Accounting
Evan Jones company purchased store equipment on credit for $3,000. The left-hand side entry is to store equipment for $3,000. The right hand entry is to a. notes payable for $3,000 b. accounts payable for $3,000 c. store equipment expense for $3,000 d. none of the above
B
Nancy purchased a two year insurance policy on July 1 20XX. At the time she recorded the following entry: ACCOUNT Left (debit) ----- Right (credit) -insurance expense: 800 -cash: 800 On December 31, 20XX she should make an adjusting entry to... a. debit insurance expense and credit cash. b. debit prepaid insurance and credit insurance expense c. debit insurance expense and credit prepaid insurance d. debit cash and credit insurance expense e. No adjustment necessary
B
The adjusting entry that is made at the end of the accounting period with respect to interest on a note credits... a. An asset account b. A liability account c. An owners' equity account d. Both B and C e. None of the above
B
The area of managerial accounting is designed for the ___ type of user. a. Governmental b. Internal c. External
B
The financial position at the end of a period is reflected on the a. Income statement b. Balance sheet c. Statement of Retained Earnings d. None of the above
B
When the bookkeeper or accountant of a business entity records an economic event, it is called : a. Record b. Transaction c. Balance
B
Which of the following statements shows the dividends paid during the accounting period? a. statement of financial position b. statement of retained earnings c. income statement d. B&C
B
A corporation's fiscal year does not always coincide with the calendar year. The most common reason for this disparity is ___ a. that most corporations don't begin operations on Jan. 1st b. that the S.E.C assigns fiscal years for public corporations c. to favorably present the result of operations of seasonable enterprises
C
A(n)____ owns a partnership a. Stockholder b. Individual c. Two or more Individuals
C
Current assets are a firm's resources that are expected to be converted into cash within a year. The basis of this rule is ___ a. The matching principle b. the going concern c. accounting convention d. Monetary concept
C
Ellis company sold $60,000 of merchandise on credit during the accounting period. $5,000 worth of merchandise was returned during the accounting period. The right-hand side of the entry to show the sales returns is to... a. Cash for $5,000 b. Sales returns for $5,000 c. Accounts receivable for $5,000 d. none of the above
C
If the retained earnings T-account has a balance of $10,000 at the end of the accounting period, the company a. had net income for the first period b. sustained a loss for the first period c. unable to determine because of lack of data d. none of the above
C
Investments representing short-term holding of securities would appear on the balance sheet as a. Long-term liabilities b. Long-term assets c. Current assets d. Current liabilities e. None of the above
C
One purpose of the statement of retained earnings is to show ___ a. How well a company performed the previous year b. The financial position of a company at a point in time c. distribution of earnings to stockholders d. claims on the company's resources e. none of the above
C
Aerial corporation incorporated on Jan. 1, 2012. The capital stock at that time was $100,000. Losses for 2012,2013 and 2014 totaled $60,000. The retained earnings account at the end of 2014 was ___ a. $40,000 b. $160,000 c. $60,000 d. $-60,000
D
During the accounting period, Franklin company sold $20,000 worth of merchandise. Franklin made a left-hand entry to cost of goods sold and a right-hand entry to... a. cash b. sales c. accounts payable d. inventory e. none of the above
D
Elpo company collected $5,000 on credit sale. The right-hand side of the entry would be... a. credit accounts payable for $5,000 b. credit sales for $5,000 c. credit costs of goods sold for $5,000 d. credit accounts receivable for $5,000
D
The cash account includes ___ a. Cash on hand b. Checks on hand c. Cash at the bank d. All of the above
D
The retained earnings account could take the form of a. accounts receivable b. inventory c. plant & equipment d. A, B & C
D
Vern prepaid a full year's rent on his office for the period September 1, 20XX through August 31, 20XY. At the time he recorded the following entry... ACCOUNT Left (debit) ------ Right (credit) - prepaid rent: 800 -cash: 800 On December 31, 20XX he should record an adjusting entry to... a. debit prepaid rent and credit rent expense b. debit prepaid rent and credit cash c. debit rent expense and credit cash d. debit rent expense and credit prepaid rent e. no entry is necessary
D
Which of the following is a liability? a. Cash b. Accounts Receivable c. Inventory d. None of the above
D
Which of the following is an asset? a. Salaries Payable b. Taxes Payable c. Accounts Payable d. None of the above
D
Which of the following statements represents a flow concept? a. Balance sheet b. Statement of retained earnings c. Inventory statement d. None of the above
D
Owner's equity can also be shown on the balance sheet as ___ a. net worth b. net assets c. stockholders' equity d. a&b e. a,b & c
E
The concept that it is better to understate rather than overstate revenues and to overstate rather than understate expense is called. a. Consistency b. Matching c. Clarity/Understanding d. Reliability e. None of the above
E
