Accounting quizes

The accounting environment does not change as a result of A. the double entry system B. organizations growth C. technological advances D. government regulation

A. the double entry system

In a period of increasing prices, which inventory flow assumption will result in the lowest amount of income tax expense A. FIFO B. LIFO C. Income tax expense for the period will be the same under all assumptions D. Average cost

B. LIFO

An accounting record of the balances of all assets, liabilities and owner's equity accounts is called a A. compound entry B. general ledger C. chart of accounts D. general journal

B. general ledger

If goods in transit are shipped FOB destination A. the buyer has legal title to the goods until they are delivered. B. the transportation company has legal title to the goods while in transit C. no one has legal title to the goods until they are delivered. D. the seller has legal title to the goods until they are delivered.

D. the seller has legal title to the goods until they are delivered.

Bookkeeping differs from the accounting in that bookkeeping primarily involves which part of the accounting process? A. Communication B. Recording C. Analysis D. Identification

Recording

NSF means

non-sufficient funds

Reconciling the bank statement monthly is an example of A. segregation of duties B. establishment of responsibility C. documentation procesdures D. independent internal verification

D. independent internal verification

Which of the following is in accordance with generally accepted accounting principles? A. Accrual-basis accounting B. Cash-basis accounting C. Both accrual-basis and cash-basis accounting D. Neither accrual-basis and cash-basis accounting

A. Accrual-basis accounting

A post-closing trail balance is prepared A. After closing entries have been journalized and posted B. before closing entries have been journalized but before the entries are posted C. after closing entries have been journalized but before the entries are posted D. before closing entries have been journalized but after the entries are posted

A. After closing entries have been journalized and posted

Which one of the following could represent the expanded basic accounting equation? A. Assets + Owner's Drawing + Expenses = Liabilities + Owner's Capital + Revenues B. Assets = Revenue + Expenses - Liabilities C. Assets - Liabilities Owner's Drawing+ Owner's Capital + Revenues+ + Expenses =

A. Assets + Owner's Drawing + Expenses = Liabilities + Owner's Capital + Revenues

Which one of the following could represent the expanded basic accounting equation? A. Assets + Owners's Drawings + Expenses = Liabilities + Owner's Capital + Revenues. B. Assets = Revenues + Expenses - Liabilities C. Assets - liabilities - owner's drawings = owner's capital + revenues - expenses D. Assets = Liabilities + owner's capital + owner's drawings - revenue - expenses.

A. Assets + Owners's Drawings + Expenses = Liabilities + Owner's Capital + Revenues.

The historical cost principle requires that when assets are acquired, they be recorded at A. cost B. appraisal value C. market value D. book value

A. Cost

When valuing ending inventory under a perpetual inventory system, the A. Valuation using the FIFO assumption is the same as under the periodic inventory system B. moving average requires that a new average be computed after every sale C. valuation using LIFO assumption is the same valuation using the LIFP assumption under the periodic system D. earliest units purchased during the period using the LIFO assumption are allocated to the cost of goods sold when units are sold

A. Valuation using the FIFO assumption is the same as under the periodic inventory system

Depreciation is the process of A. allocating the cost of an asset to expense over its useful life in a rational and systematic manner B. Valuing an asset at its fair value C. writing down an asset to its real value each accounting period D. increasing the value of an asset over its useful life in a rational and systematic manner

A. allocating the cost of an asset to expense over its useful life in a rational and systematic manner

A current asset is A. an asset that a company expects to convert to cash or use up within one year B. the last asset purchased by a business C. an asset which is currently being used to produce a product or service D. usually found as a separate classification in the income statement

A. an asset that a company expects to convert to cash or use up within one year

Failure to prepare an adjusting entry at the end of a period to record an accrued revenue would cause: A. an understatement of assets and and understatement of revenues B. an understatement of revenues and an understatement of liabilities C. an understatement of revenues and overstatement of liabilities D. net income to be overstated

A. an understatement of assets and and understatement of revenues

Paden Company purchased merchandise from Emmett Company with freight terms of FOB shipping point. The freight costs will be paid by the A. buyer B. seller C. transportation company D. buyer and seller

A. buyer

If Income Summary has a credit balance after revenues and expenses have been closed into it, the closing entry for Income Summary will include a A. credit to the owner's capital account B. credit to the own'er drawing account C. debit to the owner's drawings account D. debit to the owner's capital account

