A postdated check is a check dated prior to the actual current date.

The balance of an "NSF" check is added to the depositor's account balance.

A fiscal year is 12 consecutive months beginning January 1 and ending December 31.

All adjusting entries affect the balance of two or more accounts.

Using bookkeeping and accounting software will prevent all errors from appearing in the financial records.

Providing footnotes to the formal financial statements illustrates the adequate disclosure rule.

When the balances of the revenue accounts are greater than the balances of the expense accounts, the income summary account prior to closing will have a credit balance.

The journal entry to close the income summary account when it has a credit balance is to credit income summary and debit owner's capital.

Common source documents used to substantiate an expenditure are a supplier's invoice and a cancelled check.

The stockholder's of a corporation are contingently liable for the debts of the corporation.

A business that has a negative net worth has more assets than liabilities.

When a cash payment is received for a balance that the customer owes the cash account is increased (debited) and the sales account is increased (credited).

The payroll term gross earnings means the same as the term net earnings.

An employee's marital status and number of withholding allowances claimed affect the amount of income tax withheld from earnings.

A good policy is to set up a separate checking account for payroll.

The retained earnings account represents the accumulated earnings of a corporation.

One of the main differences in the chart of accounts for a sole proprietorship and a corporation are the owner's capital accounts.

A corporation's board of directors is elected by the stockholders.

Normally, the first estimate prepared for a cash forecast is the amount of sales.

Some contra accounts have a normal debit balance while others may have a normal credit balance.

The profit or loss for a corporation is closed to the retained earnings account.

Adjusting entries are normally initially recorded in the general ledger.

The seller maintains title to the goods shipped until the goods reach the buyer's destination when goods are shipped FOB Destination.

An "accelerated" method of depreciation is the straight line method.

The asset Land may use an "accelerated" method of depreciation.

Normally, cash flow can be improved by increasing the balances of inventories and accounts receivable.

Normally, liabilities due within a year are classified as current assets.

Interest expense is the cost of borrowing.

An attachment to a check that explains what invoices are being paid is called a remittance advice.

A partnership's net income or loss must be allocated equally among the partners.