Test Bank for College Accounting 22nd Edition by James Heintz,Robert Parry 130566616X 9781305666160

Part 1. Accounting for a Service Business

Chapter 1. Introduction to Accounting

The Purpose of Accounting

The Accounting Process

Generally Accepted Accounting Principles (GAAP)

Three Types of Ownership Structures

Sole Proprietorship

Partnership

Corporation

Types of Businesses

Career Opportunities in Accounting

Accounting Clerks

Bookkeepers and Para-Accountants

Accountants

Job Opportunities

Self-Study

Key Terms

Applying Your Knowledge

Chapter 2. Analyzing Transactions: The Accounting Equation

The Accounting Elements

Assets

Liabilities

Owner’s Equity

The Accounting Equation

Analyzing Business Transactions

Effect of Transactions on the Accounting Equation

Transaction (a): Investment by owner

Expanding the Accounting Equation: Revenues, Expenses, and Withdrawals

Effect of Revenue, Expense, and Withdrawal Transactions on the Accounting Equation

Financial Statements

The Income Statement

The Statement of Owner’s Equity

The Balance Sheet

Overview of the Accounting Process

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 3. The Double-Entry Framework

The T Account

Balancing a T Account

Debits and Credits

Assets

Liabilities and Owner’s Equity

The Owner’s Equity Umbrella

Owner’s Capital

Revenues

Expenses

Drawing

Normal Balances

Transaction Analysis

Debits and Credits: Asset, Liability, and Owner’s Equity Accounts

Debits and Credits: Including Revenues, Expenses, and Drawing

Summary of Transactions

The Trial Balance

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 4. Journalizing and Posting Transactions

Flow of Data

Source Documents

The Chart of Accounts

The General Journal

Journalizing

The General Ledger

General Ledger Account

Posting to the General Ledger

The Trial Balance

Finding and Correcting Errors in the Trial Balance

Ruling Method

Correcting Entry Method

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 5. Adjusting Entries and the Work Sheet

End-Of-Period Adjustments

Supplies

Prepaid Insurance

Wages Expense

Depreciation Expense

Expanded Chart of Accounts

Posting Adjusting Entries

The Work Sheet

The 10-Column Work Sheet

Preparing the Work Sheet

Finding Errors on the Work Sheet

Journalizing Adjusting Entries from the Work Sheet

Methods of Accounting: Cash, Modified Cash, and Accrual

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 5 Appendix. Depreciation Methods

Chapter 6. Financial Statements and the Closing Process

The Financial Statements

The Income Statement

The Statement of Owner’s Equity

The Balance Sheet

Additional Investments by the Owner (Revisited)

The Closing Process

Steps in the Closing Process

Journalize Closing Entries

Post the Closing Entries

Post-Closing Trial Balance

The Accounting Cycle

Steps in the Accounting Cycle

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 6 Appendix. Statement of Cash Flows

Comprehensive Problems

Comprehensive Problem 1: The Accounting Cycle

Comprehensive Problem 1, Period 2: The Accounting Cycle

Part 2. Accounting for Cash and Payroll

Chapter 7. Accounting for Cash

Checking Account

Opening a Checking Account

Making Deposits

Endorsements

Automated Teller Machines

Writing Checks

Bank Statement

Reconciling the Bank Statement

Deposits

Cash Payments

Reasons for Differences Between Bank and Book Balances

Steps in Preparing the Bank Reconciliation

Illustration of a Bank Reconciliation

Journal Entries

Electronic Banking

The Petty Cash Fund

Establishing a Petty Cash Fund

Making Payments from a Petty Cash Fund

Petty Cash Payments Record

Replenishing the Petty Cash Fund

The Change Fund and Cash Short and Over

Establishing and Operating the Change Fund

Cash Short and Over

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 7 Appendix. Internal Controls

Chapter 8. Payroll Accounting: Employee Earnings and Deductions

Employees and Independent Contractors

Employee Earnings and Deductions

Salaries and Wages

Computing Total Earnings

Deductions from Total Earnings

Computing Net Pay

Payroll Records

Payroll Register

Paying Employees

Employee Earnings Record

Accounting for Employee Earnings and Deductions

Journalizing Payroll Transactions

Wages and Salaries Expense

Employee Federal Income Tax Payable

Social Security and Medicare Taxes Payable

Other Deductions

Payroll Record-Keeping Methods

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 9. Payroll Accounting: Employer Taxes and Reports

