Question:* What level of detail should invoices contain?
Answer: • Specific details - dates, quantities, individual pricing
Question:* Why do companies require deposits & advances?
Answer: • It improves cash flow, especially for long duration projects
Question:* Tax Accounting Services pays off $200 on account. To record this transaction for Tax Accounting Services, the cash account is credited. Which account is debited?
Answer: • Accounts Payable
Question:* A company receives an advance payment for special order goods that are to be manufactured and delivered within 6 months. The advance payment should be reported in the company's balance sheet as a
Answer: • current liability.
Question:* On December 31, 2007, special insurance costs incurred but unpaid were not recorded. If these insurance costs were related to work-in-process, what will be the effect of the omission on accrued liabilities and retained earnings in the December 31, 2007 balance sheet?
Accrued liabilities Retained Earnings
Answer: • No effect Overstated
Question:* Rush checks may also be called _____
Answer: • quick checks
Question:* Who is to be covered by VAT (Value Added Tax)?
Answer: • All business transactions carried on within a State by individuals
Question:* What steps are taken before approving an invoice for payment?
Answer: • a, b, and c
Question:* Who typically calculates the tax liability to be paid?
Answer: • The General or Tax Accountant within the company
Question:* Among the items reported on Cord, Inc.'s income statement for the year ended December 31, 2007 were the following:
Amortization of goodwill acquired in 1992 $10,000
Insurance premium on the life of an officer. $5,000
Cord is the owner and beneficiary.
Temporary differences amount to:
Answer: • $5,000
Question:* When are sales & use taxes due?
Answer: • Quarterly, on the 15th of the following month
Question:* Lime & Co.'s payroll for the month ended January 31,2007 is summarized as follows: Total wages $10000 Federal income tax withheld $1200 All wages paid were subject to FICA. FICA tax rates were 7% each for the employees and the employer. The company remits payroll taxes on the 15th of the following month. In its financial statements for the month ended January 31, 2007, what amounts should it report as total payroll tax liability and as payroll tax expense?
Answer: • $1200 $1400
Question:* The correct journal entry to record a purchase of inventory on credit using a perpetual inventory system includes:
Answer: • debit Inventory, credit Accounts Payable
Question:* Of the following, which is a typical situation involving a deposit?
Answer: • The business has leased a new location and is required to put a deposit for the last month's rent
Question:* If a prepaid expense is expiring (the final month is expensed), and the company has not received an invoice for the upcoming prepaid period, the accounting should:
Answer: • Continue to book the monthly expense in the upcoming month and contact the company to find if an invoice will be issued for the coming year
Question:* A bill is a form on which you record details of _________ .
Answer: • a purchase made by a vendor to whom the Company owe money
Question:* Streamlined Sales Tax is a national effort by which of the following?
Answer: • The State Government
Question:* How will you track the deposits that clients pay to the vendors?
Answer: • Track deposits as negative balances in Accounts Payable
Question:* When are invoices treated as having been paid short?
Answer: • If any discount for early payment is allowed
Question:* What is the difference between Accounts Payable and Accounts Receivable?
Answer: • Accounts receivable are amounts owed by the suppliers on account whereas the Accounts Payable are amounts owed to the customers on account.
Question:* What is the report generated to find the net purchases from each vendor regardless of how payments were recorded called?
Answer: • Purchases by vendor summary
Question:* Which of the following methods can be used to value inventory in QuickBooks?
Answer: • Average cost
Question:* When clients have customers who are also vendors, what is the best way to offset Accounts Payable against Accounts Receivable?
Answer: • Use multiple journal entries
Question:* Accrual Basis means __________.
Answer: • the most commonly used accounting method which reports income when earned and expenses when incurred,
Question:* A good example of a typical prepaid expense is:
Answer: • Insurance
Question:* Orleans & Co., a cash-basis taxpayer, prepares accrual-basis financial statements. In the current year balance sheet, Orleans's deferred income tax liabilities increased in comparison with those reported for the previous year. Which of the following changes would cause this increase in deferred income tax liabilities?
