Questions and Answers of Glencoe Accounting First Year Course

Evaluate the usefulness of subsidiary ledgers.
Shutterbug Cameras, a retail merchandising store, had the following purchases transactions in March.Instructions In your working papers, record the transactions on page 31 of the general
River’s Edge Canoe & Kayak had the following purchases and cash payment transactions for the month of March. Instructions In your working papers, record the following transactions on page
Buzz Newsstand’s purchases and cash payment transactions for the month of March are described below.Instructions In your working papers:1. Record the transactions in the general journal, page
Here are the column totals of the sales journal for the month of April. In your working papers, post these totals to the appropriate general ledger accounts. SALES JOURNAL SALES SLIP CUSTOMER'S
Imagine that you are the accounting manager for EarthWear Clothing. Recently you noticed that several sales associates are not keeping good records of sales transactions. Write an informational
ABC Corporation uses special journals to account for detailed transactions. Which of the following would not be considered a special journal?a. Purchases journalb. Cash payments journalc. Sales
Describe the purpose of a special journal.
You work in the accounting department for Spring dale Movie Theater. The owners are considering enlarging the concession area one and one-half times its current size to offer a wider variety of
Accounting clerks use sales journals to record sales on account, giving them direct access to the company’s customer lists. As an accounting clerk at Haverty’s Furniture Store, you work with Bob,
You work for Equestrian Steps—Horse Boarding and Lessons. During an equestrian competition last weekend, you purchased grain on account from the local feed store for $85 plus 6% sales tax. On a
Metro Sports Distributors had this transaction that occurred on June 15. Instructions 1. Analyze the sales slip shown. In your working papers, record the required entry on page 3 of the
A form prepared by the customer showing the price deducted taken by the customer for a return is aa. Purchases Discount.b. Sales Return.c. Credit Memorandum.d. Debit Memorandum.
Explain the importance of using a purchase requisition, a purchase order, a packing slip, and a processing stamp in the purchasing process of a business.
The trial balance for Cycle Tech Bicycles, prepared on a ten-column work sheet, is included in your working papers.Instructions1. Complete the work sheet for the year ended December 31. Use the
Support the statement that all four financial statements must be examined to obtain an accurate understanding of a corporation’s financial condition.
Social Security provides the only retirement funds for many people. Some analysts believe that it is in trouble and could become insolvent. You need to become educated about retirement funding and
Use the comparative balance sheet for On Your Mark in Figure 19–7 to answer the following questions.1. Which asset account has the larger percentage of increase in the two years? Larger decrease?2.
The format of financial statements can vary by country. An example is the balance sheet of the German car manufacturer, BMW. It presents noncurrent assets before current assets, and stockholders’
You work for Big League Sports—a professional-sports merchandising company. Your boss, Lily Chang, asks you to make a simple but colorful presentation about trends in professional sports at the
Your family probably handles its kitchen supplies the way a business handles its supplies. That is, a family member buys them as needed. No one tracks them. When the supply gets low, someone decides
The August 31 trial balance for InBeat CD Shop is entered on the work sheet in your working papers. Listed below is the data needed to make the adjustments. Instructions In your working
Accounts on the balance sheet are classified or grouped into related categories. These classifications provide subtotals which can be used to compute ratios and do comparisons. For example any
What entries are recorded at the end of the fiscal period to update general ledger accounts?a. Closingb. Adjustingc. Post-closingd. Reversing
Explain where you could obtain the information needed to determine the amount of the insurance adjustment in the work sheet’s Adjustments section.
The August 31 trial balance for Shutterbug Cameras is listed on the shown below. Also listed is the data needed for the adjustments. Instructions In your working papers, complete the
Defend the concept that businesses cannot track supplies as they are used.
The balances of the general ledger accounts of Cycle Tech Bicycles, as of August 31, are listed below. Also listed is the data needed for the adjustments.Instructions In your working papers:
The balances of the general ledger accounts of River’s Edge Canoe & Kayak, as of August 31, are listed below. Instructions In your working papers:1. Prepare a ten-column work sheet for
The Trial Balance and adjustment sections for Buzz Newsstand have been prepared in your working papers. It is apparent from the totals on the work sheet that errors have been made in preparing these
Your company, The Bookworm, was purchased several months ago by an international bookstore chain—The Best Seller. Your new boss, Gabriella Sitta, asks you to create the end-of-year financial
One way to increase gross profit on sales is toa. Increase sales revenue.b. Increase cost of merchandise sold.c. Decrease sales revenue. d. Decrease expenses.
Name the two parts of stockholders’ equity.
