Questions and Answers of Small Business Accounting

Describe the controls you would put in place to prevent an employee from receiving customers’ checks and then depositing the money into his or her own bank account.
What are the possible consequences of not reconciling the bank statements in a timely manner?
Suppose you have a small manufacturing business. What are some expenses you might need petty cash for? How much petty cash would you keep on hand? How often would you need to replenish the petty cash?
Your retail store does a large cash business. Develop a policy to safeguard the cash you take in during the day.
For Items a–k, identify whether:
It is an adjustment to the bank balance.
It is an adjustment to the book balance.
It is not a bank reconciliation adjustment.
It requires a journal entry.(Be aware that an item can have more than one answer.)a. Check 352 not cleared.b. Monthly bank fee that has been journalized.c. Interest income.d. Deposit in transit.e. A
What is an employer identifi cation number? How do you obtain one?
Which two forms must be filled out by all new hires? Which of these forms must the employer also fill out?
What is the purpose of the Fair Labor Standards Act? Do all employees fall under all provisions of the act? If not, what are the exceptions?
True or False? The minimum wage in all states is the same as that set by the federal government.
List the taxes that are withheld from an employee’s earnings.
Is the entire amount of an employee’s pay subject to social security tax?To Medicare tax? Explain your answers.
Which withheld taxes does the employer match?
How do you determine the amount to withhold for federal income tax?
Are benefi ts always paid for by the employer only? Explain your answer.
How do employee-paid, tax-exempt benefi ts reduce the amount of income tax an individual pays?
List three examples of employer-paid, tax-exempt benefi ts.
List three examples of employer-paid, taxable benefi ts.
Defi ne gross earnings.
How do you calculate net pay?
Name the account(s) debited in the payroll journal entry. Name the account(s) credited.
Complete the table below using the data provided. Each employee must be paid according to the Fair Labor Standards Act with all hours worked over 40 in a 7-day period paid at a time and a half rate.
Maxine Sanders is a single employee who claims one allowance.Prior to the current pay period, her year-to-date total earnings were$75,000. Her pay for the current pay period is $3,000. Calculate
Determine the amount of federal income tax for an employee that earns $1,025 per pay period and claims fi ve withholding allowances.
Joseph Smith is a salaried employee who is paid biweekly. His yearly salary is $52,000. Calculate his gross biweekly salary.
Refer to question
Suppose Joseph is paid semimonthly. Calculate his semimonthly salary.
An employer uses a commission process to determine his employee’s gross pay. The employee is given his choice of two methods.a. 10% commission on all salesb. $500 base guaranteed salary & 5 percent
A married employee who claims two allowances earned $1,030 during the current pay period. The employee’s year to date pay prior to this pay period is $54,000. The employee is not taxed at the state
What is the lookback period? How is it used in determining a company’s payroll tax deposit schedule?
What schedule for making timely deposits does a new company use?
What are the two methods available for depositing payroll taxes?When must you use a specifi c method? Describe the circumstances in which you can only use one specifi c method.
When you make a tax deposit, which accounts are debited and credited?
Defi ne Form W-2 and Form W-3.
List fi ve important pieces of information that appear on Form W-2.
What are the due dates for Form W-2?
Who receives Form W-3? What are the due dates for this form?SELF-CHECK
Describe a method for maintaining employee records in a manual bookkeeping system.
What are the basic types of information you must retain for each employee?
When would you record a change in an employee’s withholding allowances?
Which government agencies have rules about retaining employee records?
The following payroll tax liabilities incurred during September:a. Income Tax Withholdings $2,300b. Medicare $256c. Social Security $2,193 Give the entry to record theses liabilities.
Refer to question
Give the entry to pay these liabilities.
An employee earns $20,000 per year. Determine the maximum amount of federal unemployment taxation an employer would pay for this employee.
Determine the maximum amount, in the state of Nevada, of unemployment insurance a new employer must pay for an employee earning $20,000 per year if the federal government does not give a credit for
A new California employer has fi ve employees. Each employee earns more than $7,000 per year. Determine the total amount of federal and state unemployment that must be paid given the federal
Refer to question
Give the entry to record the total payroll unemployment taxes.
Refer to questions 5 and
Give the entry to pay the total payroll unemployment taxes.
What are the nine states that have no income tax?
What are the penalties that an employer can face for filing a late W-2 form?
Is there any penalty to the employer if he files fraudulent W-2 forms claiming wages paid that were actually not paid?
What is the advantage of using a special journal?
List the columns that appear in a sales journal. Why doesn’t a sales journal have a column for the Cash account?
List three transactions that might be recorded in the General Credit column of the cash receipts journal.
What is the difference between a sales slip and a customer invoice?
What is a subsidiary ledger? Give two examples.
Which is more time-consuming: posting a group of transactions from a special journal to a subsidiary ledger or posting a group of transactions from a special journal to the general ledger? Explain
True or False? Every transaction in the sales journal is posted to a subsidiary ledger. Explain your answer.
True or False? Every transaction in the cash receipts journal is posted to a subsidiary ledger. Explain your answer.
What is a sales return? How is it different from a sales allowance?
What is a contra account? Why is the Sales Returns and Allowances account classifi ed as a contra account?
How do you determine which general ledger account to credit when you journalize a sales return? What are the possible accounts you could credit?
True or False? Every sales allowance transaction is posted to a subsidiary ledger. Explain your answer.
What is the accounts receivable aging summary?
What specifi c items of information are provided in the accounts receivable aging summary?
According to the report shown in Table 11-2, during which period of time are outstanding accounts still considered current?
Describe the practical uses of the accounts receivable aging summary.
What is meant by the term purchases?
What is the difference between purchases and cost of goods sold?
Are all purchases recorded in the purchases journal? Explain your answer.
Name two amount columns in a purchases journal.
Which two columns appear in any cash disbursements journal?
Which special journal would you use to record a cash payment for merchandise?
Which account is used to record the interest you pay to lenders?
Describe how you would use an amortization schedule to determine the account coding for a monthly note payment.
What type of accounts are in the accounts payable ledger?
How do you determine the amount to post to the Accounts Payable account from a special journal?
True or False? Every transaction in the purchases journal is posted to a subsidiary ledger. Explain your answer.
True or False? Every transaction in the cash disbursements journal is posted to a subsidiary ledger. Explain your answer.
What is the account classifi cation of Purchases Returns and Allowances?
What is the accounts payable aging summary?
What specifi c items of information are provided in the accounts payable aging summary?
Describe the practical uses of the accounts payable aging summary.
a. Provide a schedule of accounts payable from the subsidiary ledger in question 2.b. Does the sum of the Accounts Payable Subsidiary Ledger accounts equal the account balance of the Accounts Payable
Defi ne each of the following terms:a. Line of Creditb. Interest
What is a promissory note? Explain the amortization process in repaying a promissory installment note.
Explain the difference between a purchase return and a purchase allowance.
What is the formula for gross profi t?
List the methods used to track the amount of inventory on hand.
In a periodic inventory system, which accounts are used to record the initial cost of inventory?
When would you use a general ledger account called Cost of Goods Sold?
List the four inventory valuation methods.
Which method is most common for expensive, one-of-a-kind items?
In a period of rising prices, which method will result in the highest gross profi t?

Showing 600 - 700 of 772