Accounting 2036 FinalExam Mizzou Dr.P 2018
Apple paid $3,500 cash for textbooks purchased on account earlier in the month. What account should be debited? a. Accounts Payable b. Cash c. Notes Payable d. Inventory
A
Assets increase a. On the left side of the account b. On the right side of the account c. On the left side of the account for current assets and on the right side of the account for noncurrent assets d. On the right of the account side for current assets and on the left side of the account for noncurrent assets
A
Assume Tiger Inc. borrowed $100,000 cash on October 31,2018 on a one-year note that required them to pay 5% interest. What would the journal entry be for Tiger Inc to record this transaction? a) Debit Cash for $100,000, credit Note Payable for $100,000 b) Debit Cash for $95,000, credit Note Payable for $95,000 c) Debit Cash for $105,000, credit Note Payable for $105,000 d) Debit Note Payable for $105,000, credit Cash for $105,000
A
At what point does the accounting department record the purchase of goods on account? a. After the receiving report has been prepared b. When the purchase order is created c. When the invoice is received d. Once the invoice has been paid
A
BC corporation borrows $20,000 from the bank, what account should be credited? a. Notes Payable b. Cash c. Accounts Receivable d. Common Stock
A
By generating net income, a. A company increases its stockholder's equity b. A company decreases its stockholder's equity c. A company must pay dividends d. A company's expenses equal more than their profit
A
What is the name for an account that is used to reduce or offset another account? a. Contra-Account b. Reduction-Account c. Equalize-Account d. Cancel-out Account
A
What would the journal entry be if Tiger Inc. recorded a write-down of $10,000 on equipment for an asset impairment loss? a. Debit Loss on Impairment for $10,000 Credit Equipment for $10,000 b. Debit Allowance for Impairment $10,000 Credit Equipment for $10,000 c. Debit Accumulated Depreciation for $10,000 Credit Equipment for $10,000 d. Debit Equipment for $10,000 Credit Loss on Impairment for $10,000
A
All of the following are considered disadvantages of extending credit except: a. Increased wage costs b. Decrease in the seller's revenues c. Bad debt costs d. Delayed receipt of cash
B
All of the following are financial statements except: a. Income Statement b. Statement of Assets c. Balance Sheet d. Statement of Cash of Flows
B
B&B issues $1,000 worth of gift cards for cash. What account is credited? a. Cash b. Unearned revenue c. Accounts receivable d. Gift card expense
B
How do companies list liabilities on their balance sheet? a. In order of liquidity b. In order of maturity c. In order of monetary amount d. In alphabetical order
B
IF Tiger Inc. paid $5,000 in advance for October and November Rent, what accounts would be debited and credited? a) Credit Cash for $5,000, Debit Prepaid Insurance for $5,000 b) Debit Prepaid Rent for $5,000, Credit Cash for $5,000 c) Credit Rent Expense for $5,000, Debit Cash for $5,000 d) Debit Cash for $5,000, Credit Accounts Payable for $5,000
B
If Walmart sells a product on account for $500 that cost Walmart $200, what are the appropriate journal entries? a. Debit Accounts Receivable for 200, Credit Sales Revenue for 200 b. Debit COGS for 200, Credit Inventory for 200 c. Debit COGS for 200, Credit Revenue for 200 d. Debit Accounts Receivable for 500, Credit Inventory for 500
B
If a company's assets are $1,000,000 and their Stockholder's Equity is $400,000, their liabilities equal: a. $1,400,000 b. $600,000 c. $400,000 d. $800,000
B
If inventory unit costs are rising, which inventory costing method would result with the highest Ending Inventory balance? a. LIFO b. FIFO c. Weighted Average d. Cannot be determined
B
What is the most accurate way to estimate bad debts? a. Percentage of credit sales b. Aging of accounts receivable c. Percentage of cash sales d. Aging of accounts payable
B
What is the revenue recognition principle? a. Revenues are not recognized until the following year b. Revenues are recognized when they are earned c. Revenues are recognized if they outweigh the costs d. Revenues are recognized, even when they are unearned
B
What principal of accounting states that revenues should be recorded when generated and expenses when occurred, regardless of the timing of cash receipts or payments a. Cash Basis Accounting b. Accrual Basis Accounting c. Timing Basis Accounting d. Receipt Accounting
B
When Fuzzy's issues a $1,000 bond at face value with a stated annual interest rate of 5%, the journal entry would be: a. A debit to Bonds Payable for $1,000 b. A credit to Bonds Payable for $1,000 c. A credit to Premium on Bonds Payable for $50 d. A credit to Bonds Payable for $1,050
B
When is the most efficient time to make adjustment entries? a. On a daily basis b. At the end of each accounting period c. When you collect cash from a customer d. Whenever you have free time
B
Which activity is not part of the operating cycle? a. Buying goods from suppliers b. Paying dividends to stockholders c. Selling services to customers d. Collecting cash from customers
B
Which financial report is also known as the statement of financial position? a. Income Statement b. Balance Sheet c. Statement of Cash Flows d. Statement of Liabilities
B
Which of the five Principles of Control activities deals with not making one employee responsible for all part of a process? a. Establish Responsibility b. Segregation of Duties c. Restrict Access d. Independently Verify
B
Which of the following best describes a periodic inventory system? a. Provides the best inventory control b. Updates the inventory records only at the end of the accounting period c. Updates the inventory records every time inventory is bought d. Both (a) and (c)
B
Which of the following is false when a bond is issued at a premium? a. The bond will issue for an amount above its face value. b. Interest expense will exceed the cash interest payments. c. The market interest rate is lower than the stated interest rate. d. The issue price will be quoted at a number greater than 100.