Gourmet Express sells cookies, candies, food baskets, and other gourmet gift items in retail stores and catalogs. Prices increased recently for sugar and chocolate, causing net income to decrease.
You are an accounting clerk for a major league sports franchise. Your responsibilities do not include any end-of-period activities. You learn that a co-worker made a significant error on the work
A sales slip for Cindy’s Curtains is presented at right. The accountant noticed errors in the calculations.Instructions Check all calculations and recalculate the sales tax using a rate of 4
As the CEO of First Rate Products, you regularly present the financial results at stockholders’ meetings. It is imperative that your recently hired accounting clerk, James Van, understands the
The ________ account represents the increase in stockholders’ equity from net income that is held by the corporation and not distributed to stockholders as a return on their investment.a. Operating
Explain the difference between gross profit on sales and operating income.
For each group of figures that follows, determine the missing amount. 1. Beginning merchandise inventory Net purchases Cost of merchandise available for sale 2. Net sales Cost of merchandise
When using ________, each dollar amount on a financial statement is also stated as a percentage of a base amount on the same statement.a. Horizontal analysisb. Vertical analysisc. Statement of
Compare the statement of retained earnings and the statement of cash flows, and explain how they are similar.
You are given the following information: cost of merchandise sold, $404,000; operating expenses, $785,122; and net sales, $557,225. What is the company’s gross profit on sales?a. $381,122b.
Look at vertical and horizontal analysis of financial statements. Explain why the percentages on comparative income statements and balance sheets add vital information for analysis by owners and
Beginning merchandise inventory plus net purchases minus ending inventory equalsa. Net income.b. Gross profit on sales.c. Total expenses.d. Cost of goods sold.
Write a statement to explain why financial statements are prepared in this order: income statement, statement of retained earnings, balance sheet, and statement of cash flows.
The partially completed work sheet for Shutterbug Cameras is included in your working papers.1. Complete the work sheet.2. Prepare an income statement.3. Prepare a statement of retained earnings.4.
The accounting clerk for River’s Edge Canoe & Kayak prepared the income statement for the year ended December 31. The accounting supervisor at River’s Edge noticed that the balance of the
Review the source document and prepare the journal entry to record this transaction in your working papers. Your Backpack Inc. uses a cash payments journal to record disbursements. Your
The procedure for transferring information from a journal to ledger accounts is calleda. Journalizing.b. Adjusting.c. File maintenance.d. Posting.e. None of these answers
How are temporary accounts with credit balances closed?
a. What is the purpose of preparing a post-closing trial balance?b. Does the Income Summary account appear on the post-closing trial balance? Why or why not?
Proving the accuracy of the adjusting and closing entries is best defined asa. Preparing a post-closing trial balance.b. Preparing the statements.c. Closing the temporary accounts.d. Adjusting the
Describe the journal entry to record a net loss.
The following amounts appeared in the Income Statement section of Sunset Surfwear’s work sheet.Instructions In your working papers, re cord the closing entries for the year ended December 31.
a. Name the 10 steps in the accounting cycle.b. Which tasks in the accounting cycle are performed automatically in a computerized accounting system?
To close the Income Summary account of a corporation with a net loss, the balance is closed into thea. Retained Earnings account with a debit.b. Retained Earnings account with a credit.c. Account
Your future savings may include stock. Your stock investment becomes an asset for you and part of stockholders’ equity for the company.PERSONAL FINANCE ACTIVITY Choose a company to investigate
Analyze the closing of the Income Summary and Retained Earnings accounts when the business has net income and when it has a net loss.
The following account balances appeared in the Income Statement section of the work sheet of Shutterbug Cameras.Instructions 1. Journalize the closing entries for the year ended December 31.
Which of the following accounts is closed at the end of a fiscal period?a. Membership Fees Incomeb. Accounts Receivablec. Delivery Equipmentd. Retained Earnings
Create a memory device to help you remember all the closing entries for a corporation.
One measure of a corporation’s profitability is the return on stockholders’ equity. It shows how much the business earned for each dollar invested by stockholders. INSTRUCTIONSUse
A partial list of the accounts used by Cycle Tech Bicycles appears on shown below. All of the accounts have nonzero balances. Instructions In your working papers, list all account numbers
Justify the use of only three closing entries for a corporation although a sole proprietorship uses four.
In the middle of the end-of-period activities, the accountant for Buzz Newsstand was called away because of an illness in the family. Before leaving, the accountant prepared the work sheet and the
The following account names appear in the chart of accounts of Larkin’s Department Store. Instructions Use the form in your working papers to answer the following questions about each account.
