Accounting quiz questions
Lacy purchased equipment for $76,000 on January 1. Its residual value is $4,000 with a useful life of 8 years. The amount of depreciation expense in the first year under straight-line method is: A) $10,000 B) $19,000 C) $9,500 D) $9,000
D) $9,000
Robert purchased a truck for $30,000 with a life expectancy of 5 years. Using straight line depreciation, what would the book value of the truck be at the end of the second year? a.) $18,000 b.) $24,000 c.) $30,000 d.) $26,000
a.) $18,000
Accounts receivable had a normal starting balance of $4,500. There were debit posting of $1,800 and credit postings of $1,600 during the month. The ending balance of the account is: a.) $4,700 debit b.) $4,300 credit c.) $4,300 debit d.) $4,700 credit
a.) $4,700 credit
Accounts Payable had a normal starting balance of $500. There were debit postings of $200 and credit postings of $100 during the month. The ending balance is: a.) $400 credit b.) $400 debit c.) $800 credit d.) $800 debit
a.) $400 credit
Dexter Corporation has total paid-in capital of $130,000 and retained earnings of $50,000. It has 6,000 shares of $8 par value, 8% cumulative preferred stock, with a redemption value of $16 and two years of dividends in arrears, and 8,000 shares of $10 par value common stock outstanding. The book value of each share of common stock is: a.) $9.54 b.) $10.80 c.) $16.25 d.) $9.06
a.) $9.54
Internal control over a company's assets should include the following procedures: a.) all cash receipts will be deposited into the bank the same day they arrive b.) all cash payments will be made by check (except petty cash) c.) responsibilities and duties of employees will be divided a.) all these answers are correct
a.) all these answers are correct
In the statement of cash flows, which event would cause cash to be increased? a.) an increase in accounts payable b.) an increase in accounts receivable c.) an increase in inventory d.) an increase in prepaid insurance
a.) an increase in accounts payable
You meant to debit an asset account but posted it to an expense account by mistake. This would cause: a.) assets to be lower than they should be b.) assets to be higher than they should be c.) expenses to be lower than they should be d.) owners equity to be higher than they should be
a.) assets to be lower than they should be
Accumulated depreciation is found on which of the following financial statements? a.) balance sheet b.) statement of owners equity c.) income statement d.) all of these answers are correct
a.) balance sheet
The correct journal entry to record the payment of FUTA to the federal government would be: a.) debit FUTA payable, credit cash b.) debit to payroll tax payable c.) debit to payroll tax expense d.) credit to AP
a.) debit FUTA payable, credit cash
The journal entry to pay a cash dividend is to: a.) debit dividends payable, credit cash b.) debit retained earnings, credit dividends payable c.) debit dividends payable, credit retained earnings d.) debit retained earnings, credit cash
a.) debit dividends payable, credit cash
Greetings Online disposed of a van for $4,000 with an original cost of $22,000 with accumulated depreciation of $15,000. The journal entry would include a: a.) debit to loss on disposal of plant asset $3,000 b.) debit to van $22,000 c.) credit to accumulated depreciation $15,000 d.) all fo these answers are correct
a.) debit to loss on disposal of plant asset $3,000
Mark cashed $500 cash to partially reduce the amount owed for equipment that was previously bought on account. This transaction would: a.) decrease both assets and liabilities b.) increase both assets and liabilities c.) decrease assets and increase liabilities d.) increase assets and decrease liabilities
a.) decrease both assets and liabilities
Sam's catering made a payment via check for $64 but it is incorrectly recorded on the books as $46. The $18 dollar error should be shown on the bank reconciliation as: a.) deducted from the balance per books b.) added to the balance per bank statement c.) added to the balance per book d.) deducted form the balance per bank statement
a.) deducted from the balance per books
The account for payroll tax includes all the following except: a.) federal income tax b.) federal unemployment taxes c.) state unemployment taxes d.) FICA taxes paid by the employer for the latest payroll period
a.) federal income tax
The number of allowances claimed by an employee determines how much will be withheld from their paycheck for: a.) federal income tax b.) FICA-OASDI c.) FICA-Medicare d.) both a and b are correct
a.) federal income tax
Net income or net loss is calculated on the: a.) income statement b.) statement of owner's equity c.) balance sheet d.) none of these
a.) income statement
Which of the following items are both on the income statement and the statement of owner's equity? a.) net income b.) additional owner's investments c.) capital d.) owner's withdrawals
a.) net income
The activity that is the most important indicator of financial health is the net cash flow from: a.) operating activities b.) financing activities c.) buying and selling activities d.) investing activities
a.) operating activities
The May ban statement for Consulting Services shows a balance of $7,300, but the balance per books show a cash balance of $8,980. Other information includes: 1. a check for $200 to pay the electric bill was recorded on the books as $20 2. included on the bank statement was a note collected by the bank for $400 plus interest of $30 3. check outstanding totaled $260 4. bank service charges were $50 5. deposits in transit were $2,140 Which item should be subtracted from the bank balance during the bank reconciliation? a.) outstanding check b.) note collected by the bank c.) deposit in transit d.) bank service charge