Employer Payroll Taxes

Employer FICA Taxes

Self-Employment Tax

Employer FUTA Tax

SUTA Tax

Accounting for Employer Payroll Taxes

Journalizing Employer Payroll Taxes

Payroll Taxes Expense

Social Security and Medicare Taxes Payable

FUTA Tax Payable

SUTA Tax Payable

Total Payroll Cost of an Employee

Reporting and Payment Responsibilities

Federal Income Tax Withholding and Social Security and Medicare Taxes

FUTA Taxes

SUTA Taxes

Employee Wage and Tax Statement

Summary of Employee Wages and Taxes

Employment Eligibility Verification

Summary of Taxes, Reports, and Payments

Workers’ Compensation Insurance

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Part 3. Accounting for a Merchandising Business

Chapter 10. Accounting for Sales and Cash Receipts

Merchandise Sales Transactions

Retailer

Wholesaler

Credit Memorandum

Merchandise Sales Accounts

Sales Account

Sales Tax Payable Account

Sales Returns and Allowances Account

Sales Discounts Account

Journalizing and Posting Sales and Cash Receipts Transactions

Sales

Posting Sales to the General Ledger

Posting Sales to the Accounts Receivable Ledger

Sales Returns and Allowances

Cash Receipts

Journalizing Cash Receipts

Posting Cash Receipts to the General Ledger and Accounts Receivable Ledger

Schedule of Accounts Receivable

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 11. Accounting for Purchases and Cash Payments

Merchandise Purchases Transactions

Purchase Requisition

Purchase Order

Receiving Report and Purchase Invoice

Cash and Trade Discounts

Merchandise Purchases Accounts

Purchases Account

Purchases Returns and Allowances Account

Purchases Discounts Account

Freight-In Account

Computation of Gross Profit

Journalizing And Posting Purchases And Cash Payments Transactions

Purchases

Posting Purchases to the General Ledger

Posting Purchases to the Accounts Payable Ledger

Purchases Returns and Allowances

Cash Payments

Posting Cash Payments to the General Ledger and Accounts Payable Ledger

Schedule of Accounts Payable

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 11 Appendix. The Net-Price Method of Recording Purchases

Chapter 12. Special Journals

Special Journals

Sales Journal

Posting from the Sales Journal

Cash Receipts Journal

Posting from the Cash Receipts Journal

Purchases Journal

Posting from the Purchases Journal

Cash Payments Journal

Posting from the Cash Payments Journal

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 13. Accounting for Merchandise Inventory

The Impact of Merchandise Inventory on Financial Statements

Types of Inventory Systems: Periodic and Perpetual

Assigning Cost to Inventory and Cost of Goods Sold

Taking a Physical Inventory

The Periodic Inventory System

The Perpetual Inventory System

Lower-of-Cost-or-Market Method of Inventory Valuation

Estimating Ending Inventory and Cost of Goods Sold

Gross Profit Method of Estimating Inventory

Retail Method of Estimating Inventory

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 13 Appendix. Perpetual Inventory Method: LIFO and Moving-Average Methods

Chapter 14. Adjustments and the Work Sheet for a Merchandising Business

Adjustment for Merchandise Inventory: Periodic Inventory System

Adjustment for Unearned Revenue

Expanded Chart of Accounts

Preparing a Work Sheet for a Merchandising Business

Adjustments for Sunflower Cycle

Preparing a Work Sheet for Sunflower Cycle

Adjusting Entries

Adjusting Entries Under the Perpetual Inventory System

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 14 Appendix. Expense Method of Accounting for Prepaid Expenses

Chapter 15. Financial Statements and Year-End Accounting for a Merchandising Business

The Income Statement

The Statement of Owner’s Equity

Balance Sheet

Current Assets

Property, Plant, and Equipment

Current Liabilities

Long-Term Liabilities

Owner’s Equity

Financial Statement Analysis

Balance Sheet Analysis

Interstatement Analysis

Closing Entries

Post-Closing Trial Balance

Reversing Entries

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Comprehensive Problems

Comprehensive Problem 2: Accounting Cycle with Subsidiary Ledgers, Part 1

Comprehensive Problem 2: Accounting Cycle with Subsidiary Ledgers, Part 2

Part 4. Specialized Accounting Procedures for Merchandising Businesses and Partnerships