I.An increase in prepaid insurance premium
II.An increase in rent receivable
III.An increase in warranty obligations
Answer: • III only
Question:* What is the difference between billable and non-billable expenses?
Answer: • Billable expenses are the expenses incurred by you on behalf of your customer in performing duties / rendering services and supplying goodsand Non-billable expenses are the expenses incurred by you in carrying out your own business / duties and performing your own responsibilities.
Question:* From the Accounts Payable point of view, what are the main problems that arise between Accounts Payable and Purchasing?
Answer: • All of the above.
Question:* Debit memos are required for_______.
Answer: • the payments made on Purchase Orders
Question:* Tax Accounting Services pays off $200 on account. To record this transaction for Tax Accounting Services, the Cash account is credited and the __________ account is debited.
Answer: • Accounts Payable
Question:* In its 2007 income statement, Cere & Co. has reported an income of $300,000 before income taxes. Cere estimated that, because of permanent differences, taxable income for 2007 would be $280,000. During 2007, Cere made estimated tax payments of $50,000, which were debited to income tax expense; Cere is subject to a 30% tax rate. What amount should Cere report as income tax expense?
Answer: • $84,000
Question:* Which of the following accounts has a debit balance?
Answer: • Accounts Payable account
Question:* What is Accounts Payable Turnover Ratio?
Answer: • Cost of Goods Sold / Accounts Payable
Question:* How often should Payables be entered in the accounting system?
Answer: • As and when they are due
Question:* Which form is used to reimburse an individual for Travel and Entertainment expenses?
Answer: • Expense Voucher
Question:* An Invoice statement is provided __________________
Answer: • for payment purposes
Question:* What are the debit memo & the credit memo in Payables?
Answer: • In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the supplier to the Company and the credit memo is raised by the Company to the supplier stating we are due to him. Both may have positive and negative amounts
Question:* When an invoice is presented for payment, most companies match it against a purchase order and a receiving document, and if all three match, the invoice is paid on or after its due date. This is referred to as ---------------- .
Answer: • invoice paid
Question:* Accounts Payable is _________.
Answer: • a file or an account that contains details of money that a person or company owes to its suppliers.
Question:* What is VAT?
Answer: • VAT is a consumer-oriented tax imposed on goods and services sold.
Question:* Where do you record the payment terms for the money that a client owes to a vendor?
Answer: • In Sales Orders
Question:* Using the following information, compute total liabilities.
Notes Receivable $30,000, Accounts Payable $20,000, Wages Payable $8,000 and Rent Expenses $40,000.
Answer: • $28,000
Question:* How are prepaid expenses typically tracked?
Answer: • In an excel spreadsheet, with a monthly journal entry made to reflect the current month expenses
Question:* What is the Journal Entry for "The Company purchased $6,000 worth of merchandise on credit"?
Answer: • Dr Merchandise and Cr Accounts Payable
Question:* An open credit is __________.
Answer: • money owed by the company
Question:* Accounts payable refer to the current _________.
Answer: • expenses of a business or an organization
Question:* When an employer makes an end-of-period adjusting entry with a debit to the Supplies Expense, the credit entry is made to:
Answer: • Supplies.
Question:* Can you collect and remit tax for a state even if not required to do so?
Answer: • Yes, you can voluntarily register to collect and remit tax. But, you must register with the state prior to collecting the tax.
Question:* What is the last date for filing claims for VAT refunds in all countries?
Answer: • There is no deadline for filing claims for VAT refunds
Question:* How are the A/P journal entries typically created?
Answer: • The A/P staff is responsible for making journal entries
Question:* Buck & Co. receives deposits from its customers to protect itself against non-payments for future services. These deposits should be classified by the company as
Answer: • a liability
Question:* Which of the following is not an important step before approving a payment?
Answer: • Refer to the Sales Order issued.
