Accounting 2: Final Exam Review #1

The total of the schedule of accounts receivable should equal

• the Accounts Receivable account balance in the general ledger

• the Cash account

• the debit and credit proof

• none of these

The withholding allowances of an employee affect the amount of

• social security tax withheld

• federal income tax withheld

• federal unemployment tax owed

• state unemployment tax owed

Some businesses deposit employee net pay directly to each employee's bank account by using

• payroll checks

• payroll registers

• EFT

• none of these

Interest income is recorded only if a note receivable is collected

• true

• false

Preparing the general ledger for the next fiscal period is an application of the Business Entity accounting concept

• true

• false

The closing entry for income statement accounts with debit balances closes only the expense accounts

• true

• false

Recording expenses in the fiscal period in which the expenses contribute to earning revenue is an application of the accounting concept

• accounting period cycle

• adequate disclosure

• matching expenses with revenue

• historical cost

The amount of prepaid insurance not expired during a fiscal period represents

• an asset

• a liability

• revenue

• an expense

To rate the ability of a business to pay its current and long-term liabilities, investors use

• market ratios

• profitability ratios

• liquidity ratios

• solvency ratios

To close the Sales account

• debit Sales, credit Cash

• debit Sales, credit Income Summary

• debit Income Summary, credit Sales

• debit Cash, credit Sales