Chapter 16. Accounting for Accounts Receivable

Allowance Method

Estimating and Writing off Uncollectibles

Percentage of Sales Method

Percentage of Receivables Method

Comparison of Methods

Effects of Write-Offs on Financial Statements

Recovery of Accounts Previously Written Off—Allowance Method

Direct Write-Off Method

Advantage and Disadvantages of Direct Method

Recovery of Accounts Previously Written Off—Direct Write-Off Method

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 17. Accounting for Notes and Interest

The Promissory Note

Calculating Interest and Determining Due Date

Calculating Interest

Determining the Due Date

Accounting for Notes Receivable Transactions

Note Received from a Customer in Exchange for Assets Sold

Note Received from a Customer to Extend Time for Payment

Note Collected at Maturity

Note Renewed at Maturity

Note Discounted Before Maturity

Note Dishonored

Collection of Dishonored Note

Notes Receivable Register

Accrued Interest Receivable

Accounting for Notes Payable Transactions

Note Issued to a Supplier in Exchange for Assets Purchased

Note Issued to a Supplier to Extend Time for Payment

Note Issued as Security for Cash Loan

Note Paid at Maturity

Note Renewed at Maturity

Notes Payable Register

Accrued Interest Payable

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 18. Accounting for Long-Term Assets

Acquisition Cost of Property, Plant, and Equipment

Land

Land Improvements

Buildings

Equipment

Treatment of Interest When Acquiring or Constructing Assets

Depreciation

Depreciation Methods

Straight-Line Method

Declining-Balance Method

Sum-of-the-Years’-Digits Method

Units-of-Production Method

Depreciation for Federal Income Tax Purposes

Repairs, Maintenance, Additions, Improvements, and Replacements to Plant and Equipment

Disposal of Plant Assets

Discarding or Retiring Plant Assets

Selling Plant Assets

Exchange or Trade-In of Plant Assets

Property, Plant, and Equipment Records

Fully Depreciated Plant Assets

Natural Resources

Intangible Assets

Patents

Copyrights

Trademark or Trade Name

Franchises and Licenses

Goodwill

Impairment of Property, Plant, Equipment, and Intangible Assets

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 19. Accounting for Partnerships

Types of Partnerships and How They are Formed

General Partnership (or simply a partnership)

Characteristics of Partnerships

The Partnership Agreement

Advantages and Disadvantages

Accounting for Initial Investments

Cash Investments

Investment of Cash and Other Assets

Partnerships Formed from Existing Businesses

Partner Compensation and The Allocation of Net Income

Profits and Losses Shared Equally

Allocation of Profits and Losses with Salary Allowances

Allocation of Profits and Losses with Salary and Interest Allowances

Statements for Partnerships

Dissolution of a Partnership

Admitting a New Partner

Withdrawal of Partner

Death of a Partner

Liquidation of a Partnership

Gain on Sale of Assets

Loss on Sale of Assets

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Comprehensive Problems

Comprehensive Problem 3: Specialized Accounting Procedures

Part 5. Accounting for Corporations and Manufacturing Businesses

Chapter 20. Corporations: Organization and Capital Stock

The Corporation

Advantages and Disadvantages

Forming a Corporation

Organization of a Corporation

Organization Costs

Stockholders’ Equity and Types of Capital Stock

Capital Stock

Common Stock

Preferred Stock

Capital Stock Transactions

Issuing Par Value Stock at Par

Issuing Par Value Stock at a Premium

Issuing Stock with a Stated Value

Issuing No-Par Stock

Issuing Stock for Noncash Assets

Capital Stock Subscriptions

Treasury Stock

Summary of Capital Stock Transaction Accounts

Stockholders’ Equity Section

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 21. Corporations: Taxes, Earnings, Distributions, and the Statement of Retained Earnings

Corporate Income Taxes

The Retained Earnings Account

The Adjusting and Closing Process

Accounting for Dividends and Stock Splits

Cash Dividends

Stock Dividends

Stock Splits

Summary of Dividend and Stock Split Transactions

Restriction of Retained Earnings

Statement of Retained Earnings

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 22. Corporations: Bonds

Types of Bonds and Determination of Sales Price

Classification of Bonds

Comparison of Bonds with Common Stock

Determining Sales Price

Accounting for Bonds Issued at Face Value

Issuance

Interest Expense

Accounting for Bonds Issued at a Premium

Issuance

Interest Expense and Premium Amortization

Accounting for Bonds Issued at a Discount

Issuance

Interest Expense and Discount Amortization

Accounting for Bond Redemption and Sinking Funds

Redemption at Maturity

Redemption before Maturity

Bond Sinking Funds

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 22 Appendix. Effective Interest Method

