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Accounting - Preparing An 8-Column Work Sheet For A Merchandising Business - Part 1
Test Description: Review for Test
Instructions: Answer all questions to get your test result.
1) A business prepares a summary of financial information at least once each fiscal period because financial information
A
is needed to make management decisions.
B
is needed to prepare tax reports.
C
shows whether a profit is being made or a loss is being incurred.
D
all of these.
2) The entry to journalize the adjustment for merchandise inventory when beginning Merchandise Inventory is $125,000.00 and ending Merchandise Inventory is $110,000 is
A
debit Income Summary, $15,000.00; credit Merchandise Inventory, $15,000.00.
B
debit Merchandise Inventory, $110,000.00; credit Income Summary, $110,000.00.
C
debit Income Summary, $110,000.00; credit Merchandise Inventory, $110,000.00.
D
debit Merchandise Inventory, $15,000.00; credit Income Summary, $15,000.00.
3) The general ledger account in which goods on hand for sale to customers are recorded is titled
A
Merchandise Inventory.
B
Purchases Inventory.
C
Purchases.
D
Inventory.
4) The adjustment for federal income tax includes
A
an expense account and a temporary equity account.
B
an expense and a liability account.
C
an expense account only.
D
a liability account only.
5) The total amount of depreciation expense that has been recorded since the purchase of a plant asset is called
A
book value.
B
salvage value.
C
accumulated depreciation.
D
net realizable value.
6) Recording expenses in the fiscal period in which the expenses contribute to earning revenue is an application of the accounting concept
A
Accounting Period Cycle.
B
Historical Cost.
C
Adequate Disclosure.
D
Matching Expenses with Revenue.
7) Depreciation expense is calculated using all of the following except
A
fair market value.
B
original cost.
C
estimated useful life.
D
estimated salvage value.
8) The book value of accounts receivable
A
is equal to the balance in the Accounts Receivable controlling account.
B
is calculated as Accounts Receivable less Uncollectible Accounts Expense.
C
reflects the amount the business expects to collect in the future.
D
can be obtained from a single general ledger account.
9) When a work sheet is completed, a net loss will appear in the
A
Balance Sheet Debit and Balance Sheet Credit columns.
B
Income Statement Debit and Income Statement Credit columns.
C
Income Statement Debit and Balance Sheet Credit columns.
D
Income Statement Credit and Balance Sheet Debit columns.
10) A work sheet is
A
used to plan adjustments and sort financial statement information.
B
not necessary for a small business.
C
prepared only once a year.
D
prepared to aid in the analysis of financial statements.
*select an answer for all questions
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