Accounting II First Semester Exam

An asset is anything of value that is owned by an individual or a company. It can be tangible, such as property or equipment, or intangible, such as patents or copyrights. Assets are considered positive and are recorded on a balance sheet, representing the resources that an entity possesses. In contrast, liabilities represent the debts or obligations that an entity owes, while equity refers to the ownership interest in a company. Therefore, the correct answer is asset.

A general ledger is a ledger that contains all accounts needed to prepare financial statements. It serves as the central repository for recording and summarizing all financial transactions of a company. It includes various accounts such as assets, liabilities, equity, revenue, and expenses. The general ledger provides a comprehensive view of the company's financial position and performance, allowing for accurate and reliable financial reporting. Subsidiary ledgers, on the other hand, contain detailed information for specific accounts or groups of accounts, while a special ledger is not a commonly recognized term in accounting. Therefore, the correct answer is general ledger.

A business that purchases and sells goods is called a merchandising business. This type of business buys products from manufacturers or wholesalers and then sells them to customers. Unlike a service business, which provides intangible services, a merchandising business deals with tangible goods. The term "selling business" is not commonly used to describe this type of business, and "none of these" is incorrect because the correct term is "merchandising business."

Petty cash refers to a small amount of cash that is kept on hand for making small payments. It is typically used for minor expenses such as office supplies, postage, or small reimbursements. The term "cash on hand" refers to any amount of cash that is readily available, but it does not specifically imply that it is used for small payments. "Quick cash" is a more general term that can refer to any form of readily available cash, not necessarily for small payments. Therefore, the correct answer is petty cash.

A journal is a form used to record transactions in chronological order. It is the first step in the accounting process and provides a detailed record of all financial transactions. The journal includes information such as the date, description, and amounts of each transaction. Special journals are used for specific types of transactions, while a ledger is a collection of accounts that summarizes the transactions recorded in the journal. Therefore, the correct answer is journal.

A contra account is an account that reduces the balance of a related account on a financial statement. It is used to offset the balance of the corresponding account and is shown as a deduction from the original account. This helps to provide a more accurate representation of the financial position of a company. In this case, the correct answer is "contra account" because it accurately describes the type of account that reduces a related account on a financial statement.

Equities refer to the financial rights to the assets of a business. This means that equities represent the ownership interests or claims on the assets of a company. It includes the shareholders' equity, which represents the residual interest in the assets after deducting liabilities. Equities can include common stock, preferred stock, retained earnings, and other forms of equity investments. Therefore, equities accurately describe the financial rights to the assets of a business.

An account is a record that summarizes all the information related to a single item in the accounting equation. It includes details about the transactions, balances, and changes that occur for that specific item. Accounts are used to track and organize financial information in a systematic manner, allowing for accurate reporting and analysis. The other options, such as journal and ledger, are also important components of the accounting process, but they do not specifically refer to a record summarizing information for a single item.

A cash discount is a deduction that a vendor offers on the invoice amount to incentivize customers to make prompt payments. This discount serves as an incentive for customers to pay their invoices quickly, which helps improve the vendor's cash flow and reduces the risk of late or non-payment. By offering a cash discount, the vendor encourages customers to pay early, which benefits both parties involved. This deduction is commonly used in business transactions to promote timely payments and maintain healthy cash flow.

The correct answer is "none of these" because the account in a general ledger that summarizes all accounts in a subsidiary ledger is called a control account. A control account is used to provide a summary of the balances in the subsidiary ledger and is typically used for reporting and reconciliation purposes. The options "general account," "special account," and "maintenance account" do not accurately describe this type of account.

A form prepared by the customer to show the price deduction taken for returns and allowances is called a debit memorandum. This form is used to record and communicate any reductions in the amount owed by the customer to the seller. It serves as a documentation of the customer's request for a refund or adjustment in the price.

The question asks for the original business papers from which information about business transactions is obtained. The options provided are journals, ledgers, invoices, and none of these. However, none of these options is correct because the correct answer should be "source documents" or "source papers." Journals and ledgers are used for recording and summarizing transactions, while invoices are documents that request payment for goods or services. Source documents are the original papers that provide evidence of a transaction, such as receipts, purchase orders, or contracts.