B
Which of the following is not a common type of employee fraud? a. Corruption b. Incentive c. Financial statement fraud d. Asset misappropriation
B
Which of the following is not a primary goal of inventory managers? a. Maintaining a sufficient quantity of inventory b. Charging the highest price possible when selling inventory to customers c. Ensuring the quality of inventory d. Minimize the cost of acquiring & carrying inventory
B
Which of the following is not a step in the accounting cycle? a. Recording journal entries b. Issue stock to owners c. Report financial statements d. Summarize in T-accounts
B
Which of the following is not one of the four basic financial statements? a. The balance sheet b. The audit report c. The income statement d. The statement of cash flows
B
Which of the following is true about net profit margin? a. It shows the earnings per outstanding share of common stock b. It shows how much profit is earned from each dollar of revenue c. It must increase when revenues go up d. A & B
B
The Securities Exchange Commission (SEC) & Internal Revenue Service (IRS) are examples of what external group that analyzes financial statements? a. Investors b. Board of Directors c. Government d. Creditors
C
The amount by which a bond's issue price is less than its fair value is known as: a. Extra b. Sale c. Discount d. Premium
C
Under what depreciation method is an asset's book value used to calculate depreciation each year? a. Straight-line method b. Units-of-production method c. Declining balance method d. Weighted-average-cost method
C
What is one of the cost of goods sold equations? a. Beginning Inventory + Ending Inventory - Purchases = Cost of Goods Sold b. Ending Inventory + Purchases + Beginning Inventory = Cost of Goods Sold c. Beginning Inventory + Purchases - Ending Inventory = Cost of Goods Sold d. Beginning Inventory - Purchases - Ending Inventory = Cost of Goods Sold
C
According to GAAP and IFRS, which is the only acceptable method for externally reporting income? a. Accrual basis b. Cash basis c. Allocation basis d. Recognition basis
A
All of the following are considered assets except: a. Common Stock b. Cash c. Accounts Receivable d. Supplies
A
A list of all accounts with their balances to provide a check on the equality of the debits and credits is called: a. Trial Balance b. Balance Sheet c. Income Statement d. Statement of Cash Flows
A
A periodic inventory system updates the inventory records for purchases, sales, and returns a. Only at the end of the accounting period b. Every time inventory is bought, sold, or returned c. When a significant amount of inventory is purchased or returned d. Only when the inventory has been sold and not returned for 30 days
A
A set of laws established to strengthen corporate reporting in the United States. These came as a response to financial fraud. a. Sarbanes-Oxley Act (SOX) b. Glass Steagall Act c. Banking Act of 1933 d. Anti-Fraud Act of 2000
A
How do you calculate the weighted average cost per unit? a. Cost of goods available for sale/number of units available for sale b. Cost of goods sold/number of units available for sale c. Number of units available for sale/cost of goods sold d. Number of units available for sale/cost of goods available for sale
A
How would you record a service charge of $100 deducted by the bank? a. Debit Office Expenses for $100, credit cash for $100 b. Debit cash for $100, credit Office Expenses for $100 c. Debit cash for $100, credit Accounts Payable for $100 d. Debit Accounts Payable for $100, credit Cash for $100
A
If ABC Corp were to estimate $1,000 of bad debts for the period, which account would be credited? a. Allowance for Doubtful Accounts b. Bad Debt expense c. Doubtful Accounts expense d. Allowance for credit
A
If I receive $2,000 cash on September 1st for a service that I will perform on November 15th, what journal entry should I record on September 1st? a. Debit Cash 2,000, Credit Unearned Revenue 2,000 b. Debit Unearned Revenue 2,000, Credit Revenue 2,000 c. Debit Cash 2,000, Credit Prepaid 2,000 d. Debit Unearned Revenue 2,000, Credit Cash 2,000
A
If Tiger Inc. writes off a $750 receivable from one of its customers because the company could no longer pay its account, what would the journal entry be? a. Debit Allowance for doubtful accounts $750 and credit Accounts Receivable $750 b. Debit Bad debt expense $750 and credit Accounts Receivable $750 c. Debit Accounts Receivable $750 and credit Allowance for doubtful accounts $750 d. Debit Allowance for doubtful accounts $750 and credit Bad debt expense $750
A
If costs are rising, which inventory method will result in the highest COGS? a. LIFO b. FIFO c. Weighted-average d. They all result in the same COGS
A
Internal Controls have three objectives. Which is not one of the three objectives? a. Review b. Operations c. Reporting d. Compliance
A
Managerial accounting reports are created for: a. Internal users b. External users c. The Government c. Both internal and external users
A
On which financial statement will Accumulated Depreciation be found? a. Balance Sheet b. Statement of Cash Flows c. Income Statement d. Statement of Stockholders' Equity
A
Permanent accounts are: a. balance sheet accounts that carry their ending balances into the next accounting period ' b. balance sheet accounts that are transferred to retained earnings at the end of the period c. income statement accounts that track financial results for a limited period of time d. income statement accounts that have large balances
A
Revenues minus Expenses equal: a. Net Income b. Operating Profit c. Gross Profit d. Net Revenues
A
Straight-line depreciation is used when: a. An asset is expected to be used up in equal amounts each period of the asset's estimated useful life b. The amount of asset production varies significantly from period to period c. Depreciation of an asset needs to be accelerated d. One needs to report more depreciation expense in the early years of an asset's life when the asset is more efficient and less in later years as the asset becomes less efficient