A. credit to the owner's capital account

The principles of developing an accounting information system do not include A. elimination of human involvement B. flexibility C. cost effectiveness D. usefulness

A. elimination of human involvement

Allowing only designated personnel to handle cash receipts is an example of A. establishment of responsibility B. segregation of duties C. documentation procedures D. independent internal verification

A. establishment of responsibility

The principle of an efficient accounting system that states that an accounting system should accommodate a variety of users is A. flexibility B. useful output C. cost effectiveness D. implementation

A. flexibility

A trial balance is a listing of A. general ledger accounts and balances B. the totals from the journal pages C. the chart of accounts D. transactions in a journal

A. general ledger accounts and balances

In large companies, the independent internal verification procedure is often assigned to A. internal auditors B. computer operators C. outside CPA's D. management

A. internal auditors

Which of the following accounts is not closed to Income Summary? A. inventory B. sales revenue C. sales discount D. Cost of goods sold

A. inventory

Under perpetual inventory system, acquisition of merchandise for resale is debited to the A. inventory account B. Purchased account C. supplies account D. cost of goods sold account

A. inventory account

Which of the following statements related to the adjusted trial balance is incorrect? A. it is prepared before adjusting entries have been made B. it proves the equality of the total balances and the total credit balances in the ledger. C. Financial statements can be prepared directly from the adjusted trial balance D. It shows the balances of all accounts at the end of the accounting period

A. it is prepared before adjusting entries have been made

The factor which determines whether or not goods should be included in a physical count of inventory is A. legal title B. management's judgement C. whether or not the purchase price has been paid D. physical possession

A. legal title

The first item listed under current liabilities is usually A. notes payable B. salaries and wages payable C. accounts payable D. taxes payable

A. notes payable

Inventory is A. reported as a current asset on the balance sheet B. generally valued at the price for which the goods can be sold. C. reported under the classification of property, plant and equipment on the balance sheet D. often reported as a miscellaneous expense on the income statement

A. reported as a current asset on the balance sheet

The time period assumption states that A. the economic life of a business can be divided into artificial time periods B. a transaction can only affect one period of time C. estimates should not be made if a transaction affects more than one time period. D. adjustments to the company's accounts can only be made in the time period when the business terminates its operations

A. the economic life of a business can be divided into artificial time periods

In a worksheet for merchandising company, inventory would appear in the A. trail balance, adjusted trial balance and balance sheet columns B. trial balance, adjusted trial balance and income statement columns C. trial balance and adjusted trial balance columns only D. trial balance and balance sheet columns only

A. trail balance, adjusted trial balance and balance sheet columns

A sales journal is used to record A. sales of all assets on credit and for cash B. only credit sales of merchandise C. credit sales of merchandise, sales returns and allowances, and sales discounts D. only cash sales of merchandise

B. only credit sales of merchandise

An error in the physical count of goods on hand at the end of a period resulted in a $18,000 overstatement of the ending inventory. The effect of this error in the current period is A. Cost of Goods Sold: overstated Net Income: overstated B. Cost of Goods Sold: understated Net Income: overstated C. Cost of Goods Sold: overstated Net Income: understated D. Cost of Goods Sold: understated Net Income: understated

B. Cost of Goods Sold: understated Net Income: overstated

Which of the following would not be considered an external user of accounting data for the LMN Company? A. internal revenue service agent B. Management C. Customers. D. Creditors

B. Management

Generally accepted accounting principles are A. Income tax regulations of the IRS B. standards that indicate how to report economic events. C. principles that have been proven correct by academic researchers. D. theories that are based on physical laws of the universe

B. Standards that indicate how to report economic events

Proper control for over-the-counter cash receipts include A. Cash count sheets requiring only the cashiers signature B. a cash registrar with totals visible to the customers. C. using electronic cash registers with no tapes D. cash count sheets requiring only the supervisor's signature

B. a cash registrar with totals visible to the customers.

An accounting time period that is one year in length, but does not begin on January 1, is referred to as A. an interim period B. a fiscal year C. the time period assumption D. a reporting period

B. a fiscal year

An adjusting entry A. affects two balance sheet accounts B. affects a balance sheet account and an income statement account C. affects two income statement accounts D. is always a compound entry

