1. Prepaid workers' compensation insurance is what type of account?
a. Asset
b. Expense
c. Liability
d. Revenue
2. What type of an account is Wages and Salaries Payable?
a. Asset
b. Liability
c. Revenue
D. Expense
3. Wages and Salaries Expense is:
a. equal to net pay
b. equal to gross pay
c. equal to the employer's taxes
d. None of the above.
4. A calendar quarter is made up of:
a. 4 months
b. 13 weeks
c. 12 weeks
D) however many weeks are needed to complete the month
5. FUTA taxes are paid:
a. by the end of January of the following year if the amount owed is less than $500
b. by the end of the month following the end of the calendar quarter if the amount
owed is more than $500
c. at the same time as the Form 941 taxes
d. Both a and b are correct.
6. The correct journal entry to record the payment of SUTA is debit:
a. SUTA Expense; credit Cash
b. Cash; credit SUTA Expense
c. Cash; credit SUTA Payable
d. SUTA Payable; credit Cash
7. Which form is used to report FICA taxes for the employer and employee, and also federal income
taxes for the employee?
a. Form 941
b. Form 944
c. Form W-4
d. Form W-2
8. Which form contains information about gross earnings and is given to the employee by January
31?
a. Form W-2
b. Form W-3
c. SS-4
d. Form W-4B
9. How often is a 940 filed?
a. Monthly
b. Annually
c. Weekly
d. Quarterly
10. Merchants who buy goods from wholesalers for resale to customers are:
a. merchandisers
b. retailers
c. service companies
d. None of the above.
11. Credit terms of 1/10, n/30 mean that:
a. 1% discount is allowed if the bill is paid within 10 and 30 days
b. 1% discount is allowed if the bill is paid within 30 days
c. 1% discount is allowed if the bill is paid after 10 days
d. 1% discount is allowed if the customer pays the bill within 10 days, or the entire
amount is due within 30 days
12. Net sales equal:
a. gross sales
b. gross sales - sales returns and allowances
c. gross sales - sales returns and allowances - sales discounts
d. sales discounts
13. Received payment, within the discount period, for merchandise sold previously. This will be
recorded with a:
a. credit to an asset account
b. debit to a liability account
c. debit to Capital
d. None of the above.
14. When using a subsidiary ledger, the Accounts Receivable account in the general ledger is
called the _________ account.
a. master
b. subsidiary
c. receivable
d. controlling
15. Recording to the accounts receivable subsidiary ledger is done:
a. daily
b. monthly
c. quarterly
d. annually
16. The collection on account within the 1/10 n/30 discount period was recorded using a 10%
discount rather than a 1% discount in both the controlling and subsidiary accounts. This error
will cause the:
a. net income for the period to be understated
b. net income for the period to be overstated
c. control account to not agree with the subsidiary ledger
d. assets to be overstated
17. A checkmark in the PR column in the general journal means the:
a. entry was recorded correctly
b. amount was posted to the controlling account
c. mount was recorded in the subsidiary ledger
d. entry was audited
18. Net purchases are:
a. Purchases + Purchases Returns and Allowances
b. Purchases - Purchases Discount - Purchases Returns and Allowances
c. Purchases - Freight - Purchases Returns and Allowances
d. Purchases + Freight-in
19. If a display rack was purchased for the store, which of the following accounts would be
increased?
a. Store Equipment
b. Purchases
c. Cash
d. Capital
20. A purchase discount was recorded as a credit to the Purchases account and a debit to
Accounts Payable. This error will cause:
a. net income to be overstated
b. net income to be understated
c. net income to not be affected
d. total assets to be overstated
21. Office Supplies (not used for resale) bought on account were returned for credit and recorded
with a debit to Accounts Payable and a credit to Purchase Returns and Allowances. This error
will cause:
a. net income to be overstated
b. net income to be understated
c. net income to not be affected
d. total assets to be understated
22. Returned merchandise paid for within the discount period for cash. The perpetual inventory
system is in use. This will be recorded with a debit to a(n):
a. liability and a credit to an asset
b. asset and a credit to an asset
c. expense and a credit to a liability
d. expense and a credit to an asset
23. If the company uses special journals, all payments should be recorded on a:
a. cash receipts journal
b. cash payments journal
c. purchases journal
d. sales journal
24. A characteristic of purchases is:
a. it has a debit normal balance
b. it reduces net income
c. that it is used to record the purchase of merchandise to be resold
d. All of the above.
25. Which of the following transactions will cause one asset to be debited and another to be
credited when the periodic inventory system is in use?
a. purchased merchandise on account
b. purchased merchandise for cash
c. purchased office supplies for cash
d. purchased office supplies on account