Exam Review Activity

STATION #1: Solution TermDefinition Fiscal Perioda period of time over which earnings are measured aka accounting period Accounting Cyclethe total set of accounting procedures that must be carried out during each fiscal period Auditingthe examination of accounting records and internal controls of a business in order to be able to express an opinion about the business’s financial position CreditorSomeone a business owes money to DebtorSomeone who owes the business money GAAPsGuidelines established by professional accountants to be followed in the preparation of accounting records and financial statements LiquidityThe ease at which an asset can be converted into cash DebitThe left side of an account CreditThe right side of an account Chart of AccountsA listing of the accounts of a business and their numbers, arranged according to the ledger order HSTHarmonized Sales Tax; Ontario’s sales tax JournalizingThe process of recording entries into the journal

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Station #3: Multiple Choice Sampler 1 The Income Summary account at the end of the fiscal period has a debit balance of $500. To close this account –A. debit the Capital account and credit the Income Summary account –B. debit the Income Summary account and credit the Capital account –C. debit the Drawings account and credit the Income Summary account –D. No ne of the above 2 Which of the following accounts is not closed out at the end of the accounting period? –A. Wages –B. Bank Charges –C. Accounts Receivable –D. Purchases 3 Auditing may be described as: –A. serving the general public –B. the accounting procedures of a large company –C. testing a firm’s records and procedures for accuracy –D. keeping accounting records for the government 4 Which of the following is not a merchandising firm? –A. Canadian Tire –B. A hairdresser –C. Walmart –D. A grocery store

5 The best way for express the fundamental accounting equation is: –A. Assets + Owner’s Equity = Liabilities –B Assets = Liabilities + Owner’s Equity –C. Assets = Liabilities – Owner’s Equity –D. Assets + Liabilities = Owner’s Equity 6 A credit entry: –A. decreases the balance of any account –B. shows the business can get credit –C. is made on the right side of an account –D. none of the above 7 The purpose of calculating depreciation on fixed assets is: –A. to provide a fund to replace Assets when they wear out –B. to reduce the book value of assets to their current market value –C. to match revenue and expenses for the current fiscal year –D. all of the above 8 One June 30th we pay $360 for insurance for three year’s coverage. Our year end is December 31st. This year’s insurance expense should be: –A. $60 –B. $360 –C. $300 –D. none of the above

STATION #3: Solution Multiple Choice Answers: 1A 2C 3C 4B 5B 6C 7C 8A

Station #4: True/False Sampler 1. Net income for the period is determined by subtracting total expenses and drawings from total revenues. 2. The purchase of office equipment on credit increases total assets and total liabilities. 3. The basic accounting equation states that Assets = Liabilities. 4. A debit to an account indicates an increase in that account. 5. If a revenue account is credited, the revenue account is increased. 6. Transactions are first entered in the ledger accounts and then transferred to journals. 7. A journal is also known as a book of original entry. 8. A business entity has only one accounting cycle over its economic existence. 9. A company's calendar year and fiscal year are always the same. 10. Adjusting entries are often made because some business events are not recorded as they occur. 11. An adjusting entry always involves two balance sheet accounts. 12. Service businesses do not calculate Cost of Goods Sold. 13. In order to compare balance sheets from different companies, total assets are used as the base number. 14. When a business sells something, they will have a new liability called HST Payable created. 15. Only temporary (or nominal) accounts are used on the post closing trial balance.

STATION #4: Solution True/False Answers: 1F9F 2T10T 3F11F 4F12T 5T13T 6F14T 7T15F 8F

STATION #6: Solution Year Straight-line Depreciation DepreciationBalance $ Formula = original cost – salvage value / useful life / 5 = 13000

STATION #6: Solution Year Declining Balance DepreciationBalance $