1. Gerald's had opening total stockholders' equity of $160,000. During the year, total assets increased by $240,000 and total liabilities increased by $120,000. Their net income was $180,000. No additional investments were made. However, some amount was paid as dividend during the year. What was the amount of the dividend paid?
Answers:
• $20,000.
• $60,000.
• $140,000.
• $220,000.
2. '2/10, net 30' is an example of:
Answers:
• Terms
• Methods
• Systems
• None of the above.
3. A check issued by you, but not yet passed through the banking system, is:
Answers:
• an outstanding check
• a credit transfer
• a dishonored check
• a standing order
4. Documents used to control a bank account include the following except
Answers:
• a bank statement
• electronic funds transfer (EFT)
• prenumbered checks
• a signature card
5. Account books are typically closed on a _________ basis.
Answers:
• Weekly
• Monthly
• Quarterly
• Yearly
6. Retained earnings will change over time because of several factors. Which of the following factors would explain an increase in them (Retained Earnings)?
Answers:
• Net loss.
• Net income.
• Dividends.
• Investments by stockholders.
7. A multiple-step income statement is thought to be more beneficial to financial users because of the revelation of important relationships. Which of the following is not separately identified in a multiple-step income statement?
Answers:
• Gross profit
• Net income
• Income taxes
• Total costs and expenses
8. Accounts payable refer to the current
Answers:
• Liability of a business or an organization
• Asset of a business or an organization
• Expense of a business or organization
• Income of a business or organization
87 NOT Answered Yet Test Questions:
(hold on, will be updated soon)9. The correct journal entry to reconcile an NSF check returned by the bank is:
Answers:
• Debit Accounts Receivable, Credit NSF
• Debit Cash, Credit Accounts Receivable
• Debit NSF Expense, Credit Cash
• Debit Accounts Receivable, Credit Cash
10. Trade accounts receivable:
Answers:
• arise from the sale of a company's products or services.
• are reported in the non-current asset section of the balance sheet.
• include deposits with utilities
• generally comprise the minority of the total receivables balance.
11. Which of the following is a liability?
Answers:
• Creditors for Goods
• Machinery
• Cash at Bank
• Motor Vehicles
12. Refer to the given image:
Hefty Co. wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year.
Sales during the year were 2,700 units at $5.00. If Hefty used the periodic LIFO method, cost of goods sold would be:
Answers:
• $2,780
• $3,960
• $9,700
• $10,880
13. Of the following manufacturing operations, which is best suited to the utilization of a job order system?
Answers:
• Helicopter manufacturing.
• Soft drink bottling operation.
• Crude oil refining.
• Plastic molding operation.
14. What is the purpose of applying overhead costs to work in process?
Answers:
• To meet the legal requirements of the IRS
• To reduce the Expense line on the profit & loss statement
• To accurately apply costs to WIP so that the cost of the finished product reflects all the costs incurred to produce it
• To hide costs from the auditors
15. Refer to the given image:
On March 1, Zekew & Co. purchased $1,000 worth of merchandise, terms 1%10 net 30 days. They use the net method of recording purchases. Payment of the accounts payable was made on March 4. Which of the following journal entries would be appropriate for the March 4 transaction?
Answers:
• 1
• 2
• 3
• 4
16. Under normal circumstances, the Work in Process account used in a job costing system:
Answers:
• will include charges for direct labor, direct materials, and applied overhead.
• will include only charges for direct materials and applied overhead. The labor is charged to expense as incurred.
• will include charges for direct labor, direct materials, and actual overhead.
• will include only charges for direct labor and direct materials.
17. An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the final inventory valuation is:
Answers:
• FIFO
• LIFO
• Retail
• Weighted-average
18. By which of the following formulas should interest on a loan be computed?
Answers:
• (principal x rate)/time
• (principal x rate x time)
• (principal x time)/rate
• (principal x time)/time
19. Which of the following inventory methods will always produce the same results under both a periodic and a perpetual system?