Chapter 23. Statement of Cash Flows

Nature and Purpose of the Statement of Cash Flows

Operating, Investing, and Financing Activities

Operating Activities

Investing Activities

Financing Activities

Information Needed to Prepare a Statement of Cash Flows

Statement of Cash Flows: Direct vs. Indirect Methods

Cash Flows from Operating Activities: Indirect Method

Changes in Current Assets Related to Operating Activities

Changes in Current Liabilities Related to Operating Activities

Preparation of a Statement of Cash Flows Under the Indirect Method: Simplex

Section Content

Preparation of a Statement of Cash Flows Under the Indirect Method: Multiplex

Cash Equivalents

Noncash Expenses

Gains and Losses on Transactions Not Related to Operating Activities

Noncash Investing and Financing Activities

Changes in Current Assets Related to Operating Activities

Changes in Current Liabilities Related to Operating Activities

Cash Paid for Interest

Cash Paid for Income Taxes

Interpreting the Statement of Cash Flows

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 23 Appendix. Statement of Cash Flows: The Direct Method

Chapter 24. Analysis of Financial Statements

Comparative Analysis

Horizontal Analysis

Vertical Analysis

Liquidity Measures

Working Capital

Current Ratio

Quick or Acid-Test Ratio

Activity Measures

Accounts Receivable Turnover

Merchandise Inventory Turnover

Asset Turnover

Profitability Measures

Profit Margin

Return on Assets

Return on Common Stockholders’ Equity

Earnings per Share of Common Stock

Leverage Measures

Debt-to-Equity Ratio

Assets-to-Equity Ratio

Times Interest Earned Ratio

Another Look at Roa and Roe

Market Measures

Price-Earnings Ratio (PE Ratio)

Book Value per Share of Common Stock

Limitations of Financial Statement Analysis

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 25. Departmental Accounting

Departmental Accounting

Departmental Gross Profit

Departmental Income Statement Showing Gross Profit

Departmental Operating Income

Direct and Indirect Operating Expenses

Assigning and Allocating Departmental Expenses

Departmental Income Statement Showing Operating Income

Departmental Direct Operating Margin

Interpretation and Use of Direct Operating Margin

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 26. Manufacturing Accounting: The Job Order Cost System

Manufacturing Costs

Materials

Labor

Factory Overhead

Inventories

Flow of Manufacturing Costs

Financial Statement Effects

Income Statement

Balance Sheet

Job Order Cost Accounting

Perpetual Inventories

Accounting for Materials

Accounting for Labor

Accounting for Factory Overhead

Accounting for Work in Process—The Job Cost Sheet

Accounting for Completed Jobs

Accounting for Sales

Flow of Job Order Cost Through the Accounts

Underapplied and Overapplied Factory Overhead

Process Cost Accounting

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge

Chapter 27. Manufacturing Accounting: The Work Sheet and Financial Statements

The Work Sheet for a Manufacturing Company

Inventories

Cost of Goods Sold

Factory Overhead

Income Tax

Adjusting Entries

Apply Factory Overhead to Ending Work in Process

Record Additional Actual Factory Overhead

Record Under- or Overapplied Overhead

Record Other Expenses Not Involving Overhead

Provide for Corporate Income Taxes

Completing the Work Sheet

Financial Statements

Income Statement

Statement of Retained Earnings

Balance Sheet

Journal Entries

Adjusting Entries

Closing Entries

Reversing Entries

Self-Study

Demonstration Problem

Self-Study Test Questions

Applying Your Knowledge

Module. Accounting for a Professional Service Business: The Combination Journal

The Modified Cash and Accrual Bases of Accounting

Accounting for a Professional Service Business

The Combination Journal

Journalizing in a Combination Journal

Proving the Combination Journal

Posting from the Combination Journal

Determining the Cash Balance

Performing End-of-Period Work for a Professional Service Business

Preparing the Work Sheet

Preparing Financial Statements

Preparing Adjusting and Closing Entries

Self-Study

Demonstration Problem

Key Terms

Self-Study Test Questions

Applying Your Knowledge