A
The LIFO Conformity Rule a. Requires that if LIFO is used on the income tax return, it must also be used in financial statement reporting b. Requires all manufacturing companies to use LIFO c. Prohibits companies from changing inventory costing methods for any circumstances d. Allows companies to switch from inventory costing methods when their cash flows will be positively affected
A
The portion of long-term debt must be recorded in current liabilities when a. The portion of long-term debt is due to be paid within a year b. The lender does not require a covenant c. Long term debt should always be recorded in long term liabilities d. There is uncertainty about the terms of the debt
A
The principal that states that assets are initially reported on the balance sheet based on their original cost to the company is known as the: a. Cost Principal b. Origination Principal c. Purchase Price Principal (PPP) d. Assets Principal
A
Tiger Inc. owes $5000 of wages to employees for work done in May but has not paid them yet. What accounts would be debited and credited? a) Debit Salaries and Wages Expense for $5000 and credit Salaries and Wages Payable for $5000 b) Debit Cash for $5000 and credit Salaries and Wages Expense for $5000 c) Debit Salaries and Wages Payable for $5000 and credit Salaries and Wages Expense for $5000 d) Debit Salaries and Wages Expense for $5000 and credit Cash for $5000
A
What are accrued liabilities? a. Liabilities that have been incurred but not yet paid b. Liabilities that have been incurred and paid c. Liabilities that have been paid but not yet accrued d. Liabilities that cannot be paid
A
What are the two components of profit? a. Paid-in capital and earned capital b. Assets and liabilities c. Assets and stockholders' equity d. Revenues and expenses
A
What are the two primary methods for estimating bad debts? a. Percentage of credit sales; Aging of accounts receivable b. Percentage of net income; Percentage of accounts payable c. Number of historical loan defaults; Percentage of interest expense d. Aging of accounts payable; Percentage of cash sales
A
What is a liability representing a company's obligations to provide goods or services to customers in the future? a. Deferred Revenue b. Notes Payable c. Accounts Payable d. Prepaid Rent
A
What is petty cash? a. Cash paid to reimburse employees b. Cash that the employer deposited c. Cash restricted for daily operating activities d. None of the above
A
What is the basic accounting equation? a. Assets = Liabilities + Stockholder's Equity b. Assets = Liabilities - Stockholder's Equity c. Liabilities = Assets + Stockholder's Equity d. Assets + Stockholder's Equity = Liabilities
A
What is the formula for a Gain on the disposal of tangible assets? a. Gain= Cash Received - Book Value b. Gain= Book Value - Cash Received c. Gain= Accumulated depreciation - Cash Received d. Gain= Cash Received - Accumulated depreciation
A
When Tiger Co. purchases inventory from a supplier, what is the appropriate journal entry Tiger Co. would make to record $100 of transportation costs associated with the purchase? Assume the terms of the sale to Tiger Co. are FOB shipping point. a. Debit Inventory $100; Credit Cash $100 b. Debit Transportation Expense $100; Credit Cash $100 c. Debit Inventory $100; Credit Sales Revenue $100 d. Tiger Co. would not record a journal entry
A
When a product is sold for cash, which two accounts are used to record the transaction? a) Cash and Sales Revenue b) Cash and Accounts Receivable c) Accounts Receivable and Sales Revenue d) Cash and Prepaid Rent
A
When bond is issued at a discount, what accounts are debited and credited? a. Debit Cash; Debit Discounts on Bonds Payable; Credit Bonds Payable b. Debit Cash; Credit Discounts on Bonds Payable; Credit Bonds Payable c. Debit Bonds Payable; Credit Cash; Credit Discounts on Bonds Payable d. Debit Bonds Payable; Debit Cash; Credit Discount on Bonds Payable
A
When using the allowance method, as Bad Debt Expense is recorded, a. Total assets decrease and stockholders' equity decreases b. Total assets remain the same and stockholders' equity remains the same c. Total assets increase and stockholders' equity decreases d. Total liabilities increase and stockholders' equity decreases
A
Which approach records Bad Debt Expense only when a company writes off specific accounts? a. Direct write-off method b. Recovery method c. Percentage of credit sales method d. Aging of accounts receivable method
A
Which financial statement can also be referred to as "the statement of operations"? a. Income Statement b. Balance Sheet c. Statement of Cash flows d. Statement of Retained Earnings
A
Which inventory item is most likely to follow the specific identification method? a. A car sold by Honda b. A can of soda sold by Pepsi c. Tiger Ears sold by the Mizzou Store d. A Four-Function calculator sold by Walmart
A
Which inventory system lists an up-to-date balance at all times? a. Perpetual Inventory System b. Inventory Turnover System c. Periodic Inventory System d. Continuous Inventory System
A
Which measure represents Revenues minus Costs of Goods sold? a. Gross Profit b. Net Income c. Net Sales d. Income Before Taxes
A
Which of the following is an example of a journal entry made to close a temporary account? a. Credit Expense Account; Debit Retained Earnings b. Credit Accounts Receivable; Debit Cash c. Credit Revenue Account; Debit Retained Earnings d. Credit Sales Revenue; Debit Accounts Receivable
A
Which of the following is false regarding a perpetual inventory system? a. Physical counts are never needed because records are maintained on a transaction-by-transaction basis. b. The Inventory records are updated with each inventory purchase, sale, or return transaction. c. Cost of Goods sold is increased as sales are recorded. d. A perpetual inventory system can be used to detect shrinkage.
