Accounting Test Final
Who is responsible for creating GAAP in the United States? A. SEC B. IASB C. FASB D. AICPA
FASB
The cost flow method that often parallels the actual physical flow of merchandise is the FIFO LIFO Average cost Gross Profit
FIFO
Which of the following is likely not a type of not-for-profit entity? A. public library B. community foundation C. university D. local movie theater
local movie theater
Debts owed by a business are referred to as: a. accounts receivable b. liabilities c. owner's equity d. expenses
liabilities
**Which of the following groups would have access to managerial accounting information? A. bankers B. investors C. competitors of the business D. managers
managers
Financial information that is capable of making a difference in a decision is a. faithfully representative b. relevant c. convergent d. generally accepted
relevant
Which of the following best describes a contingent liability that is unlikely to occur? remote probable and estimable reasonably possible probable and inestimable
remote
Assets are: a. rights of creditors over the business b. rights of owners over the business. c. resources owned by the business d. personal property of the owners
resources owned by the business
The estimated economic life of an asset is also known as ________. residual value book value salvage life useful life
useful life
What does 2/10, n/30 mean? payment due in 30 days 2% discount if paid within 10 days, net due in 30 days 10 % discount if paid within 2 days 2% extra due if not paid within 30 days
2% discount if paid within 10 days, net due in 30 days
The accounting equation is expressed as ________. A. Assets + Liabilities = Owner's Equity B. Assets - Noncurrent Assets = Liabilities C. Assets = Liabilities + Investments by Owners D. Assets = Liabilities + Owner's Equity
Assets = Liabilities + Owner's Equity
Accounting is sometimes called the "language of _____." A. Wall Street B. business C. Main Street D. financial statements
Business
FOB shipping point requires the shipping to be paid by the Shipping company Buyer Transporter Seller
Buyer
Which of these accounts is never closed? Drawing Capital Service Fee Revenue Income Summary
Capital
Which of the following statements about capitalizing costs is correct? Capitalizing costs refers to the process of converting assets to expenses. Only the purchase price of the asset is capitalized. Capitalizing a cost means to record it as an asset. Capitalizing costs results in an immediate decrease in net income.
Capitalizing a cost means to record it as an asset.
Which of the following is not a criterion to recognize revenue under GAAP? The earning process must be completed A product or service must be provided Cash must be collected GAAP requires that the accrual basis accounting principle be used in the revenue recognition process
Cash must be collected
Most states require 150 semester hours of college credit for which professional certification? A. Certified Management Accountant (CMA) B. Certified Internal Auditor (CIA) C. Certified Public Accountant (CPA) D. Certified Financial Planner (CFP)
Certified Public Accountant (CPA)
The total cost of merchandise sold during the period is know as Cost of goods manufactured Merchandise fee expense Freight Cost of goods sold
Cost of goods sold
Which of these accounts would be present in the closing entries? Drawing Accounts Receivable Unearned Service Revenue Sales Tax Payable
Drawing
Which of the following best represents the matching principle criteria? Expenses are reported in the period in which they were incurred. Expenses may be reported in a different period than the matching revenues. Revenue and expenses are matched based on when expenses are paid. Revenue is recognized when an order occurs and not when the actual sale is initiated.
Expenses are reported in the period in which they were incurred.
Which of the following accounts is considered a temporary or nominal account? Fees Earned Revenue Prepaid Advertising Unearned Service Revenue Prepaid Insurance
Fees Earned Revenue
"GAAP refers to: A. Generally Accepted Auditing Principles B. Guidelines for American Accounting Procedures C. General Association of Accounting Practitioners D. Generally Accepted Accounting Principles
Generally Accepted Accounting Principles
In a perpetual inventory system, the amount of the discount allowed for paying for merchandise purchased within the discount period is credited to Purchase Discount Inventory Sales Discount Purchase Allowance
Inventory
Which of the following is not a characteristic of a short-term note payable? Payment is due in less than a year. It bears interest. It can result from an accounts payable conversion. It is reported on the balance sheet under noncurrent liabilities.
