AAMI ACCOUNTING 1 CORRECT COMPREHENSIVE
QUESTIONS AND ANSWERS SURE A+
✔✔Salary - ✔✔compensation, generally measured in terms of a month or year.
✔✔Wage - ✔✔compensation, generally measured in terms of pay per hour.
✔✔W-2 form- - ✔✔Wage and Tax Statement; a report given to the employee by the
employer indicating that employee's gross earnings and deductions.
✔✔W-4 form- - ✔✔An employee's withholding certificate.
✔✔FICA - ✔✔Federal Insurance Contributions Act; the act that requires most
employers and employees to pay taxes to support the federal social security program.
✔✔FUTA - ✔✔Federal Unemployment Tax Act; the act imposed upon each employer
for financing the administration costs of the federal and state unemployment
compensation programs.
✔✔SUTA - ✔✔State Unemployment Tax Act
✔✔Payroll Tax - ✔✔The deductions from an employee's paycheck, such as social
security tax, medicare tax, federal unemployment tax and state unemployment tax are
referred to as payroll tax. Depending on where one lives and work, one may be also
subject to state income tax, state unemployment tax, city income tax, and state disability
tax.Payroll tax is deducted from an employee's paycheck but is actually paid by the
employer, who also has to match the social security deduction.
✔✔Journal Entry Recording - ✔✔payroll expense and payroll tax expense are two
different items. What we pay employees is recorded as payroll or salaries expense.
What we set aside and pay to the government is recorded as payroll tax expense.
, ✔✔Depreciation - ✔✔defined as the name given to the periodic allocation of the costs
of assets (specifically long-term real assets)
✔✔is Land depreciated? - ✔✔Land is never depreciated.
✔✔have depreciated over time. - ✔✔Buildings, Cars, Office Equipment, Embalming
Equipment, Funeral Equipment (such as funeral biers, flower stands, chairs, etc.)
✔✔capitalized cost - ✔✔a cost that is added to the value of the asset's acquisition cost
and thus depreciated
✔✔Capitalized costs are reserved - ✔✔to bigger ticket items, such as renovations/
additions, Heating and Air Conditioning Systems, Roofing, etc.
✔✔Accumulated Depreciation - ✔✔A contra-account is simply an account that is used
to record deductions from the balance of a related account. would be used as a way to
deduct from the account of the asset we are depreciating.
✔✔Depreciation Expense - ✔✔expense and all expenses appear in the INCOME
STATEMENT, and like all expenses, is closed out at the end of each accounting period
to the Income Summary account
✔✔Book Value - ✔✔the value of the Acquisition Cost - Accumulated Depreciation, or
the portion of the original asset's cost that has yet to be depreciated.
✔✔Balance Sheets list - ✔✔assets, liabilities and Owner's Equity and equality of the
Accounting Equation is demanded.
✔✔Depletion - ✔✔the allocation of costs of natural resources, such as minerals, oil,
natural gas, etc. So a type of company with a substantial Depletion Expense would be
an energy company, such as Exxon Mobil (XOM).
✔✔Amortization - ✔✔the allocation of costs of intangible assets, such as patents. So , a
type of company with a substantial Amortization Expense would be a pharmaceutical
company, such as Pfizer (PFE).
✔✔Salvage Value - ✔✔value an asset is expected to have at the end of its useful life.
✔✔Useful Life - ✔✔the amount of time the asset will be used (in terms of years or
output).
✔✔straight line method of depreciation - ✔✔the most widely used method of computing
depreciation
QUESTIONS AND ANSWERS SURE A+
✔✔Salary - ✔✔compensation, generally measured in terms of a month or year.
✔✔Wage - ✔✔compensation, generally measured in terms of pay per hour.
✔✔W-2 form- - ✔✔Wage and Tax Statement; a report given to the employee by the
employer indicating that employee's gross earnings and deductions.
✔✔W-4 form- - ✔✔An employee's withholding certificate.
✔✔FICA - ✔✔Federal Insurance Contributions Act; the act that requires most
employers and employees to pay taxes to support the federal social security program.
✔✔FUTA - ✔✔Federal Unemployment Tax Act; the act imposed upon each employer
for financing the administration costs of the federal and state unemployment
compensation programs.
✔✔SUTA - ✔✔State Unemployment Tax Act
✔✔Payroll Tax - ✔✔The deductions from an employee's paycheck, such as social
security tax, medicare tax, federal unemployment tax and state unemployment tax are
referred to as payroll tax. Depending on where one lives and work, one may be also
subject to state income tax, state unemployment tax, city income tax, and state disability
tax.Payroll tax is deducted from an employee's paycheck but is actually paid by the
employer, who also has to match the social security deduction.
✔✔Journal Entry Recording - ✔✔payroll expense and payroll tax expense are two
different items. What we pay employees is recorded as payroll or salaries expense.
What we set aside and pay to the government is recorded as payroll tax expense.
, ✔✔Depreciation - ✔✔defined as the name given to the periodic allocation of the costs
of assets (specifically long-term real assets)
✔✔is Land depreciated? - ✔✔Land is never depreciated.
✔✔have depreciated over time. - ✔✔Buildings, Cars, Office Equipment, Embalming
Equipment, Funeral Equipment (such as funeral biers, flower stands, chairs, etc.)
✔✔capitalized cost - ✔✔a cost that is added to the value of the asset's acquisition cost
and thus depreciated
✔✔Capitalized costs are reserved - ✔✔to bigger ticket items, such as renovations/
additions, Heating and Air Conditioning Systems, Roofing, etc.
✔✔Accumulated Depreciation - ✔✔A contra-account is simply an account that is used
to record deductions from the balance of a related account. would be used as a way to
deduct from the account of the asset we are depreciating.
✔✔Depreciation Expense - ✔✔expense and all expenses appear in the INCOME
STATEMENT, and like all expenses, is closed out at the end of each accounting period
to the Income Summary account
✔✔Book Value - ✔✔the value of the Acquisition Cost - Accumulated Depreciation, or
the portion of the original asset's cost that has yet to be depreciated.
✔✔Balance Sheets list - ✔✔assets, liabilities and Owner's Equity and equality of the
Accounting Equation is demanded.
✔✔Depletion - ✔✔the allocation of costs of natural resources, such as minerals, oil,
natural gas, etc. So a type of company with a substantial Depletion Expense would be
an energy company, such as Exxon Mobil (XOM).
✔✔Amortization - ✔✔the allocation of costs of intangible assets, such as patents. So , a
type of company with a substantial Amortization Expense would be a pharmaceutical
company, such as Pfizer (PFE).
✔✔Salvage Value - ✔✔value an asset is expected to have at the end of its useful life.
✔✔Useful Life - ✔✔the amount of time the asset will be used (in terms of years or
output).
✔✔straight line method of depreciation - ✔✔the most widely used method of computing
depreciation
