Accounting Quiz

What is a key difference between the financial statements of a merchandising corporation and a sole proprietorship service business?

• Merchandising corporations do not use balance sheets

• Sole proprietorships report cost of goods sold

• Merchandising corporations have an income statement that includes cost of goods sold

• Sole proprietorships require a statement of retained earnings

What is the first step in the accounting cycle?

• Prepare a trial balance

• Analyze business transactions to determine debits and credits

• Journalize transactions in the general journal

• Post transactions to the general ledger

What is the purpose of a trial balance?

• To record business transactions

• To ensure that debits and credits are equal

• To prepare financial statements

• To close the books at the end of a period

Which financial statement shows a company's profitability over a period?

• Balance Sheet

• Statement of Retained Earnings

• Income Statement

• Trial Balance

What happens in the final step of the accounting cycle?

• Adjusting entries are made

• Financial statements are prepared

• A post-closing trial balance is prepared

• The general journal is closed

What is the formula for calculating gross earnings for an hourly employee?

• Hourly rate × Hours worked

• Salary × Commission rate

• Net pay ÷ Taxes

• Sales revenue ÷ Commission rate

Which of the following is NOT a required payroll tax deduction for employees?

• Federal income tax

• Social security tax

• Medicare tax

• 401(k) contribution

Which payroll form is used by employees to determine tax withholding?

• W-2

• W-4

• I-9

• Payroll Register

What is the purpose of an Employer Payroll Tax Journal Entry?

• To record wages paid to employees

• To document deductions from employee paychecks

• To record employer payroll tax expenses

• To track commissions and bonuses

Which report lists all employee wages and deductions for a pay period?

• Employee Earnings Record

• Payroll Register

• W-2 Form

• Balance Sheet