The operating expenses shown on an income statement usually include ___ a. cost of goods sold b. salaries c. administration d. a&b e. b& c
E
Which of the following accounts represents the market valuation of the company? a. Assets b. Liabilities c. Net assets d. Retained earnings e. None of the above
E
Which of the following is a snapshot of the financial position of the company? a. Income statement b. Statement of retained earnings c. Cash flow statement d. Inventory statement e. None of the above
E
A company's property holdings are usually listed at fair market value on the balance sheet. True or False
False
ALMOST all the data necessary to prepare an income statement is contained in the retained earnings account. True or False
False
Allison Corporation had net income of $18,000 for 2014. At the end of 2014, Allison paid out $10K in dividends. This payment left Allison with $8K cash in retained earnings True or False
False
An asset is only a tangible, economic resource of a firm that can be measured in monetary terms. True or False
False
C.P.A. stands for "Certified Private Accountant" True or False
False
Credits are generally good and debits are generally bad. True or False
False
Current assets almost always equal current liabilities True or False
False
Debits always increase an account, while credits decrease an account. True or False
False
Dividends are one of the largest expenses that a corporation incurs. True or False
False
Even though tax laws are constantly changing they are fairly easy to predict. True or False
False
Financial accounting, like managerial accounting, has no firm guidelines that it must follow. True or False
False
If a company's retained earnings account has a credit (right-hand) balance, then the firm must have generated a profit during the period. True or False
False
In order to obtain a copy of a corporation's financial reports, you must be either a stockholder or lender to the firm. True or False
False
Increases in T accounts are always shown on the right side. True or Fasle
False
Large corporations, like GM, are required to round off their figures to the nearest million dollars on their financial reports
False
Liabilities normally have a left hand balance True or False
False
Long-term investments in securities are recorded on the balance sheet at their original cost, unless the market value has increased significantly, in which case they should be written up to their fair market value. True or False
False
Managerial accounting must follow strict rules which govern internal accounting procedures. True or False
False
Retained earnings are the earnings that a company saves and reinvests; they can be used whenever the company needs cash. True or False
False
The Statement of Financial Position shows how well a company has performed over a period of time. True or False
False
The accounting process is concerned only with external transactions representing economic events True or False .
False
The capital stock account combined with the retained earnings account reflect the valuation the open market places on the company. True or False
False
The money spent to buy equipment is called an expense true or False
False
The statement of retained earnings shows revenues, expenses, and net income of an enterprise over a period of time. True or False
False
The statement of retained earnings shows the revenues, expenses and net income of an enterprise over a period of time. True or False
False
A transaction is an event that affects the financial position of a company True or False
True
Any accounting entity is considered to be any organization for which separate accounting data is gathered and processed. True or False
True
Bookkeeping accounts are a method of accumulating financial transactions and summarizing their effects on balance sheet items. True or False
True
Depreciation can be considered an allocated cost of using an asset with a life of more than one year. True or False
True
It is possible to have the books in the balance, but with mistakes. True or False
True
Liabilities = Assets- Owners Equity True or False
True
Liabilities are the claims of creditors to a company's resources. True or False
True
One application of the conservatism principle is that inventory is valued at either its original cost or market value, whichever is lower. True or false
True
Stockholder's equity is the same as Owner's Equity. True or False
True
T accounts are called such because they resemble the shape of a T. True or False
True
Which one of the following entities separates the individual from the entity both legally and with respect to accounting? Select one: a. Proprietorship b. Corporation c. Partnership d. None of the above
b
Elvon Incorporated is a large multinational corporation located in the US. Elvon presents its financial statements in US dollars. This is an example of Select one: a. Managerial accounting b. Tax accounting c. Financial accounting d. None of the above
c
Presenting an asset in the balance sheet at its historical cost less accumulated depreciation is an example of Select one: a. Managerial accounting b. Tax accounting c. Financial accounting d. None of the above
c
In a proprietorship, Select one: a. There is no legal distinction between the business and its owner. b. There is a distinction between the business and its owner for accounting purposes. c. There is a legal distinction between the business and its owner. d. A and B
d