A
Which of the following is false regarding goodwill? a. Goodwill is amortized b. Goodwill occurs when one company buys another company c. Only purchased goodwill is an intangible asset d. Goodwill is impairment tested and may be written down
A
Which of the following is not one of a company's goals when performing a bank reconciliation? a. Determining net income b. Identifying deposits in transit c. Identifying outstanding checks d. Recording other transactions on the bank statement and correcting your errors
A
Which of the following is not one of the three types of activities identified on the statement of cash flows? a. Earning b. Investing c. Operating d. Financing
A
Which of the following regarding the Debt-to-Assets ratio is false: a. A lower ratio means greater financing risk b. It tells you the percentage of assets financed by creditors c. A higher ratio means greater financing risk d. The equation is Total Liabilities divided by Total Assets
A
Which of the following would be considered a long-term liability? a. Bond payable b. Accounts payable c. Salaries and wages payable d. Interest payable
A
A sale is recognized when the goods leave the seller's shipping department is known as: a. FOB Destination b. FOB Shipping Point c. FOB Point of Sale d. FOB Arrival
B
If the receivables turnover ratio decreased during the year, a. The days to collect also decreased b. Receivables collections slowed down c. Sales revenues increased at a faster rate than accounts receivable increased d. None of the above
B
In which of the following situations would Company A record an expense on their books? a. Prepaid $1,200 for 12 months of rent. No time has passed yet. b. Received a utility bill for energy usage during the current month. Payment is not due until the following month. c. Paid cash in December for an advertisement purchased on account in November. d. Paid $100,000 cash to purchase a building.
B
In which situation would a debit to an account be used? a. Increase in a liability b. Increase in an asset c. Decrease in an asset d. Increase in stockholder's equity
B
Income Statement Accounts (Revenue and Expenses) are closed to what permanent account on the balance sheet at the end of an accounting period? a. Cash b. Retained Earnings c. Common Stock Available d. Past Revenues
B
Sales discounts the terms 2/10, n/30 mean a. Two-tenths of a percent discount for payment received within 30 days b. 2 percent discount for payment received within 10 days or the full amount (less returns) is due within 30 days c. 10 percent discounts for payment received within 30 days of the date of the sale d. 2 percent discount for payment received within 30 days of the date of the sale
B
The equation to calculate depreciation using the straight-line method is: a. (Residual value - Asset cost) / Useful life b. (Asset cost - Residual value) x (1/Useful life) c. (Useful life - Residual value) / Asset cost d. (Asset cost - Useful life) / Residual value
B
The process of allocating the cost of buildings and equipment over their productive lives using a systematic and rational method of allocation is known as: a. Amortization b. Depreciation c. Asset Reduction d. Write-off
B
The receivable turnover ratio is a. Operating income/accounts payable b. Net sales revenue/average net receivables c. profit/average net receivables d. gross profit margin/average net receivables
B
The term to describe potential liabilities that have arisen as a result of past transactions or events; their outcome will not be known until a future event occurs or fails to occur. a. Current Liabilities b. Contingent Liabilities c. Possible Liabilities d. Accrued Liabilities
B
Theft & embezzlement fall under which category of fraud? a. Financial statement fraud b. Asset misappropriation c. Corruption d. Forgery
B
Three months of rent totaling $3000 were prepaid on January 1. What accounts would be debited and credit at the end of the month on January 31 for this adjustment? a) Debit Prepaid Rent for $3000 and credit Rent Expense for $3000 b) Debit Rent Expense for $1000 and credit Prepaid Rent for $1000 c) Debit Rent Expense for $3000 and credit Prepaid Rent for $3000 d) Debit Rent Expense for $1000 credit Cash for $1000
B
Tiger, Inc. sells a textbook at a price of $200. The textbook had previously been purchased and recorded in Tiger, Inc.'s inventory at a cost of $100. The journal entry is: a. Debit Inventory for 200, Credit Sales Revenue for 200 b. Debit COGS for 100, Credit Inventory for 100 c. Debit COGS for 200, Credit Revenue for 200 d. Debit Accounts Receivable for 100, Credit Inventory for 100
B
Trulaske corporation repaid a $20,000 loan from the bank. What account should be credited? a. Notes Payable b. Cash c. Accounts Payable d. Common Stock
B
Under FOB Shipping Point, the sale is recorded when: a. The goods reach their destination b. The goods leave the seller's shipping department c. The customer notifies the seller that they have received the goods d. None of the above
B
What are measurable amounts that the company owes to creditors? A) Assets B) Liabilities C) Stockholder's Equity D) Revenue
B
What are the four main groups of external users? a. Directors, Investors, Government, Management b. Creditors, Directors, Investors, Government c. Auditors, Creditors, Directors, Investors d. Creditors, Directors, Government, Supervisors
B