Answers:
• FIFO
• LIFO
• Average
• All of these
20. The correct journal entry to reconcile the interest earned on a bank balance is:
Answers:
• Debit Cash, Credit Interest Revenue
• Debit Cash, Credit Accounts Payable
• Debit Cash, Credit Accounts Receivable
• Debit Accounts Receivable, Credit Cash
21. A payment of cash for the purchases of services should be recorded in the:
Answers:
• cash payments journal
• purchases journal
• revenue journal
• cash receipts journals
22. Refer to the given image:
On February 1, Crown & Co. purchased $2,000 worth of merchandise, terms 2%/ 10 net 30 days. They use the gross method of recording purchases. Payment of the accounts payable was made on February 26. Which of the following journal entries would be appropriate for the February 26 transaction?
Answers:
• 1
• 2
• 3
• 4
23. The sales account and the purchase account should include:
Answers:
• only cash sales and purchases of merchandise.
• only credit sales and credit purchases of merchandise.
• both cash and credit sales and credit purchases of merchandise.
• not only merchandise transactions, but also purchases and other assets used in the business.
24. What is accounts payable aging report?
Answers:
• a sorting of a company's accounts payable by bill date.
• a sorting of a company's accounts payable by due date.
• a sorting of a company's accounts payable by posted date.
• None of above.
25. Refer to the given image:
Lynn Lippincott invested land valued at $5,000 in her business. This transaction would be recorded by:
Answers:
• 1
• 2
• 3
• 4
26. Refer to the given image:
Dodd & Co. uses the periodic inventory accounting system. They had the opening inventory of $59,000, the closing inventory of $37,000, and made net purchases of $123,000. Which of the following components should be included in the year-end closing entries prepared by them?
Answers:
• 1
• 2
• 3
• 4
27. Which of the following best describes the meaning of 'Purchases'?
Answers:
• Goods paid for
• Goods bought for resale
• Items bought
• Goods bought on credit
28. How often can a company change its inventory valuation methodology and still be compliant with GAAP?
Answers:
• Once per month
• Any number of times; there are no rules
• Once per year, but not every year
• Never; you decide once and only once.
29. Sorting the accounts Payable into current, 1-30 days past due, 31-60 days past due, and so on, is known as
Answers:
• Aging Report
• Pending Report
• Payable Report
• Other Report.
30. The basic sequence in the accounting process can best be described as:
Answers:
• Transaction, journal entry, source document, ledger account, trial balance.
• Source document, transaction, ledger account, journal entry, trial balance.
• Transaction, source document, journal entry, trial balance, ledger account.
• Transaction, source document, journal entry, ledger account, trial balance.
31. Of the following account types, which would be increased by a debit?
Answers:
• Liabilities and expenses.
• Assets and equity.
• Assets and expenses.
• Equity and revenues.
32. Refer to the given image:
Hefty & Co. wants to know the effect of different inventory methods on financial statements. Given below is the information about the opening inventory and purchases for the current year.
Sales during the year were 2,700 units at $5.00. If they used the weighted-average method, the gross profit would be:
Answers:
• $3,255
• $3,415
• $10,245
• $13,500
33. Why would a company choose to invoice customers weekly rather than monthly?
Answers:
• It keeps the accounting staff busy
• It increases cash flow
• Customers expect it
• It is required by law
34. The accounting profession can be divided into three major categories; specifically, the public accounting, private accounting, and governmental accounting. A somewhat unique and important service of public accountants is _____.
Answers:
• financial accounting.
• managerial accounting.
• auditing.
• cost accounting.
35. Wilson & Co. owns land which has cost it $100,000. If a "quick sale" of the land were necessary to generate cash, the Co. feels it would receive only $80,000. The Co. continues to report the asset on the balance sheet at $100,000. Under which of the following concepts is it justified?
Answers:
• The historical-cost principle.
• The objectivity principle.
• Neither of the above.
• Both "a" and "b".
36. Which of the following transactions would have no impact on the stockholders' equity?
Answers:
• Purchase of land from the proceeds of a bank loan.
• Dividends to stockholders.
• Net loss.
