1. Which of the following best describes accounting?
A. Is used only for filling out tax returns and for financial statements for various type of governmental reporting requirements.
B. Is an information system that provides reports to users regarding economic activities and condition of a business
C. Records economic data but does not communicate the data to users according to any specific rules.
D. Is of no use by individual outside of the business.
2. Earning revenue journal entry is recorded as:
A. Increases assets, decreases stockholders’ liabilities
B. Decreases assets, increases liabilities
C. Increases assets, increases stockholders’ equity
D. Increases one asset, decrease another assets
3. A chart of accounts is:
A. usually listed in the order in which they appear in financial statement.
B. Usually a listing of accounts in alphabetical order
C. The same as a balance sheet
D. One of the four financial statements.
4. Which group of accounts is comprised of only assets?
A. Unearned Revenues, Prepaid Expenses, Cash
B. Accounts Receivable, Revenue, Cash
C. Prepaid Expenses, Buildings, Patents
D. Cash, Accounts Payable, Buildings.
5. Which of the following entries records the acquisition of office supplies on account?
A. Office Supplies, debit; Cash, credit
B. Office Supplies, debit; Accounts Payable, credit
C. Accounts Receivable, debit; Office Supplies, credit
D. Cash, debit; Office Supplies, credit
6. Randomly listed below are the steps for preparing a trial balance:
(1). Verify that the total of the Debit column equals the total of the credit column
(2). List the accounts from the ledger and enter their debit or credit balance in the debit or credit column of the trial balance.
(3). List the name of the company, the title of the trial balance, and the date the trial balance is prepared.
(4). Total the Debit and Credit columns of the trial balance.
A. (3), (2), (1), (4)
B. (3), (2), (4), (1)
C. (4), (3), (2), (1)
D. (2), (3), (4), (1)
7. The statement of owner’s equity shows
A. Only net income, beginning capital, and withdrawals
B. All of the changes in the owner’s capital as a result of net income, net loss, additional investments, and withdrawals
C. Only total assets, beginning and ending capital
D. Only net income, beginning and ending capital
8. Sales to customers who use bank credit cards, such as MasterCard and Visa, are generally treated as
A. Sales when the credit card company remits the cash
B. Sales returns
C. Cash sales
D. Sales on account
9. Isaac Co. sells merchandise on credit to Sonar Co in the amount of $5,700. The invoice is dated on April 1 with terms of 1/15, net 45. What is the amount of the discount and up to what date must the invoice be paid in order for the buyer to take advantage of the discount? (3 points)
A. $57, April 16
B. $114, April 15
C. $57, April 15
D. $114, April 16
10. The Corbit Corp. sold merchandise $10,000 for cash. The cost of the merchandise sold was $7,590. The journal entry(s) to record this transaction would be: (3 points)
A. Cash 10,000
Merchandise Inventory 10,000
Cost of goods Sold 7,590
Sales 7,590
B. Cash 10,000
Sales 10,000
Cost of goods Sold 7,590
Merchandise Inventory 7,590
C. Cash 7,590
Merchandise Inventory 7,590
Cost of goods Sold 7,590
Sales 7,590
D. Cash 10,000
Merchandise Inventory 10,000
Cost of goods Sold 10,000
Sales 10,000
11. If merchandise inventory is being valued at cost and the price level is steadily rising, the method of costing that will yield the highest net income is:
A. Periodic
B. Average
C. LIFO
D. FIFO
12. When a firm uses internal auditors, it is adhering to which one of the following internal control elements?
A. Monitoring
B. Risk Assessment
C. Proof and securities measure
D. Separating responsibilities for related operations
13. A bank reconciliation should be prepared periodically because
A. The bank must make sure that its records are correct
B. The bank has not recorded all of its transitions
C. The company’s records and the bank’s records are in agreement
D. Any differences between the company's records and the bank's records should be determined, and any errors made by either party should be discovered and corrected
14. The amount of deposits in transit is included on the bank reconciliation as a(n)
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15. Which of the following would be deducted from the balance per books on a bank reconciliation?
A. Service Charges
B. Deposits in transit
C. Outstanding checks
D. Notes collected by the bank
16. The receivable that is usually evidenced by a formal instrument of credit is a(n)
A. Income tax receivable
B. Accounts receivable
C. Trade receivable
D. Note receivable
17. The maturity value of a $40,000, 9%, 40-day note receivable dated July 3 is: (3 points)
A. $44,000
B. $43,000
C. 40,000
D. 40,400
18. Current assets are usually listed in order:
A. Alphabetically
B. Of the due date
C. Of liquidity
D. Of the size
19. A new account on the multi-step income statement for a merchandiser uses which of the following as an expense when selling inventory?
a. wages expense
b. merchandise inventory
c. cost of goods sold
d. copyright
20. The Crafter Company has the following assets and liabilities (3 points):
|
ASSETS |
|
|
Cash |
$28,000 |
|
Accounts receivable |
15,000 |
|
Inventory |
20,000 |
|
Equipment |
50,000 |
|
LIABILITIES |
|
|
Current portion of long-term debt |
10,000 |
|
Accounts payable |
2,000 |
|
Long-term debt |
25,000 |
Determine the current ratio (rounded to one decimal point).
A. 3.6
B. 2.3
C. 3.3
D. 5.3
21. Roo Company has 20,000 shares of $100 par, 2% preferred stock. Calculate the preferred stock dividends should be issued. (3 points)
A. 40,000
B. 20,000
C. 10,000
D. 15,000
22. Dec 10, 2016, ARSC Inc. sold merchandise on account to customer of $12,000 with terms 2/10, net 30. On Dec 15, 2016, the customer took the discount and paid to ARSC. How much payment ARSC should receive? (3 points)
A. 12,000
B. 11,760
C. 11,700
D. 9,600
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