What assets should be amortized using the straight-line method? a. Land b. Intangible assets with limited lives c. Intangible assets with unlimited lives d. All of the above
B
What financial statement reports the revenues less the expenses of the accounting period? a. Balance Sheet b. Income Statement c. Statement of Retained Earnings d. Statement of Cash Flow
B
What inventory system updates the inventory records every time an item is bought, sold, or returned? a. Periodic b. Perpetual c. Real-time d. Control
B
What involves assigning responsibilities so that one employee can't make a mistake or commit a dishonest act without someone else discovering it? a. Restrict access b. Segregation of duties c. Establish responsibility d. Document procedures
B
What is cash received in advance of providing services? a) Notes Payable b) Unearned Revenue c) Service Revenue d) Interest Payable
B
What is not reported on the balance sheet? a. Assets b. Revenue c. Liabilities d. Stockholders' equity
B
What is the amount at which an asset or liability is reported after deducting any contra-accounts? a. Fair Value b. Carrying Value c. Depreciation Value d. Contra-account
B
What is the first step in the accounting cycle? a. Record b. Analyze c. Complete d. Summarize
B
What is the fixed asset turnover ratio? a. Average net fixed assets / net revenue b. Net revenue / average net fixed assets c. Total assets / average net fixed assets d. Average assets / Inventory
B
What is the formula to calculate interest on Notes Receivable? a. Interest= Principal / Interest Rate * Time b. Interest= Principal * Interest Rate * Time c. Interest= (Principal - Time) * Interest Rate d. Interest= Time * Interest Rate / Principal
B
A $12,000 piece of equipment has been used for 1 month resulting in depreciation of $1,000. What is the month-end adjusting journal entry to record this event? a. Debit Depreciation Expense $1,000; Credit Cash $1,000 b. Debit Accounts Payable $1,000; Credit Cash $1,000 c. Debit Depreciation Expense $1,000; Credit Accumulated Depreciation $1,000 d. Debit Depreciation Expense $1,000; Credit Equipment $1,000
C
A car dealership most likely uses which inventory costing method? a. FIFO b. LIFO c. Specific Identification d. Weighted Average Cost
C
A company uses $500 of supplies in August that were purchased in previous months. What accounts are affected? a. Debit to supplies, credit to supplies expense b. Debit to cash, credit to supplies c. Debit to supplies expense, credit to supplies d. Debit to supplies expense, credit to cash
C
A discount on a bond payable is recorded in what type of account? a. Asset b. Liability c. Contra-liability d. Contra-asset
C
ABC Corp owes $2,200 of wages to employees for work done in the last six days of September. What account should be Credited? a. Cash b. Salaries and Wages expense c. Salaries and Wages Payable d. Notes payable
C
Acquisition costs of tangible assets include: a. Purchase price b. Purchase price, all expenditures needed to prepare the asset for its intended use, and all maintenance costs in the future c. Purchase price, all expenditures needed to prepare the asset for its intended use d. All costs during the life of the asset
C
Adjusting journal entries will never involve which account? a. Service Revenue b. Wages Expense c. Cash d. Interest Payable
C
All of the following are categories of fraud except: a. Corruption b. Asset Misappropriation c. Equity deception d. Financial Statement Fraud
C
All of the following are types of bonds except: a. Treasuries b. Municipal c. Contingent d. Corporation
C
Assets that will be used up or turned into cash within 12 months or the next operating cycle, whichever is longer, are referred to as: a. Short-term Assets b. Noncurrent Assets c. Current Assets d. Long-term assets
C
Ben and Jerry's borrows $3,000 for a new ice cream machine. They promise to pay the 3,000 back in 3 years. Which answer correctly summarizes the changes in accounts? a. Cash decreases by $3,000 and Equipment increases by $3,000 b. Accounts payable increases by $3,000 and Equipment increases by $3,000 c. Notes payable increases by $3,000 and Equipment increases by $3,000 d. Accounts payable decreases by $3,000 and equipment increases by $3,000
C
Companies such as Ford Motors and Boeing are most likely to use which inventory costing method due to their uniqueness of their products? a. LIFO b. FIFO c. Specific Identification Method d. Weighted Average Inventory
C
Employee fraud is typically grouped into three categories, which of the following is not one of the typical categories? a. Corruption b. Asset Misappropriation c. Incidental Error d. Financial Statement Fraud
C
Ensuring that cash is not collected and recorded by the same person is an example of which principle of internal control? a. Restricting access b. Establishing responsibility c. Segregating duties d. Independently verifying
C
If Beginning Inventory is $2,000 and Purchases are $1,000, which of the following could be true? a. Ending Inventory is $2,000 and Cost of Goods Sold is $500 b. Ending Inventory is $500 and Cost of Goods Sold is $2,000 c. Ending Inventory is $2,000 and Cost of Goods Sold is $1,000 d. Ending Inventory is $1,000 and Cost of Goods Sold is $1,500
C
If Revenues are $100,000 and Net Income is $45,000, how much are expenses? a. ($55,000) b. $145,000 c. $55,000 d. $60,000
C
If Tiger Co. makes a $1,000 sale to a customer on account and satisfies all performance obligations, which of the following accounts will be credited? a. Accounts payable b. Accounts receivable c. Revenue d. Expenses
