit card companies?
> How are the net sales for an accounting period determined?
> What accounts appear on a postclosing trial balance?
> How is the Income Summary account used in the closing procedure?
> Tess Company manufactures one product. Standard costs for each unit of the product follow: Materials: 5 gallons at $1.15 $ 5.75 Direct labor: 1 hour at $18 18.00 Manufacturing overhead: 0.5 hour at $18 9.00 Total standard costs per unit $32.75 During the
> What is the accounting cycle?
> Why does the accountant record closing entries at the end of a period?
> Briefly describe the flow of data through a simple accounting system.
> Where does the accountant obtain the data needed for the adjusting entries?
> Why is a postclosing trial balance prepared?
> Where does the accountant obtain the data needed for the closing entries?
> What three procedures are performed at the end of each accounting period before the financial information is interpreted?
> Name the steps of the accounting cycle.
> How does the straight-line method of depreciation work?
> Are the following assets depreciated? Why or why not? a. Prepaid Insurance b. Delivery Truck c. Land d. Manufacturing Equipment e. Prepaid Rent f. Furniture g. Store Equipment h. Prepaid Advertising i. Computers
> Sticky Inc. makes candy. The continuous production operation starts in the mixing department, where the chocolate, sugar, water, and other ingredients are blended. It then moves to the second department (cooking), where the ingredient mix is heated and p
> Why is an accumulated depreciation account used in making the adjustment for depreciation?
> How does a contra asset account differ from a regular asset account?
> What is book value?
> What three amounts are reported on the balance sheet for a long-term asset such as equipment?
> Why is it necessary to journalize and post adjusting entries?
> What effect does each item in Question 1 have on owner’s equity?
> A firm purchases machinery, which has an estimated useful life of 10 years and no salvage value, for $60,000 at the beginning of the accounting period. What is the adjusting entry for depreciation at the end of one month if the firm uses the straight-lin
> What adjustment would be recorded for expired insurance?
> What are prepaid expenses? Give four examples.
> Why is it necessary to make an adjustment for supplies used?
> Selected data about the operations of the mixing department, the first department of Red Manufacturing, Inc., for November 20X1 follows. At the beginning of the month, there were 1,000 units in process with total costs of $48,000. Included in the total w
> Give three examples of assets that are subject to depreciation.
> What effect does each of the following items have on net income? a. The owner withdrew cash from the business. b. Credit customers paid on outstanding balances that were past due. c. The business bought equipment on account. d. The business journalized a
> What procedure is used to record an entry in the general journal?
> What is the value of having a description for each general journal entry?
> What is the accounting cycle?
> What are posting references? Why are they used?
> What is Posting?
> What is a ledger?
> In what order are accounts arranged in the general ledger? Why?
> The job order cost sheets for Nash Inc. show the following information about special orders for June and July of the current year: The company prices its jobs to make a 50 percent gross profit on sales. Operating expenses for July totaled $7,500, and the
> What is an audit trail? Why is it desirable to have an audit trail?
> How should corrections be made in the general journal?
> What is the purpose of a journal?
> Why is Prepaid Rent considered an asset account?
> The terms debit and credit are often used in describing the effects of transactions on different accounts. What do these terms mean?
> Indicate whether each of the following types of account would normally have a debit balance or a credit balance: a. An asset account b. A liability account c. The owner’s capital account d. A revenue account e. An expense account
> How is the balance of an account determined?
> Accounts are classified as permanent or temporary accounts. What do these classifications mean?
> When a chart of accounts is created, number gaps are left within groups of accounts. Why are these number gaps necessary?
> In what order do accounts appear in the chart of accounts?
> John Manufacturing Company manufactures one product that has several model styles. All materials are added at the beginning of production. Manufacturing overhead is applied as a percentage of direct labor cost. On January 1, 20X1, one job, DE31, was in p
> What is the purpose of a chart of accounts?
> Are the following accounts permanent or temporary accounts? a. Fees Income b. Johnny Jones, Drawing c. Accounts Payable d. Accounts Receivable e. Johnny Jones, Capital f. Prepaid Rent g. Cash h. Advertising Expense i. Utilities Expense j. Equipment k. Sa
> Why is the modern system of accounting usually called the double-entry system?
> What are accounts?
> What are expenses?
> What is revenue?
> Why does the third line of the headings differ on the balance sheet and the income statement?
> What information is shown in the heading of a financial statement?
> What information does the statement of owner’s equity contain?
> What information does the income statement contain?
> Certain information about the statement of cost of goods manufactured and the income statement for the year ended December 31, 20X1, for Paul’s Production, Inc., is given below: Beginning inventory of finished goods, 105 percent of ending inventory Work
> 1. A building owned by Hopewell Company was recently valued at $850,000 by a real estate expert. The president of the company is questioning the accuracy of the firm’s latest balance sheet because it shows a book value of $550,000 for the building. How w
> What information does the balance sheet contain?
> What are assets, liabilities, and owner’s equity?
> Describe the effects of each of the following business transactions on assets, liabilities, and owner’s equity. a. Bought equipment on credit. b. Paid salaries to employees. c. Sold services for cash. d. Paid cash to a creditor. e. Bought furniture for c
> How does net income affect owner’s equity?
> How is net income or net loss determined?
> What is the fundamental accounting equation?
> Employees sometimes make mistakes and errors in recording accounting transactions. Is this considered fraud?
> Name two common internal control and fraud prevention procedures. Answer: Two common internal control and fraud prevention procedures are policies and procedures that require written proof that transactions and payments are authorized and separating du
> What is the goal of internal control?
> Define fraud.
> In January 20X1, Kate Kasal started Warmers, a business manufacturing ladies’ scarves. Kasal was so busy with the manufacturing side of the business that she did not take time to set up detailed accounting records; the business checkbook was her only rec
> Define internal control.
> What is a limited liability company (LLC)?
> How does one become a Certified Bookkeeper (CB)?
> What does the Certified Bookkeeper (CB) designation imply?
> What is the purpose of the Public Company Accounting Oversight Board?
> Explain opportunity costs.
> What is a differential cost?
> What are sunk costs?
> Explain the meaning of marginal income on sales.
> What is the manufacturing margin?
> At the last staff meeting of the Beach Shop, the question of how expenses are allocated to each department was raised. Because year-end bonuses are awarded to the managers on the basis of departmental net income from operations, the discussion was lively
