Accounting Paraprofessional Skills and Knowledge Covered Flashcards

Which document summarizes all transactions in a customer's account and is sent to request payment?

Answer: Statement of account

A statement of account lists all transactions (invoices, payments, credits) for a customer over a period and requests payment for any balance due.

The FUTA tax (Federal Unemployment Tax) is paid by:

Answer: The employer only

FUTA is solely an employer-paid tax; it is not withheld from employee wages.

Which of the following is NOT considered a generally accepted accounting principle (GAAP) concept?

Answer: Cash basis accounting

GAAP requires accrual basis accounting; cash basis accounting (recording only when cash changes hands) is not a GAAP concept for most businesses.

When a contra account such as Allowance for Doubtful Accounts is used, it is presented on the balance sheet as:

Answer: A deduction from Accounts Receivable

The Allowance for Doubtful Accounts is a contra asset that reduces the gross Accounts Receivable to its net realizable value on the balance sheet.

A trial balance that is in balance (debits equal credits) guarantees that:

Answer: The mathematical equality of debits and credits is maintained

A balanced trial balance only confirms that total debits equal total credits; it does not detect errors such as posting to wrong accounts or omitted transactions.

Which of the following is an example of an adjusting entry for accrued revenue?

Answer: Debit Accounts Receivable, Credit Revenue

Accrued revenue is earned but not yet received; the adjusting entry debits Accounts Receivable and credits Revenue to record the earned amount.

What is the purpose of a subsidiary ledger in accounts payable?

Answer: To provide detailed records for each individual vendor

An accounts payable subsidiary ledger maintains a separate account for each vendor, providing detail that supports the controlling account in the general ledger.