C
If Tiger Inc estimates $500 in bad debts at the end of the accounting period, what would the journal entry be? a. Debit Allowance for doubtful accounts $500 and credit Bad debt expense $500 b. Debit Sales Revenue $500 and credit Accounts Payable $500 c. Debit Bad Debt Expense $500 and credit Allowance for doubtful accounts $500 d. Debit Bad Debt Expense $500 and credit Sales Revenue $500
C
If Tiger Inc pays $5,000 cash for Supplies, what account will have a credit balance? A) Accounts Payable B) Supplies C) Cash D) Equipment
C
If the cash received from the issuance of the bond is more than the face value, then the bond is being issued at a: a. Discount b. Face Value c. Premium d. Zero-coupon
C
In September, Truman Company sold $5,000 worth of Tiger Ears online. What should be the journal entry? a. Debit Equipment (Tiger Ears) for 5,000; Credit Accounts Payable for 5,000 b. Debit Sales Revenue for 5,000; Credit Cash for 5,000 c. Debit Cash for 5,000; Credit Sales Revenue for 5,000 d. Credit Accounts Payable for 5,000; Debit Equipment (Tiger Ears) for 5,000
C
Liabilities are listed on the balance sheet in the order of: a. Smallest amount to greatest amount b. Greatest amount to smallest amount c. Maturity d. Liquidity
C
Liabilities for expenses that have been incurred but not paid at the end of the accounting period are called: a. Current Liabilities b. Long-term Liabilities c. Accrued Liabilities d. Total Liabilities
C
Making a deferral or accrual adjusting journal entry will always affect: a. Two balance sheet accounts b. Two income statement accounts c. One balance sheet account and one income statement account d. There is no rule. It depends on the adjusting entry.
C
Occurs when the cash to be generated by an asset is estimated to be less than the carrying value of that asset and requires that the carrying value of the asset to be written down .a. Depreciation b. Bad Debt Expense c. Impairment d. Amortization
C
Sales revenue minus cost of goods sold equals a. Net income b. Operating income c. Gross profit d. Profit
C
What is the act of removing an uncollectible account receivable and its corresponding allowance from the accounting records? a. Payable write-off b. Uncollectible account expense c. Receivable write-off d. You cannot write-off a receivable
C
What is the difference between selling price and cost of goods sold called? a. Return on equity b. Sales revenue c. Gross profit d. Sales discount
C
What organization form is a business organization owned by one person? a. Partnership b. Corporation c. Sole Proprietorship d. Limited Partnership
C
What principle requires you to record expenses in the same period as the revenues with which they are associated? a) Conservatism Principle b) Cost Principle c) Expense Recognition Principle ("Matching Principle") d) Revenue Recognition Principle
C
When costs are rising a. FIFO produces a smaller ending inventory b. LIFO produces a smaller cost of goods sold c. FIFO will result in a larger income tax expense d. FIFO will result in a greater cost of goods sold
C
When do managers choose to use the straight-line depreciation method? a. When the amount of asset production varies significantly from period to period. b. To report more depreciation expense in the early years of an asset's life when the asset is more efficient c. When the asset is expected to be used up in equal amounts each period of the asset's estimated useful life. d. Manager typically try to avoid the Straight-line depreciation method.
C
When expenses exceed revenues in a given period, a. Stockholders' equity will not be impacted b. Stockholders' equity will be increased c. Stockholders' equity will be decreased d. One cannot determine the impact on stockholders' equity without information about the specific revenues and expenses
C
When referring to journal entries, all of the following are true except: a. A date is included in every transaction b. Total debits equal total credits for each transaction c. Credits appear first (on top) and debits appear below them and are indented to the right d. A brief explanation of the transaction is shown below the debits and credits
C
When using _________, the sale is recorded when the goods leave the seller's shipping department. a. FOB destination b. FOB Transfer c. FOB shipping point d. None of the above
C
When you record revenues as generated and expenses as incurred, what is this called? a. Cash Basis Accounting b. General Basis Accounting c. Accrual Basis Accounting d. Incurred Basis Accounting
C
Which account increases Retained Earnings? a. Expenses b. Liabilities c. Revenues d. Assets
C
Which account is not closed at the end of the accounting period? a. Service revenue b. Utilities expense c. Accounts receivable d. Rent expense
C
Which account(s) gets credited when there is a loss on disposal of tangible assets? a. Accumulated Depreciation b. Loss on Disposal c. Equipment d. Both A & B
C
Which expense account are inventory write-downs debited to? a. Inventory b. Write-down expense c. Cost of goods sold d. Depreciation expense
C
Which of the following best describes Accrued Liabilities? a. Long-term liabilities. b. Current amounts owed to suppliers of inventory. c. Expenses incurred but not paid at the end of the accounting period. d. Revenues that have been collected but not earned.
