Accounting Paraprofessional Skills and Knowledge Covered Flashcards

Which depreciation method results in the highest depreciation expense in the early years of an asset's life?

Answer: Double declining balance method

The double declining balance method applies a fixed percentage to the declining book value, producing the largest depreciation in early years.

An employee earns $3,000 per month. Their federal income tax withholding is $420 and FICA is $229.50. What is the employee's net pay?

Answer: $2,350.50

$3,000 − $420 − $229.50 = $2,350.50 net pay after withholdings.

Which of the following would be recorded as a capital expenditure rather than a revenue expenditure?

Answer: Purchasing a new delivery truck

A new delivery truck is a capital expenditure because it provides economic benefits beyond one year and is capitalized as an asset.

The matching principle in accounting requires that:

Answer: Revenues and expenses are recorded in the same period they occur

The matching principle states that expenses should be recognized in the same period as the revenues they helped generate.

A company's gross profit margin is 40% and net sales are $500,000. What is the cost of goods sold?

Answer: $300,000

If gross profit margin is 40%, then COGS = 60% of sales; $500,000 × 0.60 = $300,000.

Which account is used to record money owed to suppliers for goods purchased on credit?

Answer: Accounts Payable

Accounts Payable represents amounts owed to vendors and suppliers for credit purchases and is a current liability.

When preparing a bank reconciliation, a deposit in transit should be:

Answer: Added to the bank balance

Deposits in transit are recorded in the company's books but haven't yet appeared on the bank statement, so they are added to the bank balance.