It is reported on the balance sheet under noncurrent liabilities.
In a period of inflation, the cost flow method that results in the lowest income taxes is the: LIFO FIFO Average Cost Gross Profit
LIFO
Which of the following is NOT a common cost flow assumption used in costing inventory? First In - first out Middle In - First out Last In - First out Average cost
Middle In - First out
Which of the following accounts is considered a permanent or real account? Interest Revenue Prepaid Insurance Insurance Expense Supplies Expense
Prepaid Insurance
The revenue account used in merchandising business is Service Revenue Fees Earned Sales Subscription Revenue
Sales
FOB destination requires the shipping to be paid by the Shipping company Buyer Transporter Seller
Seller
A 90-day, 12% note for $10,000, dated May 1. Assuming a 360-day year, the maturity value of the note is: a. $11,200 b. $10,300 c. $9,700 d. $10,000
b. $10,300
A debenture is ________. the interest paid on a bond a type of bond that can be sold back to the issuing company whenever the bondholder wishes a bond with only the company's word that they will pay it back a bond with assets such as land to back their word that they will pay it back
a bond with only the company's word that they will pay it back
If Accounts Receivable for Crawford Company are equal to $172,000 and the Allowance for Doubtful Accounts are $4,500 at December 31, 2014, what is the amount of net receivables shown on Crawford's balance sheet at December 31, 2014? a. $167,500 b. $172,000 c. $176,500 d. cannot be determined from the information given
a. $167,500
Ngo Company purchased a truck for $54,000. Sales tax amounted to $5,400; shipping costs amounted to $1,200; and one-year registration of the truck was $100. What is the total amount of costs that should be capitalized? a. $60,600 b. $66,100 c. $54,000 d. $59,400
a. $60,600
The statement that provides the financial position of a company, listing assets, liabilities and owner's equity, as of a specific date is the: a. balance sheet b. statement of owner's equity c. statement of cash flows d. income statement
a. balance sheet
The statement that provides the financial position of a company, listing assets, liabilities and owner's equity, as of a specific date is the: a. balance sheet b. statement of owner's equity c. statement of cash flows d. income statement
a. balance sheet
Merchandise inventory is found on the balance sheet as a: a. current asset b. long-term asset c. current liability d. long-term liability
a. current asset
The process of initially recording a business transaction is called: a. journalizing b. balancing c. posting d. closing
a. journalizing
A(n) _________________ sells products purchased from other businesses to make their objective of maximizing their profits. a. merchandising business b. manufacturing business c. enterprise business d. service business
a. merchandising business
Adjusting entries are: a. needed to bring accounts up to date and match revenue and expense b. the same as correcting entries c. rarely needed in large companies d. optional under generally accepted accounting principles
a. needed to bring accounts up to date and match revenue and expense
The purpose of the adjusted trial balance is to verify: a. the equality of the total debit balances and the total credit balances after adjustments have been recorded b. that all of the accounts are correct c. the equality of the total debit balances and the total credit balances before adjustments have been recorded d. that the net income reported is accurate
a. the equality of the total debit balances and the total credit balances after adjustments have been recorded
Using accrual accounting, revenue is recorded and reported only: a. when the services are rendered without regard to when cash is received b. when cash is received without regard to when the services are rendered c. when cash is received at the time services are rendered d. if cash is received after the services are rendered
a. when the services are rendered without regard to when cash is received
If an adjustment includes an entry to a payable or receivable account, which type of adjustment is it? accrual deferral (prepaid) estimate cull
accrual
Depreciation of a plant asset is the process of ________. asset valuation for statement of financial position purposes allocation of the asset's cost to the periods of use fund accumulation for the replacement of the asset asset valuation based on current replacement cost data
allocation of the asset's cost to the periods of use