C
Which of the following best describes gross profit percentage? a. Percentage of sales earned on each dollar of Cost of Goods Sold b. Percentage of sales earned on each dollar of profit c. Percentage of profit earned on each dollar of sales d. Percentage of profit earned on each dollar of Cost of Goods Sold
C
Which of the following does not impact the calculation of the cash interest payments to be made to bondholders? a. Face value of the bond. b. Stated interest rate. c. Market interest rate. d. The length of time between payments.
C
Which of the following is false about the inventory turnover ratio: a. It tells you the number of times inventory turns over during the period b. A higher ratio means faster turnover c. It tells you the average number of days from purchase to sale d. The formula is cost of goods sold divided by average inventory
C
Which of the following is not a type of inventory? a. Raw materials inventory b. Work in process inventory c. Cost of goods sold inventory d. Finished goods inventory
C
Which of the following is not a typical operating activity? a. Collecting cash from customers b. Selling goods or services c. Paying dividends d. Paying cash to employees
C
Which of the following trial balances is used as a source for preparing the income statement? a. Unadjusted Trial Balance b. Pre-adjusted Trial Balance c. Adjusted Trial Balance d. Post-closing Trial Balance
C
Which of the following would be considered a current asset? a. Equipment b. Accounts receivable not expected to be collected within one year c. Cash d. Software
C
Which phrase defines assets? a. Resources owed to stockholders b. Resources owed to creditors c. Resources owned by the company d. Costs of doing business operations
C
Why can internal controls never completely prevent and detect error and fraud? a. Controls cannot be implemented in accounts receivable b. Internal controls are not possible in most service industries c. Human error or fraud d. None of the above
C
If Tiger Corporation received $5,000 from credit sales made to Mizzou last month, what would be Tiger Corporation's appropriate journal entry? a. Debit Accounts Payable for 5,000; Credit Accounts Payable for 5,000 b. Debit Sales Revenue for 5,000; Credit Accounts Receivable for 5,000 c. Debit Accounts Receivable for 5,000; Credit Sales Revenue for 5,000 d. Debit Cash for 5,000; Credit Accounts Receivable for 5,000
D
1. What is an example of a contra-asset account a. Cash b. Accounts Receivable c. Equipment d. Accumulated Depreciation
D
2. What is the first step of the accounting cycle? a. Record journal entries & adjusting entries b. Prepare financial statements c. Summarize T-accounts d. Analyze transactions & monthly adjustments
D
A liability whose ultimate resolution depends on a future event is a: a. Premium b. Discount c. Potential liability d. Contingent liability
D
An increasing inventory turnover ratio a. Indicates a longer time span between the ordering and receiving of inventory b. Indicates a shorter time span between the ordering and receiving of inventory c. Indicates a longer time span between the purchase and sale of inventory d. Indicates a shorter time span between the purchase and sale of inventory
D
Banks help businesses control cash by: a. Restricting access b. Documenting procedures c. Independently verifying d. All of the above
D
Current assets are assets the business will use up or turn into cash within ___ months of the balance sheet date. a. 3 b. 6 c. 9 d. 12
D
For what reason(s) can a company's records be different from the records of its bank? a. The bank uses the companies deposited funds to make loans, which decreases the company's cash balance b. The bank has recorded items that the company does not know about until the bank statement is examined c. The company has recorded items the bank does not know about at the time it prepares the statement of account d. B and C e. All the above
D
If Amazon sold $1,000 worth of textbooks to a customer on account, what is the appropriate journal entry? a. Debit Cash 1,000, Credit Sales Revenue 1,000 b. Debit Inventory 1,000, Credit Sales Revenue 1,000 c. Debit Selling Expense 1,000, Credit Sales Revenue 1,000 d. Debit Accounts Receivable 1,000, Credit Sales Revenue 1,000
D
If Tiger Co. Sells a piece of equipment with a book value of $90 dollars for $120 in cash, which account is debited or credited to record to record the gain or loss on the sale? a. Debit loss $30 b. Credit loss $30 c. Debit gain $30 d. Credit gain $30
D
If Walmart receives $10,500 of bikes (inventory) purchased on account, what is the journal entry? a. Debit Inventory by $10,500; Credit Inventory Expense by $10,500 b. Debit Inventory Expense by $10,500; Credit Inventory by $10,500 c. Debit Cash by $10,500; Credit Inventory by $10,500 d. Debit Inventory by $10,500; Credit Accounts Payable by $10,500
D
In response to fraud, and to strengthen corporate reporting in the United States, the government created a set of laws called a. Generally Accepted Accounting Principles b. Goodman-Will Act c. Financial Reporting Standards Act d. Sarbanes-Oxley Act
D