Question:* Barnel Corp. owns and manages 19 apartment complexes. On signing a lease, each tenant has to pay the first and the last month's rent and a $500 refundable security deposit. The security deposits are rarely refunded in total because cleaning costs of $150 per apartment are almost always deducted. About 30% of the time, the tenants are also charged for damages to the apartment, which typically costs $100 to repair. If a one year lease deed is signed on a $900 per month apartment, what amount would the company report as refundable security deposit?
Answer: • $350
Question:* The correct journal entry to record a return of inventory purchased on credit basis using a perpetual inventory system includes:
Answer: • debit Accounts Payable, credit Inventory
Question:* Hudson Hotels collects 15 % as city sales tax on room rentals, in addition to $2 per room, per night, as occupancy tax. Sales tax for each month is due at the end of the following month, and occupancy tax are due 15 days after the end of each calendar quarter. On January 3, 2008, Hudson paid its November 2007 sales tax and occupancy tax for the fourth quarter of 2007. Additional information pertaining to Hudson's operations is as follows:
2007 Room Rentals Room Nights
October $100,000 $1,100
November $110,000 $1,200
December $150,000 $1,800
What amounts should Hudson report as sales tax payable and occupancy tax payable in its December 31, 2007 balance sheet?
Sales Tax Occupancy Taxes
Answer: • $54,000 $8,200
Question:* Why do companies use the government listed mileage rate for the reimbursement of traveling expenses rather than paying actualexpenses?
Answer: • It is required by the tax law
Question:* Ross & Co. pays all salaried employees on Monday for the 5-day work week ended the previous Friday. The last payroll recorded for the year ended December 31, 2004 was for the week ended December 25, 2004. The payroll for the week ended January 1, 2005 included regular weekly salaries of $80000 and vacation pay of $ 25000 for the vacation time earned in 2004 but not taken by December 31, 2004. Ross had an accrued liability of $20000 for vacation pay as on December 31, 2003. In its December 31, 2004 balance sheet, what amount should Ross report as accrued salary and vacation pay?
Answer: • $89000
Question:* What is the best way to reimburse Travel and Entertainment to the employees who do not wish to use the electronic form of reimbursement?
Answer: • The reimbursement should be made by cash
Question:* On July 1, 2006, Ran County issued reality tax assessments for its fiscal year ended June 30, 2007. The assessments were to be paid in two equal installments. On September 1, 2006, Day & Co. purchased a warehouse in Ran County. The purchase price was reduced by a credit for accrued realty taxes. The company did not record the entire year's real estate tax obligations, but instead records tax expenses at the end of each month by adjusting prepaid real estate taxes payable, as appropriate. On November 1, 2006, it paid the first installment of $12000 for realty taxes. What amount of this payment should it record as a debit to real estate taxes payable?
Answer: • $12,000
Question:* What does the acronym EFT stand for?
Answer: • Electronic Funds Transfer
Question:* When a deposit is used as payment, what is the journal entry from the customer's (the person who made the deposit) perspective?
Answer: • Debit Service Expense, credit Other Advances
Question:* Under which head does VAT reflect in the Balance Sheet?
Answer: • Creditors
Question:* SFAS 109 establishes standards of financial accounting and reporting for income taxes that are currently payable and for
Answer: • the tax consequences of revenues and expenses included in taxable income in a different year from the year in which they are recognized for financial reporting purposes.
Question:* Recording expenditure made, but not yet paid, to a vendor is an example of:
Answer: • an accrued payable transaction
Question:* Receipts from cash sales of $7,500 were recorded incorrectly as $5,700. What entry is required in the depositor's accounts?
Answer: • Debit Cash: Credit Cash Sales
Question:* What is the mode of making payment to the employees for reimbursing travel and entertainment expenses?
Answer: • Direct deposit
Question:* Accounts Payable affect net income.
Answer: • False
Question:* What is nexus?
Answer: • Nexus is the determining factor of whether a state business selling goods in the state is liable for collecting the tax on sales in the state.
Question:* Which of the following will not result in the recognition of a deferred tax asset?
Answer: • An operating loss carry forward.
Question:* Excess payment made to the supplier will appear as a _____.