B. affects a balance sheet account and an income statement account

The inventory turnover is computed by dividing cost of goods sold by A. ending inventory B. average inventory C. beginning inventory D. 365 days

B. average inventory

The account balances that appear on the post-closing trial balance will match the A. balance sheet account balances before adjustments B. balance sheet account balances after closing entries C. income statement account balances after closing entries D. income statement account balances after adjustments

B. balance sheet account balances after closing entries

Cost of goods available for sale is computed by adding A. net purchases and freight-in B. beginning inventory to the cost of goods purchased C. purchases to beginning inventory D. beginning inventory to net purchase

B. beginning inventory to the cost of goods purchased

Accounts Receivable and Accounts Payable are examples of A. nominal accounts. B. controlling accounts C. subsidiary ledger accounts D. both nominal and controlling accounts

B. controlling accounts

The individual amounts in the sales journal are posted to the accounts receivable subsidiary ledger A. weekly B. daily C. monthly D. yearly

B. daily

A voucher system is a series of prescribed control procedures A. to check the credit worthiness of customers B. designed to assure that disbursements by check are proper C. which eliminates the need for a sales journal D. specifically designed for small firms who may not have checking accounts

B. designed to assure that disbursements by check are proper

the inventory account balance appearing inventory worksheet reprints the A. cost of merchandise sold B. ending inventory C. cost of merchandise purchased D. beginning inventory

B. ending inventory

A subsidiary ledger frees the general ledger from details of A. external transactions B. individual balances C. internal transactions D. the control account

B. individual balances

A buyer would record a payment within the discount period under a perpetual inventory system by crediting A. Account's payable B. inventory C. purchase discounts D. sales discounts

B. inventory

If an adjustment is needed for unearned revenues, the A. liability and related revenue are overstated before adjustment B. liability is overstated and the related revenue is understated before adjustment C. liability and related revenue are understated before adjustment D. liability is understated and the related revenue ie overstated before adjustment

B. liability is overstated and the related revenue is understated before adjustment

A correcting entry A. is another name for a closing entry B. may involve any combination of accounts C. is a required step in the accounting cycle D. must involve one balance sheet account and one income statement account

B. may involve any combination of accounts

posting to the control accounts in the general ledger are made A. annually B. monthly C. daily D. weekly

B. monthly

Prepaid expenses are A. incurred an already paid or recorded B. paid and recorded in an asset account before that are used or consumed C. paid and recorded in an asset account after they are used or consumed. D. incurred but not yet paid or recorded

B. paid and recorded in an asset account before that are used or consumed

Which of the following depicts the proper sequence of steps in the accounting cycle? A. Prepare a trial balance, prepare financial statements, prepare adjusting entries B. prepare a trial balance, prepare adjusting entries, prepare financial statement C. Prepare a trial balance, post ledge accounts, post adjusting entries D. Journalize the transactions, analyze business transactions, prepare a trial balance

B. prepare a trial balance, prepare adjusting entries, prepare financial statement

An adjusted trial balance A. cannot be used to prepare financial statements B. proves the equality of the total balances and total credit balances of ledger accounts after all adjustments have been made C. is prepared after the financial statements are completed D. is a required financial statement under generally accepted accounting principals

B. proves the equality of the total balances and total credit balances of ledger accounts after all adjustments have been made

To be useful, the information outputs of a system should be A. distributed only to management personnel B. relevant, reliable, timely and accurate C. reliable, flexible, understandable and timeless D. such that one report meets all different users needs

B. relevant, reliable, timely and accurate

Closing entries are necessary for A. permanent or real accounts only B. temporary accounts only C. both permanent and temporary accounts D. permanent accounts only

B. temporary accounts only

A trial balance would only help in detecting which one of the following errors? A. A transaction that is not journalized B. Offsetting errors are made in recoding the transaction C. A transposition error when transferring the debit side of journal entry to the ledger D. A journal entry that is posted twice

C. A transposition error when transferring the debit side of journal entry to the ledger

Blossom's Electronic Repair Shop started the year with total assets of $318000 and total liabilities of $211000. During the year, the business recorded $505000 in electronic repair revenue, $311000 in expenses, and Blossom withdrew $50200. Blossom Owners Capital balance at the end of the year was A. $194000 B. $107000 C. $250800 D. $301000

C. $250800

Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using A. LIFO will have the highest ending inventory B. FIFO will have the highest cost of goods sold C. FIFO will have the highest ending inventory D. LIFO will have the lowest cost of goods sold

C. FIFO will have the highest ending inventory

Closing entries are made A. so that financial statements can be prepared. B. so that all assets, liabilities and owner's capital accounts will have zero balances when the next accounting period starts C. In order to transfer net income (or loss) and owner's drawing to the owner's capital account D. in order to terminate the business as an operating entity

C. In order to transfer net income (or loss) and owner's drawing to the owner's capital account

A journal provides A. the balance for each account B. a list of all accounts used in the business C. a chronological record of transactions D. information about a transaction in several different places.