On October 1st Sky Blue Corporation collected $3,000 rent for the period October 1st through December 31st. What adjustment will be made on October 31st? a. Debit Cash $1,000; Credit Rent Revenue $1,000 b. Debit Rent Revenue $1,000; Credit Unearned Revenue $1,000 c. Debit Rent Expense $1,000; Credit Unearned Revenue $1,000 d. Debit Unearned Revenue $1,000; Credit Rent Revenue $1,000
D
What are the key elements of a bond? a) Maturity Date b) Face Value c) Stated interest rate d) All of the above
D
What are the two general categories of adjustments? a. Revenue adjustments; Expense adjustments b. Asset adjustments; Liability adjustments c. Debit adjustments; Credit adjustments d. Deferral adjustments; Accrual adjustments
D
What does a high current ratio suggest? a. Better ability to pay b. Current assets are not sufficient to pay current liabilities c. Good liquidity d. A and C
D
What is a disadvantage of a corporation? a. The legal fees for creating a corporation can be expensive b. Income taxes must be paid by both the corporation and the owners c. The owners cannot lose more than their investment in the corporation d. Both A and B are correct
D
What is an example of control limitations on preventing or detecting fraud? a. Collusion b. Management override c. Segregation of duties d. Both a & b
D
What is not an event that occurs with a note payable? a. Recording of principal paid b. Recording of interest paid c. Accruing interest incurred but not received d. Decreasing the principal as the note is spent
D
What is the formula for net profit margin? a. Total assets / Stockholders' Equity b. Revenues / Total Assets c. Net Income / Total Assets d. Net Income / Revenues
D
What types of accounts increase with a credit? a. Stockholders' equity b. Liabilities c. Assets d. A and B are correct
D
When a company incurs a cost that will be paid later, what account is credited? a. Cash b. Salaries Expense c. Revenue d. Accounts Payable
D
When calculating net purchase amounts, what amounts are subtracted? a. Purchase Returns and Allowances b. Purchase Discounts c. Freight-In d. both a and b
D
Which of the following about Deferral Adjustments is false? a. An expense or revenue is deferred if we have postponed reporting it on the income Statement until a later period. b. Deferral adjustments are used to decrease balance sheet accounts and increase corresponding income statement accounts c. Each deferral adjustment involves one asset and one expense account, or one liability and one revenue account d. Deferred adjustments cannot involve revenues because revenues cannot be deferred.
D
Which of the following accounts will have a zero balance after performing the closing process? a) Revenues b) Cash c) Expense d) Both A and C
D
Which of the following are decreased by credit sales that are unlikely to be collected from customers? a. Net Income b. Accounts Receivable c. Cost of Goods Sold d. Both A & B
D
Which of the following are disadvantages of extending credit? a. Increased wage costs b. Bad debt costs c. Delayed receipt of cash d. All of the above
D
Which of the following is not a cause of impairment losses? a. Casualty b. Obsolescence c. Lack of Demand for the asset's services d. Gain in demand for the asset's services
D
Which of the following is not a section of the Cash Flows Statement? a. Operating b. Investing c. Financing d. Monitoring
D
Which of the following is not an inventory costing method? a. FIFO b. Specific Identification c. LIFO d. Historical Cost Principle
D
Which of the following is not listed on the multistep income statement? a. Net Income b. Cost of Goods Sold c. Income Tax Expense d. Unearned Revenue
D
Which of the following is not one of the five common principles of internal control? a. Restrict access b. Document procedures c. Segregate duties d. Monitor activities
D
Which of the following is not one of the variables needed to calculate interest? a. Principal amount b. Interest rate c. Time period d. Future value of note receivable
D
Which of the following is not part of the fraud triangle? a. Rationalization b. Incentive c. Opportunity d. Corruption
D
Which of the following is part of the fraud triangle? a. Opportunity b. Incentive c. Rationalization d. All the above
D
Which of the following is true as it relates the debit/credit framework? a. Debits increase stockholders' equity b. Credits increase assets c. Credits decrease liabilities d. Debits increase assets
D
Which of the following is true? a. A credit to bad debt expense decreases stockholders' equity b. A debit to bad debt expense increases stockholders' equity c. A credit to allowance for doubtful accounts increases a liability account d. A credit to allowance for doubtful accounts increases a contra-asset account
D
Which of the following should be capitalized when a piece of production equipment is acquired for a factory? a. Sales tax b. Transportation costs c. Installation costs d. All of the above
D
Which of these accounts need to be adjusted at the end of the period? a. Assets b. Revenue c. Equity d. A & B
D
If Tiger Inc purchases and receives $10,000 of equipment in exchange for its promise to pay the $10,000 at the end of the month, what accounts will be affected? A) Equipment B) Accounts Payable C) Cash D) Both A and C E) Both A and B
E
What costs will be included in the acquisition cost of land? a. Purchase price b. Legal Fees c. Survey Fees d. Title Search Fees e. All of the above
E
