Accounting Semester 2 Review

Interest income is recorded only if a note receivable is collected.

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

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

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A temporary account is closed by transferring its balance out of the account.

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The book value of accounts receivable at year end is an estimate of the amount of accounts receivable the business expects to collect during the next fiscal year.

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The amount of dividends declared during the year is presented on the income statement.

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The purpose of the post-closing trial balance is to prove the general ledger equality of debits and credits.

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Increasing operating revenue while keeping cost of merchandise sold the same will increase gross profit.

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Alpha Company’s benchmark total operating expense ratio is between 28.0% and 30.0%. A decline in its operating expense ratio from 32.1% to 30.8% is a favorable trend.

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The column totals of an employee earnings record provide the debit and credit amounts needed to journalize a payroll.

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• false