Closing entries for a corporation are made from information in a work sheet’sa. Trial Balance columns.b. Adjustments columns.c. Income Statement columns.d. Balance Sheet columns.e. none of these
What is the source of information for journalizing the closing entries?
You work in the accounting department for Pearl’s, a trendy department store. The accounting manager asked you to review the work of an accounting intern who completed the closing process. Some
As you are completing the closing entries for the fourth quarter, you realize that your company, Dynamic Sound, has a net loss. You know that management is not aware that the fourth quarter financial
Most retail stores give employees specific instructions on how to process a sales return. For example, a cash refund can only be given if cash was paid. Imagine that you work for a large sporting
List the following steps of the accounting cycle in their proper order. Use the form provided in your working papers or a separate sheet of paper. Analyzing business transactions Collecting and
The Fitness Center, owned by Gail Chan, has been in business for two years. The business is successful with its expanded hours of operation.You are a local business consultant and have worked with
Whether you work in a small or large business, technology is critical to efficiency in the workplace.ON THE JOBAfter graduating from college and working for a year as a junior accountant in a CPA
Many companies provide office supplies for their employees’ use while on the job. Imagine that you work for a large department store like JC Penney. Several of your co-workers take company supplies
Imagine that you are a bookkeeper for an attorney who likes to use state-of-theart technology. The business just received the latest update on its Web site design software. You would like to use the
Many businesses offer a toll-free telephone line for customers and business associates. Suppose you’re an accountant for Procter & Gamble in Cincinnati, Ohio. Your friend Mike just moved to
Assume that you are an accounting clerk for a large insurance company like Farmers Insurance. Your boss introduces you to the newest hire, and you recognize her as a former classmate from high school
Assume that you started a service business by depositing cash into a business checking account, purchasing various assets, and incurring a number of expenses. You have commitments from customers and
The process of transferring information from the journal to the individual general ledger accounts is called.a. Journalizingb. Carrying forwardc. Transferringd. Posting.
The method for correcting an error depends on when and where the error is found:• If the journal entry is wrong and has not yet been posted, draw a line through the incorrect item and write the
When posting to the general ledger accounts, the information in the Post. Ref. Column of each ledger account refers toa. The transaction’s source document.b. The account number.c. The journal and
If total debits and total credits are not equal, you must locate and correct the errors. The following trial balance errors are the most common:• Addition and subtraction errors•
On July 7 Video Connection’s accounting supervisor discovered that a July 3 transaction had been recorded incorrectly. The transaction, involving the purchase of advertising in the local newspaper
When preparing a trial balance, which of the following would not be considered a procedure?a. Check to see if both columns equal.b. Double rule both columns.c. Write the general ledger account names
Analyze the transaction that is described in Memorandum 47, and then record and post the required correcting entry in your working papers. FUNTIME MEMORANDUM 47 AMUSEMENT ARCADE TO: Accounting
Every worker must learn how to interpret information and communicate effectively with co-workers, customers, and superiors.ON THE JOBAs an accounting clerk for New Wave Inc., a surfboard
Devid Serlo made the following cash investment in his business. Use the six-step process to post the entry to the ledger accounts in your working papers. DATE 1 20-- 2 May 3 4 GENERAL
An error in posting may causea. Income to be overstated or understated on the income statement.b. A business to pay too much to a vendor.c. Cash on hand to be less than the balance in the cash
Describe how correcting an error discovered after a transaction is posted is different from correcting an error before it is posted.
Use the step-by-step processes presented in this chapter for starting new ledger pages for the following accounts. Use the accounting stationery provided in your working papers. January 1 of the
As a junior accounting clerk for Action Sports Outfitters, you are being evaluated for a raise. Your boss wants to see how well you understand basic accounting terminology. He asks you to write a
An account balance isa. The total of the credit side of the account.b. The total of the debit side of the account.c. The difference between the increases and decreases recorded in the account.d.
a. What six steps are required to open a general ledger account?b. List the steps in the posting process.
What is the purpose of each amount column in the four-column ledger account form?
Joel Rivlin studied accounting in college and then worked as an accountant for a local real estate company. After becoming a CPA, Joel decided to start his own company, Joel Rivlin,
Imagine that you are an accounting clerk for Ace Hardware. The store manager has asked you to prepare the trial balance. The totals on the trial balance are not equal and you cannot find the error.
What if your trial balance were out of balance by a small amount, for example by $8.39? Is it worthwhile to find the reason for differences? Why or why not?
A partial chart of accounts for Kits & Pups Grooming follows. Instructions1. In your working papers, open an account in the general ledger for each of these accounts.2. Record the March

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