In periods of rising prices, which of the following generally accepted accounting principles is violated ? Select one: a. Matching b. Conservatism c. Going concern d. Monetary concept
d
Information that can make a difference to the decision at hand is considered to be Select one: a. Reliable b. Comparable c. Conservatism d. Understandability e. None of the above
e
The quality that assumes that information is reasonably free from error is Select one: a. Relevant b. Conservatism c. Understandability d. Consistency e. None of the above
e
A(n) ____ owns a corporation a. Stockholder b. Individual c. Two or more individuals
A
Accounting assists corporations in making major decisions by... a. Providing relevant economic information on costs and effective profits b. Predicting economic environment in which the corporation will exist. c. Mathematically integrating various economic and political models
A
How will the following transaction affect a company's assets, liabilities, and owner's equity? make cash settlement on an account payable. a. liabilities and assets decrease b. owner's equity and assets decrease c. liabilities and assets increase d. liabilities and owner's equity decrease e. assets and owner's equity increase
A
Redstone Incorporated borrows $10,000 from the bank. The terms of the note are 90 days at a 10% interest rate. Redstone debits... a. Cash b. Notes payable c. Interest payable d. Retained earnings e. None of the above
A
The area of tax accounting is designed for the ____ type of user. a. Governmental b. Internal c. External
A
Which of the following accounts represents the original investment of the shareholders? a. Capital stock b. Retained earnings c. Liabilities d. Assets e. None of the above
A
Which of the following is a liability? a. Accounts Payable b. Inventory c. Investments d. prepaid Insurance e. none of the above
A
G.A.A.P is a. the collection of accounting standards and conventions that has evolved over the years to govern the profession. b. the Governmental Association of Accounting Principles. c. the rule making committee of A.I.C.P.A d. A chain of clothing stores
A.
The area of financial accounting is designed for the _____ type of user. a. Government b. Internal c. External
C
To increase the taxes payable account, the bookkeeper will... a. debit accounts receivable b. debit taxes payable c. credit taxes payable d. none of the above
C
Which account should be debited to record this transaction: Used cash to purchase merchandise for resale a. cash b. accounts receivable c. merchandise inventory d. plant & equipment e. accounts payable f. retained earnings
C
Which organization is recognized today as the authoritative voice of accounting principles? a. S.E.C. b. A.I.C.P.A c. F.A.S.B, d.A.A.A
C
A(n) ______ own(s) a proprietorship a. Stockholder b. Individual c. Two or more Individuals
B
Bookkeeping is a.. a. Communication system b. Measuring and recording system c. Dull and tedious job d. System for recording illegal bets by gamblers
B
Essex company borrows $10,000 from the bank. The terms of the note are 10% intrest for one year. Essex makes a left hand entry to cash and a right hand entry to ... a. bank loan payable for $10,100 b. bank loan payable for $ 10,000 c. bank loan payable for $9,900 d. none of the above
B
Dividends can be paid to stockholders only following a year in which a company has generated net income True or False
False
Accounting is a set or rules and methods by which economic information of a business is collected and made into reports that are useful to end users. True or False
True
Although dividends are not an expense of a company, they still impact retained earnings. True or False
True
Congress has authorized the S.E.C. to govern the financial reporting. True or False
True
Blue Talon purchases a three-year insurance policy for $3000. At the end of the first year, Blue Talon adjusts insurance expense by crediting.... a. An asset account b. a retained earnings account c. a liability account d. Both B and C e. None of the above
A
Blueline Incorporated had $10,000 in credit sales. The credit entry is to... a. Retained earnings b. Accounts payable c. Accounts Receivable d. Cash e. None of the above
A
Goober Pyle purchased machinery for his auto shop at a cost of $5,000 with a note from the bank. Accordingly a. liabilities increased $5K and assets increased $5K b. liabilities increased $5K and owner's' equity decreased $5K c. assets and owner's' equity both increased $5K d. none of the above
A
The main purpose of the trial balance is to make sure you haven't committed any math errors in your T-Accounts. True or False
True
The main purpose of the trial balance is to make sure you haven't committed any math errors in your T-accounts. True or False
True
The total of ALL the right hand sides of the T-account must equal the total of ALL the left hand sides of the T-accounts. True or False
True
When the owner of a proprietorship or one of the partners of a partnership dies, the business ceases to exist. True or False
True
the "net worth" of a firm is shown on a company's balance sheet. True or False
True
A partnership is the same as a proprietorship except that it is owned by two or more individuals. Select one: a. TRUE b. FALSE
a
Financial accounting involves reporting financial information to a. external users. b. taxing authorities. c. internal users. d. B and C
a
Owners in corporations are liable only for the amount they have invested and no more. Select one: a. TRUE b. FALSE
a
