Annual straight-line depreciation expense of a plant asset is calculated as the original cost of the plant asset (minus the salvage value) divided by the years of estimated useful life.

Estimated federal income tax must be paid in quarterly installments.

All accounts are listed on the unadjusted trial balance regardless of whether there is a balance or not.

Functional depreciation should be considered in estimating the useful life of computer equipment.

For a business using the periodic inventory method, purchases are recorded in the Purchases account.

The Income Summary account is one of the accounts used to adjust the Merchandise Inventory account at the end of the fiscal period.

The annual straight-line depreciation of equipment costing $5,000.00 with a salvage value of $1,000.00 and a useful life of 5 years would be $800.00.

The annual straight-line depreciation of equipment costing $7,000.00 with a salvage value of $1,000.00 and a useful life of 5 years would be $1,200.00.

The annual straight-line depreciation of equipment costing $12,000.00 with a salvage value of $1,500.00 and a useful life of 7 years would be $1,500.00.

The value of the insurance coverage used is recorded as a debit to Insurance Expense.

The book value of a plant asset is its original cost minus accumulated depreciation.

For a business using the periodic inventory method, the balance of Merchandise Inventory in the unadjusted trial balance represents the beginning balance. This does not include all purchases of merchandise made in the fiscal period.

The difference between an asset’s account balance and its related contra account is called book value.

The tax rate associated with an income tax bracket is called the marginal tax rate.

The Prepaid Insurance account must be adjusted at the end of a fiscal period because the account balance does not reflect the value of the insurance premiums that expired during the period.

A business can use any 12-month period for reporting its financial performance.

Cash and other assets expected to be exchanged for cash or consumed within a year are called current assets.

Depreciation expense is not recorded on all plant assets because one of the plant assets, land, is assumed to have an unlimited useful life.

The marginal tax rate increases as the net income before federal income tax increases.

Congress sets the amounts and rates of the tax brackets used to calculate federal income tax expense.

The total amount of depreciation expense that has been recorded since the purchase of a plant asset is called accumulated depreciation.

The amount of the adjustment to Allowance for Uncollectible Accounts when the account balance is a $400.00 debit and $5,000.00 of accounts receivable is estimated to be uncollectible would be $5,400.

Accrued interest income on notes receivable is calculated using annual interest rate, principal, and the date of the note.

The adjustment unique to merchandising businesses adjusts the Merchandise Inventory account.

The journal entry to adjust Merchandise Inventory when beginning merchandise inventory is $125,000.00 and ending merchandise inventory is $115,000.00 would be a Debit to Income Summary and Credit to Merchandise Inventory.

Recording depreciation expenses is an application of the accounting concept Matching Expenses with Revenues.

Depreciation Expense is calculated by using the estimated salvage value, estimated useful life, and the original cost.

The total amount of depreciation expense that has been recorded since the purchase of a plant asset is called accumulated depreciation.

The adjustment for unpaid federal income tax includes an expense and a liability account.

A physical inventory is always conducted at the end of each fiscal period.

In the preparation of financial statements, accounting principles are applied the same way from one fiscal period to the next.

Dividends Payable is a long-term liability.

Management uses gross profit as a measure for how effectively the business is performing in its primary functions of buying and selling merchandise.

Data needed to prepare the Liabilities section of a balance sheet are obtained from the Credit column of an adjusted trial balance.

The difference between an asset’s account balance and its related contra account balance is known as its book value.

The amount of dividends paid during the year is presented on the statements of stockholders' equity.

Some management decisions can best be made after the amount of assets, liabilities, and stockholders’ equity in the business is determined.

Interest income is reported on the income statement in a section labeled Other Revenue.

Operating revenue less cost of merchandise sold equals net income.

When a business’s expenses are less than the gross profit, the difference is known as a net income.

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

All the information required to prepare a statement of stockholders’ equity is obtained from the income statement, the adjusted trial balance, and general ledger.

When more detailed information about an item on a financial statement is needed, a supporting schedule may be prepared.

A statement of stockholders’ equity summarizes the changes in owners’ equity during a fiscal period.

Interest earned on notes receivable is reported in the Other Revenue section of an income statement.

Beginning merchandise inventory plus purchases made during the fiscal period minus ending inventory equals cost of merchandise sold.

On an income statement, vertical analysis percentages are calculated by dividing the amount on each line by the amount of net sales.

The operating revenue remaining after cost of merchandise sold has been deducted is

The income from operations is calculated by subtracting operating expenses from

One way to increase gross profit is to

A financial statement that reports the amount of dividends is

The financial statement that reports the par value of the stock is

The total original price of all merchandise sold during a fiscal period is called

Preparing financial statements that provide information about a business’s financial condition, changes in this financial condition, and the progress of operations is an application of the accounting concept

In the accounting cycle, closing entries are journalized and posted

The amount of sales, less sales discounts and sales returns

and allowances.

The revenue remaining after cost of merchandise sold has

been deducted.

The revenue earned by a business from its normal business

operations.

A value assigned to a share of stock and printed on the

stock certificate.

Liabilities owed for more than a year.

Liabilities due within a short time, usually within a year.

What is the first step of the accounting cycle?

What is the second step of the accounting cycle?

What is the third step of the accounting cycle?

What is the fourth step of the accounting cycle?

What is the fifth step of the accounting cycle?

What is the sixth step of the accounting cycle?

What is the seventh step of the accounting cycle?

What is the eighth step of the accounting cycle?

What is the ninth step of the accounting cycle?

What is the tenth step of the accounting cycle?

What is the 11th step in the accounting cycle?

What is the LAST step in the accounting cycle?

Closing a contra revenue account results in a credit to Income Summary.

Closing a contra revenue account results in a debit to Income Summary.

The Dividends account is closed by recording a debit to Retained Earnings.

The Income Summary account has a normal credit balance.

A company having earnings per share of $5.67 is more profitable than a company having earnings per share of $4.32.

A company has set its gross margin benchmark at 40% to 42%. An increase in the ratio from 38% to 39% is a positive trend.

An accounts receivable ratio above the target range may indicate that ThreeGreen is too liberal in extending credit to its customers.

Investors are willing to pay a higher P/E ratio for growth stocks than for income stocks.

Managers who want to control operating expenses will be more interested in the operating margin than the total operating expense ratio.

The ratio that measures the relationship between cash and current assets is the quick ratio.

Modifying a benchmark is an option for a business that fails to achieve its benchmark.

The gross profit margin gives investors the best indication of how effectively a business is earning a profit from its normal business operations.

Alpha Company’s benchmark total operating expense ratio is between 32.0% and 34.0%. An increase in its operating expense ratio from 33.1% to 34.2% is a favorable trend.

A business with operating expenses that exceed its benchmark should always begin by reducing the number of employees, the largest operating expense for most businesses.

A company has done everything possible to control rising merchandise costs. To maintain its gross margin, its only alternative is to sell more merchandise.

Income stocks typically have a higher dividend yield than growth stocks.

Quick assets include cash and merchandise inventory.

The gross profit ratio is also referred to as the gross margin.

The dividend ratio is the most widely recognized measure of a corporation’s financial performance.

A corporation should compare its working capital to industry standards.

A corporation’s earnings per share is compared to its prior periods’ earnings per share or the corporation’s projected earnings per share.

The current ratio assumes a business could sell its merchandise inventory quickly.

Operating margin is also referred to as

The price-earnings ratio is an example of a

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

Gross margin can be increased by

Vertical analysis ratios are an example of a

The least likely factor a business will use to determine a benchmark is

The ratio that gives the best indication of how effectively a business is earning a profit from its normal business operations is the

The debt ratio is an example of a