Payroll Fundamentals 2
Comprehensive Questions
(Frequently Most Tested) with
Verified Answers
The accounting equation states: - Answer: Assets = Liabilities + Owners Equity
Owner's Equity has two components: - Answer: Owner's Equity = Contributed Capital + Retained
Earnings
Contributed Capital - Answer: The amount of payments in cash or assets that the owners have made to
the company
The accounting equation can be expanded to: - Answer: Assets = Liabilties + Contributed Capital +
Retained Earnings
The 5 different accounts of a typical for-profit organization - Answer: - asset accounts
- liability accounts
- revenue accounts
- expense accounts
- owners' equity accounts
Asset accounts - Answer: Contains the value of items owned by the organization
Liability accounts - Answer: Indicates the money that the organization owes to its creditors
Asset accounts include: - Answer: - Cash
- Accounts receivable
- prepaid expenses
, - inventory
Liability accounts include - Answer: - accounts payable
- salaries and wages payable
- vacation pay payable
Revenue accounts - Answer: Used to record the income earned by the organization during the
accounting cycle
Expense accounts - Answer: Costs incurred by an organization in the process of earning revenue during a
designated period of time
Equity accounts - Answer: Accounts that show the owners' or shareholders' worth or interest in the
organization
Owners' equity is divided into: - Answer: Contributed capital & retained earnings
General ledger accounts consists of the following five elements: - Answer: - account name
- opening balance
- reference
- debit and credit transactions
- closing balance
Each journal entry must contain the following components: - Answer: - A journal entry reference or
number
- the date of the transaction
- the debit and credit amounts to be applied to each account
- a total of the debit entries and of the credit entries
- a brief explanation of the transaction
Comprehensive Questions
(Frequently Most Tested) with
Verified Answers
The accounting equation states: - Answer: Assets = Liabilities + Owners Equity
Owner's Equity has two components: - Answer: Owner's Equity = Contributed Capital + Retained
Earnings
Contributed Capital - Answer: The amount of payments in cash or assets that the owners have made to
the company
The accounting equation can be expanded to: - Answer: Assets = Liabilties + Contributed Capital +
Retained Earnings
The 5 different accounts of a typical for-profit organization - Answer: - asset accounts
- liability accounts
- revenue accounts
- expense accounts
- owners' equity accounts
Asset accounts - Answer: Contains the value of items owned by the organization
Liability accounts - Answer: Indicates the money that the organization owes to its creditors
Asset accounts include: - Answer: - Cash
- Accounts receivable
- prepaid expenses
, - inventory
Liability accounts include - Answer: - accounts payable
- salaries and wages payable
- vacation pay payable
Revenue accounts - Answer: Used to record the income earned by the organization during the
accounting cycle
Expense accounts - Answer: Costs incurred by an organization in the process of earning revenue during a
designated period of time
Equity accounts - Answer: Accounts that show the owners' or shareholders' worth or interest in the
organization
Owners' equity is divided into: - Answer: Contributed capital & retained earnings
General ledger accounts consists of the following five elements: - Answer: - account name
- opening balance
- reference
- debit and credit transactions
- closing balance
Each journal entry must contain the following components: - Answer: - A journal entry reference or
number
- the date of the transaction
- the debit and credit amounts to be applied to each account
- a total of the debit entries and of the credit entries
- a brief explanation of the transaction