If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales discount return contra asset allowance
allowance
The balance sheet lists which of the following? A. assets, liabilities, and owners' equity B. revenues, expenses, gains, and losses C. assets, liabilities, and investments by owners D. revenues, expenses, gains, and distributions to owners
assets, liabilities, and owners' equity
A 90-day, 12% note for $10,000, dated May 1, is received from a customer on account. Assuming a 360-day year, the maturity value of the note is: a. $11,200 b. $10,300 c. $9,700 d. $10,000
b. $10,300
The chart of accounts is: a. a group of accounts for a business b. a list of the accounts in the ledger c. a list of all income and expense accounts d. a list of all the accounts with their balances
b. a list of the accounts in the ledger
Debts owed by a business are referred to as: a. accounts receivable b. liabilities c. owner's equity d. expenses
b. liabilities
The inventory system employing accounting records that continuously disclose the amount of inventory is called: a. physical b. perpetual c. periodic d. retail
b. perpetual
The trial balance will include: a. only the debits of each account b. the ending balance of each account c. only the credits of each account d. only balance sheet accounts
b. the ending balance of each account
An amortization table ________. breaks each payment into the amount that goes toward interest and the amount that goes toward the principal is a special table used in a break room to make people feel equitable separates time value of money tables into present value and future value separates time value of money tables into single amounts and streams of cash
breaks each payment into the amount that goes toward interest and the amount that goes toward the principal
The accounting concept which relates to separating the reporting of business economic transactions and personal economic transactions is: a. cost concept b. unit of measure concept c. objectivity concept d. business entity concept
business entity concept
The primary ledger containing all the balance sheet and income statement accounts is the: a. customer's ledger b. creditor's ledger c. general ledger d. subsidiary ledger
c. general ledger
The inventory system where companies do not keep detailed inventory records of goods on hand is called: a. physical b. perpetual c. periodic d. retail
c. periodic
The process of copying the journal to the ledger is called: a. journalizing b. balancing c. posting d. closing
c. posting
At the end of the accounting period, four closing entries are required. The first one is to close _______, the second one is to close _______, the third one is to close _______, and the last one is to close _______. a. drawing account, income summary, expense accounts, revenue accounts b. capital account, drawing account, income summary, assets c. revenue accounts, expense accounts, income summary, drawing account d. expense accounts, assets, income summary, capital account
c. revenue accounts, expense accounts, income summary, drawing account
Which of these accounts is included in the post-closing trial balance? Sales Revenue Salaries Expense Capital Drawing
capital
Which of the following is not an example of a retailer? A. electronics store B. grocery store C. car dealership D. computer manufacturer E. jewelry store
computer manufacturer
Determine the gross profit using the following information:Sales $702,000 Sales R&A 13,800 Sales discount 8,000 Cost of Goods Sold 504,000 Selling Expense 50,400 Administrative expense 25,000 a. 125,800 b. 690,200 c. 100,800 d. 176,200
d. 176,200
Regardless how careful a company is in granting credit, some credit sales will be uncollectible. The operating expense recorded as a result of uncollectible receivables is called: a. sales returns and allowances b. credit expense c. net realizable value d. bad debt expense
d. bad debt expense
The accounting concept which relates to separating the reporting of business economic transactions and personal economic transactions is: a. cost concept b. unit of measure concept c. objectivity concept d. business entity concept
d. business entity concept
The unearned subscriptions account reflected a balance of $32,500 prior to any adjustments. It is determined that $9,800 in subscriptions remains unearned at the end of the period. The adjusting journal entry should include a: a. debit Unearned Subscriptions for 9,800 b. credit to Unearned Subscriptions for 22,700. c. credit to Subscriptions Earned for 9,800. d. credit to Subscriptions Revenue for 22,700.
d. credit to Subscriptions Revenue for 22,700.