Answer: • debit balance in the supplier's account.
Question:* At what stage in the Accounts Payable process is cash affected?
Answer: • When an invoice is entered into the accounting system
Question:* $1,000 worth of supplies are purchased on account. What is the Journal Entry to be posted?
Answer: • Dr Supplies account and Cr A/P account
Question:* Under generally accepted accounting principles, which approach is used to determine income tax expense?
Answer: • Asset and liability approach.
Question:* Under the state law, Acme may pay 3% of eligible gross wages or it may reimburse the state directly for actual unemployment claims. The Company believes that actual unemployment claims will be 2% of the eligible gross wages and has chosen to reimburse the state. Eligible gross wages are defined as the first $10000 of the gross wages paid to each employee. The Company had five employees, each of whom earned $20000 during 2007. In its December 31, 2007 balance sheet, what amount should it report as accrued liability for unemployment claims?
Answer: • $2000
Question:* On December 31, 2007, Deal Inc. failed to accrue the December 2007 sales salaries that were payable on January 6,2008. What will be the effect of the failure to accrue sales salaries on the working capital and cash flows from operating activities in Deal's 2007 financial statements?
Working Capital Cash Flows from Operating Activities
Answer: • Overstated No effect
Question:* What are the steps involved in setting up QuickBooks to track 1099 information?
Answer: • All of the above
Question:* What is the use of an Accounts Payable ledger?
Answer: • An Accounts Payable ledger helps you to control your expenditures and payables
Question:* What should be submitted to the VAT authorities to obtain a refund of VAT?
Answer: • The original invoice, together with an application form and other supporting documents relating to the expenditure incurred must be submitted.
Question:* Making insurance payments in advance is an example of:
Answer: • a prepaid expense transaction
Question:* Is a sales tax return required to be filed even if the sales are equal to zero?
Answer: • Yes
Question:* What is Accounts Payable aging report?
Answer: • Sorting of a company's Accounts Payable by the posted date.
Question:* What is the standard method used for the employees to submit an account of the travel expenses incurred by them?
Answer: • They have to submit a report of the expenses approved by the employees' supervisor
Question:* Payments for expenses incurred on corporate cards should be made directly to_____.
Answer: • the credit card company
Question:* The ratio derived by dividing Cost of Goods Sold by Account Payable is known as _______.
Answer: • the Accounts Payable Turnover Ratio
Question:* Why are per diem's used in lieu of having employees detail all actual spending for meals?
Answer: • Reasonable amounts are fixed and it limits the amount the company will have to spend
Question:* The Provisions of SFAS 109, Accounting for Income Taxes, are applicable to:
Answer: • domestic Federal income taxes.
Question:* What type of people does the Accounts Payable interface with most often?
Answer: • Vendors
Question:* Who can use a company's Travel & Entertainment Cards, though the liability lies with the employees?
Answer: • Employees
Question:* On February 1, Royal Company Ltd. purchased $2,000 worth of merchandise, terms 2/10, n/30. The company uses the gross method of recording purchases. Payment for the Accounts Payable was made on February 26. Which of the following journal entries is appropriate for the February 26 transaction?
Answer: • Debit Accounts Payable a/c... $2,000 and credit Cash a/c... $2,000
Question:* A Trial Balance is a list of all accounts and their ending balances. Place the following accounts in the order they would appear on a properly prepared Trial Balance: Sales Revenue, Accounts Payable, Land and Rent Expense.
Question:* A firm makes all its purchases on credit basis. Cash payment on trade credit is required in the month following the purchase on 70% of all the purchases. The firm takes a 2% cash discount and makes payment for the remaining 30% of all the purchases in the month of purchase.The forecasted purchases for January through April are worth $300,000, $375,000, $450,000, and $300,000 respectively. What will be the total cash disbursement for purchases in the month of March?
Question:* Accompanying the bank statement was a credit memorandum for a short-term, non-interest-bearing note collected by the bank. What entry is required in the depositor's accounts?
Question:* On what sales is it important to note that the Sales and Use Tax should be paid?
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