C. a chronological record of transactions

A subsidiary ledger is A. a group of accounts used by branches and subsidiaries of corporate business B. used to post excess transactions if a general ledger account becomes full during an accounting period C. a group of accounts with a common characteristic that provided detailed information about a control account in the general ledger D. used in place of the general ledger if the general ledger is destroyed or stolen

C. a group of accounts with a common characteristic that provided detailed information about a control account in the general ledger

If total liabilities increased by $8500. A. assets must have decreased by $8500 B. Owner's equity must have increased by $8500 C. assets must have increased by $8500, or owners equity must have decreased by $8500. D. Assets and owners equity each increased by $4250

C. assets must have increased by $8500, or owners equity must have decreased by $8500.

A balance sheet shows A. revenues, liabilities and owners equity B. revenues, expenses and drawings C. assets, liabilities and owner's equity D. expenses, drawings and owner's equity

C. assets, liabilities and owner's equity

An account is an individual accounting record of increases and decreases in specific A. assets B. expenses C. assets, liabilities and owner's equity items D. Liabilities

C. assets, liabilities and owner's equity items

Inventories affect A. only the balance sheet B. only the income statement C. both the balance sheet and the income statement D. neither the balance sheet nor the income statement

C. both the balance sheet and the income statement

In which journal would a cash purchase of inventory be recorded ? A. purchases journal B. general journal C. cash payments journal D. none of the above

C. cash payments journal

Which one of the following transactions is recorded with the same entry in a perpetual and a periodic inventory system? A. return of merchandise sold B. sale of merchandise on credit C. cash received on account with a discount D. payment of freight costs on a purchase

C. cash received on account with a discount

Under the lower-of-cost-or-market basis in valuing inventory, market is defined as A. historical cost plus 10% B. selling price less markup C. current replacement cost D. selling price

C. current replacement cost

The information for preparing a trial balance on a worksheet is obtained from A. general journal entries B. financial statements C. general ledger accounts D. business documents

C. general ledger accounts

adjusting entries are recorded A. only on the worksheet B. only in the general ledger C. in the general journal D. in the special journals

C. in the general journal

the balance of a control account in the general ledger A. is always greater than the composite balance of individual accounts in a related subsidiary ledger B. must always be zero C. must equal the composite of individual accounts in a related subsidiary ledger. D. must equal the amount of total assets

C. must equal the composite of individual accounts in a related subsidiary ledger.

The economic entity assumption requires that the activities A. of a sole proprietorship cannot be distinguished from the personal economic events of its owners. B. of different entities can combine if all the entities are corporations. C. of an entity be kept separate from the activities of its owner. D. must be reported to the securities and exchange commission

C. of an entity be kept separate from the activities of its owner.

If services are rendered for credit, then A. liabilities will decrease B. liabilities will increase C. owners equity will increase D. assets will decrease

C. owners equity will increase

Financial information that is capable of making a difference in a decision is A. faithfully representative B. generally accepted C. relevant D. convergent

C. relevant

The revenue recognition principle dictated that revenue should be recognized in the accounting records A. when cash is received B. at the end of the month C. when the performance obligation is satisfied D. in the period that income taxes are paid

C. when the performance obligation is satisfied

In a service-type business, revenue is considered recognized A. at the end of the year B. at the end of the month C. when the service is provided D. when cash is received

C. when the service is provided

Owner's equity is best depicted by: A. Assets = Liabilities B. Residual equity + Assets C. Liabilities + Assets D. Assets - Liabilities

D. Assets - Liabilities

An accountant has debited an asset account for $1360 and credited a liability account for $460. Which of the following would be an incorrect way to complete the recording of the transaction? A. credit another liability account for $900 B. Credit an owner's equity account for $900 C. Credit and asset account for $900 D. Debit an owner's equity account for $900

