QUESTION 1

Which of the following types of organization would probably sell goods?

Answer

a.Merchandising operation

b.Service operation

c.Not-for-profit operation

d.Manufacturing operation

 

QUESTION 2 

Which of the following types of organizations would produce goods?

Answer

a.Merchandising operation

b.Service operation

c.Not-for-profit operation

d.Manufacturing operation

 

QUESTION 3

 By definition, which type of organization has stockholders?

Answer

a.Partnerships

b.Sole proprietorships

c.Corporations

d.Limited liability companies

 

QUESTION 4

GAAP is the acronym for generally accepted _______________ principles.

Answer

a.auditing

b.accounting

c.averaging

d.associated

 

QUESTION 5 

Liabilities represent:

Answer

a.items owned by the company.

b.future economic benefits of the company.

c.earnings kept in the business.

d.monies owed to third parties.

 

QUESTION 6 

All payables are listed as:

Answer

a.assets.

b.liabilities.

c.stockholders’ equity.

d.revenue.

 

QUESTION 7 

Land, cash, office equipment and accounts receivable belong to what category of accounts?

Answer

a.Liabilities

b.Revenues

c.Expenses

d.Assets

 

QUESTION 8

Net income and dividends are part of:

Answer

a.liabilities.

b.stockholders’ equity.

c.assets.

d.net income.

 

QUESTION 9

Cash, common stock, and advertising expense have normal balances of:

Answer

a.credit, credit, and credit, respectively.

b.debit, credit, and debit, respectively.

c.debit, debit, and credit, respectively.

d.credit, debit, and debit, respectively.

 

QUESTION 10 

Debit means:

Answer

a.decrease.

b.increase.

c.the right side of an account.

d.the left side of an account.

 

QUESTION 11

It is necessary to post:

Answer

a.asset and liability entries.

b.revenue and expense entries.

c.adjusting entries.

d.all journal entries.

 

QUESTION 12

Which of the following accounts would NOT be adjusted?

Answer

a.Accumulated depreciation

b.Cash

c.Depreciation expense

d.Wages payable

 

QUESTION 13

The difference between the cost of office equipment and accumulated depreciation—office equipment is called:

Answer

a.market value.

b.salvage value.

c.book value.

d.original value.

 

QUESTION 14

Of the following, which are reported on the balance sheet?

Answer

a.Assets

b.Revenues

c.Expenses

d.Net income or net loss

 

QUESTION 15

The Cost of Goods Sold account appears on the:

Answer

a.balance sheet.

b.statement of retained earnings.

c.income statement.

d.post-closing trial balance.

 

QUESTION 16

The Inventory account appears on the:

Answer

a.balance sheet.

b.statement of retained earnings.

c.income statement.

d.list of liabilities.

 

QUESTION 17

If an invoice states 5/15, n/60, the 15 refers to:

Answer

a.the percent that can be taken for the discount.

b.the days in the discount period.

c.the days in which to pay the bill in full.

d.the percent of the bill that has to be paid in the discount period.

 

QUESTION 18

The account in which the revenue earned from the sale of merchandise is entered is:

Answer

a.Retained Earnings.

b.Sales.

c.Cash.

d.Inventory.

 

QUESTION 19

A method of valuing inventory based on the assumption that the oldest goods will be sold first is called the:

Answer

a.LIFO method.

b.average cost method.

c.specific cost method.

d.FIFO method.

 

QUESTION 20

A method of valuing inventory based on the assumption that the newest goods will be sold first is called the:

Answer

a.LIFO method.

b.average cost method.

c.specific cost method.

d.FIFO method.

 

QUESTION 21 

A manufacturer’s goods available for sell represent:

Answer

a.work-in-process inventory.

b.raw materials inventory.

c.cost of goods sold inventory.

d.finished goods inventory.

 

QUESTION 22 

Inventory is shown on the:

Answer

a.balance sheet as an asset.

b.income statement before gross profit.

c.statement of retained earnings.

d.income statement after gross profit.

 

QUESTION 23 

Embezzlement usually involves the misappropriation of business:

Answer

a.equity by an employee.

b.liabilities by an employee.

c.assets by an employee.

d.information by an employee.

 

QUESTION 24 

Internal control is a comprehensive system that helps an organization do all of the following EXCEPT:

Answer

a.safeguard assets.

b.safeguard liabilities.

c.operate efficiently and effectively.

d.ensure compliance with applicable laws and regulations.

 

QUESTION 25 

The agency that requires financial audits of publicly traded companies is the:

Answer

a.Financial Accounting Standards Board.

b.Securities and Exchange Commission.

c.Federal Government.

d.Internal Revenue Service.