The two methods of accounting for uncollectible receivables are the allowance method and the: a. interest method b. equity method c. cost method d. direct write-off method
d. direct write-off method
The statement that is a summary of the revenue and expenses for a specific period of time is the: a. balance sheet b. statement of owner's equity c. statement of cash flows d. income statement
d. income statement
All of the following assets will be included as intangible assets on the balance sheet except: a. copyrights b. goodwill c. patents d. investments
d. investments
Gross profit is net sales: a. less inventory. b. plus cost of goods sold c. less operating expenses d. less cost of goods sold
d. less cost of goods sold
Mortgage Payable is found on the balance sheet as a: a. current asset b. long-term asset c. current liability d. long-term liability
d. long-term liability
The matching concept: a. requires that the dollar amount of debits equal the dollar amount of credits on a trial balance b. addresses the relationship between the journal and the balance sheet c. determines whether the normal balance of an account is a debit or credit d. states that the revenues and related expenses should be reported in the same period.
d. states that the revenues and related expenses should be reported in the same period.
Which type of adjustment occurs when cash is either collected or paid, but the related income or expense is notreportable in the current period? accrual deferral (prepaid) estimate cull
deferral (prepaid)
An accelerated depreciation method that takes more expense in the first few years of the asset's life is ________. units-of-production depreciation double-declining-balance depreciation accumulated depreciation straight-line depreciation
double-declining-balance depreciation
External users of financial accounting information include all of the followingexcept________. A. lenders such as bankers B. governmental agencies such as the IRS C. employees of a business D. potential investors
employees of a business
Which of the following skills/attributes is not a primary skill for accountants to possess? A. written communication B. verbal communication C. ability to work independently D. analytical thinking E. extensive computer programing background
extensive computer programing background
Which of the following is a twelve-month reporting cycle that can begin in any month, except January 1, and records financial data for that twelve-month consecutive period? fixed year interim period calendar year fiscal year
fiscal year
A governmental agency can best be described by which of the following statements? A. has a primary purpose of making a profit B. has a primary purpose of using taxpayer funds to provide services C. produces goods for sale to the public D. has regular shareholder meetings
has a primary purpose of using taxpayer funds to provide services
When a bond sells at a discount, the carrying value ________ after each amortization entry. increases decreases stays the same cannot be determined
increases
Which of the following would not be considered an intangible asset? goodwill patent copyright inventory
inventory
Stockholders can best be defined as which of the following? A. investors who lend money to a business for a short period of time B. investors who lend money to a business for a long period of time C. investors who purchase an ownership in the business D. analysts who rate the financial performance of the business
investors who purchase an ownership in the business
O'Shea Inc. issued bonds at a face value of $100,000, a rate of 6%, and a 5-year term for $98,000. From this information, we know that the market rate of interest was ________. more than 6% less than 6% equal to 6% cannot be determined from the information given.
more than 6%
The legal protection that provides a company exclusive rights to produce and sell a unique product is known as which of the following? trademark copyright patent goodwill
patent
Which of the following best describes a contingent liability that is likely to occur but cannot be reasonably estimated? reasonably possible probable and estimable probable and inestimable remote
probable and inestimable
What type of organization primarily offers tax compliance, auditing, and consulting services? A. corporations B. public accounting firms C. governmental entities D. universities
public accounting firms
Which of these statements is not one of the financial statements? A. income statement B. balance sheet C. statement of cash flows D. statement of owner investments
statement of owner investments
Financial accounting information ________. A. should be incomplete in order to confuse competitors B. should be prepared differently by each company C. provides investors guarantees about the future D. summarizes what has already occurred
summarizes what has already occurred
Property, Plant, and Equipment is considered why type of asset? current assets contra assets tangible assets intangible assets
tangible assets
Which of the following is not considered a current liability? Accounts Payable Unearned Revenue the component of a twenty-year note payable due in year 20 current portion of a noncurrent note payable
the component of a twenty-year note payable due in year 20
The principal of a bond is ________. the person who sold the bond for the company the person who bought the bond the interest rate printed on the front of the bond the face amount of the bond that will be paid back at maturity
the face amount of the bond that will be paid back at maturity