D. Debit an owner's equity account for $900

Income from operations appears on A. Bothe multiple step and single step income statement B. neither a multiple step nor a single step income statement C. a single step income statement D. a multiple step income statement

D. a multiple step income statement

The final step in the accounting cycle is to prepare A. closing entries B. financial statements C. adjusting entries D. a post-closing trial balance

D. a post-closing trial balance

Posting A. involves transferring all debits and credit on a journal page to the trial balance B. is accomplished by examining ledger accounts and seeing which ones need updating. C. should be performed in account number order. D. accumulates the effects of journalized transaction in the individual accounts.

D. accumulates the effects of journalized transaction in the individual accounts.

After the adjusting entries are journalized and posted to the accounts in the general ledger, the balance of each account should agree with the balances shown on the A. the general journal B. post-closing trial balance C. adjustments columns of the worksheet D. adjusted trial balance

D. adjusted trial balance

Ethics are the standards of conduct by which one's actions are judged as A. right or wrong B. honest or dishonest C. Fair or Unfair D. all of these answer choices are correct

D. all of these are correct

A debt to an asset account indicates A. an error B. A credit was made to a liability account C. a decrease in the asset D. an increase in the asset

D. an increase in the asset

Liabilities A. are things of value used by the business in its operation B. are existing debts and obligations C. are future economic benefits D. possess service potential

D. are existing debts and obligations

Company provided consulting services and billed the client $3040. As a result of this event, A. assets increased by $3040. B. owner's equity increased by $3040. C. assets remained unchanged D. assets and owner's equity both increased by $3040.

D. assets and owner's equity both increased by $3040.

Cost of good sold is computed A. beginning inventory - cost of goods purchased + ending inventory B. sales - cost of goods purchased + beginning inventory - ending inventory C. sales + gross profit - ending inventory + beginning inventory D. beginning inventory + cost of goods purchased - ending inventory

D. beginning inventory + cost of goods purchased - ending inventory

A company will usually replace a manual accounting information system with an electronic system as the operations increase in A. simplicity B. productivity C. efficiency D. complexity

D. complexity

Two categories of expenses for merchandising companies are A. operating expenses and financing expenses B. sales and cost of goods sold. C. cost of goods sold and financing expenses D. cost of goods sold and operation expenses

D. cost of goods sold and operation expenses

Credits A. increase assets and decrease liabilities B. increase both assets and liabilities C. decrease both assets and liabilities D. decrease assets and increase liabilities

D. decrease assets and increase liabilities

The common characteristic possessed by all assets is A. tangible nature B. long life. C. great monetary value D. future economic benefit

D. future economic benefit

Sales revenue less cost of goods sold is called A. marginal income B. net profit C. net income D. gross profit

D. gross profit

After a business transaction has been analyzed and entered in the book or ogival entry, the next step in the recording process is to transfer the information to A. financial statements B. the company's bank C. owners' equity D. ledger accounts

D. ledger accounts

On June 1, 2016. Ben Casey buys a copier machine for his business and finances this purchase with cash and a note. When journalizing this transaction, he will A. list the credit entries first, which is proper form for this type of transaction B. make a simple entry. C. use two journal entries D. make a compound entry.

D. make a compound entry

If an adjusting entry is not made for a accrued revenue, A. assets will be overstated B. revenues will be overstated C. expenses will be understated. D. owner's equity will be understated

D. owner's equity will be understated

Communication of economic events is the part of the accounting process that involves A. identifying economic events B. recording and classifying information C. quantifying transactions into dollars and cents D. preparing accounting reports

D. preparing accounting reports

In preparing closing entries for a merchandising company, the income summary account will be credited for the balance of A. sales discount B. freight-out C. inventory D. sales revenue

D. sales revenue

The lower-of-cost-or-market (LCM) basis may be used with all of the following methods except: A. average cost B. FIFO C. LIFO D. the LCM basis may be used with all of these

D. the LCM basis may be used with all of these

The left side of an account is A. the balance of the account B. blank C. a description of the account D. the debt side

D. the debt side

The worksheet does not show A. revenue and expense account balances B. the trial balance before adjustments C. net income or loss for the period D. the ending balance in the owner's capital account

D. the ending balance in the owner's capital account