 

QUESTION 26 

The audit opinion that all companies try to achieve is a(n):

Answer

a.disclaimer of opinion.

b.qualified opinion.

c.adverse opinion.

d.unqualified opinion.

 

QUESTION 27 

The process of acquiring merchandise from a supplier begins with the:

Answer

a.check for payment.

b.receiving report.

c.purchase order.

d.invoice.

 

QUESTION 28 

A bank statement shows the:

Answer

a.ending book balance as of a specific date.

b.ending bank balance as of a specific date.

c.reconciled balance as of a specific date.

d.book errors as of a specific date.

 

QUESTION 29

Deposits in transit are:

Answer

a.subtracted from the book balance.

b.added to the book balance.

c.subtracted from the bank balance.

d.added to the bank balance.

 

QUESTION 30 

Outstanding checks are:

Answer

a.added to the book balance.

b.added to the bank balance.

c.subtracted from the book balance.

d.subtracted from the bank balance.

 

QUESTION 31 

Buildings, vehicles, and desks are:

Answer

a.amortized.

b.depleted.

c.depreciated.

d.expensed.

 

QUESTION 32 

Assets that cannot be seen, touched, or held are called:

Answer

a.intangible assets.

b.natural resources.

c.plant assets.

d.tangible assets.

 

QUESTION 33 

After an asset is fully depreciated, the asset:

Answer

a.must be removed from the balance sheet.

b.remains on the balance sheet at a value of $0.

c.remains on the balance sheet at (cost – accumulated depreciation).

d.remains on the balance sheet at cost.

 

QUESTION 34 

The depreciation method in which the depreciable cost of an asset is apportioned equally over its estimated life in terms of month or years is called the:

Answer

a.double-declining-balance method.

b.units-of-production method.

c.amortization method.

d.straight-line method.

 

QUESTION 35 

Accounts payable would be an example of a(n):

Answer

a.contingent liability.

b.estimated liability.

c.known liability.

d.accrued liability.

 

QUESTION 36 

Current liabilities are expected to be settled within:

Answer

a.3 months

b.6 months

c.1 year

d.more than 1 year

 

QUESTION 37 

The amount that a borrower must pay back to the bondholders on the maturity date is the:

Answer

a.principal.

b.interest.

c.stated value.

d.market value.

 

QUESTION 38 

The rate of interest that is printed on the bond is called the __________ rate of interest.

Answer

a.stated

b.market

c.variable

d.maturity

 

QUESTION 39 

The basic unit of stock is called a(n):

Answer

a.authorization.

b.certificate.

c.share.

d.ownership record.

 

QUESTION  40 

Which of the following is an advantage of a corporation?

Answer

a.Double taxation

b.Continuous life

c.Unlimited liability

d.Non-transfer of ownership

 

QUESTION  41 

Earnings that a stockholder receives from a corporation is an example of which stockholder right?

Answer

a.Vote

b.Dividends

c.Liquidation

d.Preemption

 

QUESTION 42 

The liability “dividend payable” is recognized on the date of:

Answer

a.stock issue.

b.payment.

c.record.

d.declaration.

 

QUESTION 43 

Which of the financial statements listed below represents a point in time?

Answer

a.Statement of Cash Flows

b.Statement of Stockholders’ Equity

c.Income Statement

d.Balance Sheet

 

QUESTION 44 

The _________________________ is the financial statement associated with the operating, investing and financing activities of a corporation.

Answer

a.income statement

b.statement of stockholders’ equity

c.statement of cash flows

d.balance sheet

 

QUESTION 45 

The purpose of the statement of cash flows is to show:

Answer

a.the revenue earned.

b.the profits that were earned.

c.the expenses that were paid.

d.how cash was received and used during the period.

 

QUESTION 46 

Operating cash flows affect:

Answer

a.current assets and current liabilities.

b.long-term asset accounts.

c.equity accounts.

d.long-term liability accounts.

 

QUESTION 47 

Basic earnings per share (EPS) is determined using:

Answer

a.authorized shares of common stock.

b.issued shares of common stock.

c.outstanding shares of common stock.

d.shares of treasury stock.

 

QUESTION 48 

Which analysis deals with the percentage of changes in certain items over a period of years?

Answer

a.Horizontal analysis

b.Vertical analysis

c.Incremental analysis

d.Trend analysis

 

QUESTION 49 

Which of the following is defined as the ability to meet short-term obligations with current assets?

Answer

a.Current ratios

b.Liquidity ratios

c.Market analysis ratios

d.Asset management ratios

 

QUESTION 50 

Current assets divided by current liabilities yields the:

Answer

a.quick ratio.

b.current ratio.

c.debt ratio.

d.working capital ratio.