Match the following terms with the appropriate definitions. Each term is to be used only once.
a. Interest
b. Contribution or contributed capital
c. Entrepreneur
d. Principal
e. Retained earnings
f. Comparative balance sheets
g. Multistep income statement
_____ 1. A person who starts a business.
_____ 2. A statement that reports two consecutive fiscal years.
_____ 3. The cost of borrowing money.
_____ 4. Reports gross profit on sales (or gross margin) and operating income as subtotals.
_____ 5. The equity that results from doing business that is kept in the company.
_____ 6. The amount of money borrowed.
_____ 7. An owner's investment in a company.
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Q. 2) The department or function that develops and operates an organization's information systems is often called the:
a. information systems organization
b. computer operations department
c. controller's office
d. computer technology branch
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Q. 3) Match the items below with the appropriate statements.
I = The expenditure should be included in the inventory account.
X = The expenditure should NOT be included in the inventory account.
______ 1. ABC, Inc. purchases merchandise and pays 400 of shipping insurance.
______ 2. ABC, Inc. returned 200 of merchandise.
______ 3. ABC, Inc. paid 2,500 to a supplier for merchandise it had purchased on credit two months earlier.
______ 4. ABC, Inc. purchases 2,000 of merchandise on account.
______ 5. ABC, Inc. pays 60 of import tariffs associated with a purchase of merchandise from an overseas supplier.
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Q. 4) Social Security, Medicare, FUTA, and SUTA taxes have separate liability accounts.
a. True
b. False
Indicate whether the statement is true or false
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Q. 5) At December 31, 2011 a company's Accounts receivable balance was 12,600 and its Allowance for uncollectible accounts was (1,000).
Part A: Show the effect of the following events on the accounting equation, including both account titles and amounts.
Shareholders' equity
Assets Liabilities CC Retained earnings
1. Credit sales in 2012 were 117,000.
Cost of goods sold was 45,000.
2. During 2012, 900 of specific receivables were written off as uncollectible.
3. During 2012, 119,000 of receivables were collected.
4. At Dec. 31, 2012, the company estimates that 5 of its accounts receivable will be uncollectible.
Part B: Select the column which represents the 2012 financial statement where the item will appear, and fill in the correct dollar amount.
Income Statement Balance Sheet
1. Net accounts receivable
2. Sales
3. Accounts receivable
4. Bad debts expense
5. Allowance for uncollectible accounts
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Q. 6) The method of estimating inventory that uses records of the selling prices of the merchandise is called
a. retail method
b. gross profit method
c. inventory turnover method
d. average cost method
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