• Investments of cash by stockholders.
37. Home Depot. Inc. had net purchases of $50,000, closing inventory of $25,000, net sales of $100,000, and gross profit of $32,000. How much was their opening inventory?
Answers:
• $7,000
• $43,000
• $93,000
• $143,000
38. Gerber Departmental Store uses the retail inventory method. Their opening inventory had cost $140,000 and its retail price was fixed at $280,000. Purchases for the period amounted to $390,000 and were priced to sell at twice that amount. Sales for the period, all at the normal retail price, were $600,000. How much is the estimated cost of their closing inventory?
Answers:
• $115,000
• $150,000
• $230,000
• $300,000
39. How does a company ensure that their physical inventory matches what is there in the account books?
Answers:
• It assumes it to be correct if it has been received properly in the system
• It holds the warehouse manager accountable
• It counts every item daily
• It uses some form of physical inventory count - either annual or cyclical
40. The theoretically correct method of allocating under or over applied overhead is to:
Answers:
• allocate the amount to cost of goods sold.
• allocate the amount to finished goods.
• allocate the amount to work in process and finished goods.
• allocate the amount among work in process, finished goods, and cost of goods sold.
41. If a bank account does not reconcile, what's the best thing to do?
Answers:
• Book the difference as an adjustment regardless of the magnitude
• Let it remain unreconciled and hope it will clear up in the following month
• Start from scratch to see if the discrepancy can be found
42. The purpose of Accrued Expenses is:
Answers:
• to accurately reflect expenses in the periods during which they are incurred
• to keep account of the vendors who never send invoices
• to make the financial statements more complicated
• to reflect the amounts owed to the company
43. Ritz & Co. agreed to purchase certain inventory items from Hostess Corporation. The Hostess shipped the goods F.O.B. destination. On December 31, the Ritz's accounting year-end, they were aware that the goods had been shipped and would be received any day.
Answers:
• TheRitz should include the goods in its inventory calculated on December 31.
• TheRitz should include the goods in its inventory calculated on December 31 but should not record the obligation to pay for them.
• TheRitz should not include the goods in its inventory calculated on December 31 but should include the related payable on its balance sheet on December 31.
• TheRitz should not include the goods in its inventory calculated on December 31 and should not include the related payable on its balance sheet on December 31.
44. Which of the following statements concerning job cost sheets is incorrect?
Answers:
• A job cost sheet would show the direct materials used on that specific job.
• A job cost sheet would reveal the selling costs associated with a particular job.
• The total costs recorded on a job cost sheet should also be reflected in the Work in Process account in the general ledger.
• The amount of overhead on a job cost sheet is the applied factory overhead rather than the actual factory overhead.
45. With the job order cost system, a credit balance in the Factory Overhead account at the end of an accounting period would indicate:
Answers:
• that an error in the job cost system has occurred.
• that the company lost money during the period.
• the presence of under-applied overhead.
• the presence of over-applied overhead.
46. The following statements are true regarding the Cash short and Over account except
Answers:
• "Cash Short and Over also acts as an internal control device."
• "There is rarely a difference between actual cash receipts and that day's record of cash receipts."
• "A large balance signals the accountant to investigate."
• "Honest errors can result in an entry to this account."
47. Using the following information, determine the adjusted bank balance: bank statement balance $5,000, bank service charges $15, NSF check $500, checks outstanding $1,000, deposits in transit $2,000.
Answers:
• $6,000
• $5,000
• $5,485
• None of the above
48. Which of the following regulatory bodies would a publicly traded company be much more involved with than a private company?
Answers:
• SEC
• GAAP
• IRS
• FCC
49. Failure to record the receipt of a utility bill for services already received will result in _____.
Answers:
• an overstatement of assets.
• an overstatement of liabilities.
• an overstatement of equity.
• an understatement of assets.
50. The entry to record the payment of dividends is:
Answers:
• debit Cash, credit Dividend Expense
• debit Dividend Expense, credit Cash
• debit Dividends, credit Dividend Payable
• debit Dividend Payable, credit Cash
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