a.) outstanding check
A transaction completed by Norton Company caused $4,000 increase in both the total assets and the total liabilities. This transaction could have been: a.) purchase of office equipment for $12,000, paying $8,000 cash, with the rest on account b.) purchase of office equipment, paying $4,000 cash, and $8000 on account c.) investment by owner of an additional $4,000 d.) a loan of $5,000, on a $9,000 purchase of equipment with $4,000 down payment
a.) purchase of office equipment for $12,000, paying $8,000 cash, with the rest on account
Which of the following accounts would not appear on the Balance Sheet? a.) rent expense b.) equipment c.) accumulated depreciation d.) cash
a.) rent expense
If management wishes to measure how effectively the assets were used in generating a profit, they could use the: a.) return on assets b.) return on sales c.) rate of return on common stockholders equity d.) times interest earned
a.) return on assets
What item is not listed on the balance sheet? a.) revenue b.) equipment c.) accounts payable d.) accounts receivable
a.) revenue
A gain on the sale of an asset occurs when: a.) the cash received is greater than the book value of the asset b.) the cash received is less than the book value of the asset c.) the book value is equal to the cost of the asset, the cash received is less than the cost of the asset d.) none of these are correct
a.) the cash received is greater than the book value of the asset
Noble Company's average collection period was 24.6 in Fiscal 2018 and 26.8 in Fiscal 2017. This change indicated: a.) the company's customers are paying faster b.) the company is selling its inventory faster c.) the company's customers are paying slower d.) the company is not selling inventory as fast
a.) the company's customers are paying faster
An outflow of cash from investing activities would be: a.) the purchase of plant property and equipment b.) the sale of investment in equity securities c.) interest received on loans d.) the issuance of stock
a.) the purchase of plant property and equipment
If the employee has $800 withheld from their check for federal income tax, what is the amount that the employer would need to pay for their portion of the federal income tax? a.) $800 b.) $0 c.) $200 d.) $400
b.) $0
Dave Brown's cumulative earnings are $127,200 and his gross pay for the week is $5,300. If the FICA rates are: Social Security 6.2% and Medicare 1.45%, what are his FICA-OASDI and FICA-Medicare taxes for the week? a.) $74.40, $17.40 b.) $0, $76.85 c.) $328.60, $76.85 d.) $74.40. $76.85
b.) $0, $76.85
Strawberry Supreme purchased a new baking equipment for $17,000 subject to a discount of 3%. The discount was taken. Additional costs include a sales tax of $700, installation of $500, and insurance for the first year of $1000. The total cost to be added to the equipment account is: a.) $17,000 b.) $17,690 c.) $18,200 d.) $$18,690
b.) $17,690
Calculate the adjusted book cash balance at the end of April bank statement ending cash balance: $3,000 general ledger cash balance ending: $4, 250 bank monthly service charge: $45 deposits in transit: $2,500 outstanding checks: $1,500 NSF check returned with bank statement: $205 a.) $4,205 b.) $4,000 c.) $4,250 d.) %5,500
b.) $4,000
What would the book value be at the end of year 5 for a piece of equipment using the straight line method when the cost is $16,000, residual value is $2,000, and the expected life is 10 years? a.) $5,000 b.) $9,000 c.) $3,000 d.) $4,400
b.) $9,000
Iconic Brands has a beginning AR balance of $225,000 and an ending balance of $175,000. Net credit sales are $400,000 for the month of June (30 days). The company's average collection period or days sales outstanding is: a.) 20 days b.) 15 days c.) 32.6 days d.) none of the above
b.) 15 days
The current ratio for a company with current assets of $120,000, current liabilities of $50,000, total assets of $150,000 and net sales of $80,000 would be: a.) 0.416 b.) 2.4 c.) 0.333 d.) 3.0
b.) 2.4
Net income was $45,000 in 2017 and $60,000 in 2018. The percentage increase or decrease in net income was: a.) (33.33%) b.) 33.33% c.) (25%) d.) 25%
b.) 33.33%
The employer's total FICA, SUTA, and FUTA tax is accounted for as: a.) a credit to accounts payable b.) a debit to payroll tax expense c.) a debit to payroll tax payable d.) a credit to payroll tax expense
b.) a debit to payroll tax expense
In the statement of cash flows, which of the following would be an addition to net income? a.) an increase in accounts receivable b.) a decrease in prepaid insurance c.) an increase in inventory d.) a decrease in accounts payable
b.) a decrease in prepaid insurance
An account that would be increased by a credit is: a.) utilities expense b.) accounts payable c.) cash d.) prepaid expense
b.) account payable
If a company's revenues are higher than its expenses it will cause: a.) no effect on owner's equity b.) an increase in owner's equity c.) a decrease in owner's equity d.) an increase in assets
b.) an increase in owner's equity
If prepaid rent expense for the period is not adjusted: a.) assets will be understated and expenses will be overstated b.) assets will be overstated and expenses will be understated c.) revenue will be understated and expenses will be understated d.) assets will be overstated and expenses will be understated
b.) assets will be overstated and expenses will be understated
If the prepaid insurance account is not adjusted: a.) assets will be overstated and expenses will be overstated b.) assets will be overstated and expenses will be understated c.) assets will be understated and expenses will be overstated d.) assets will be understated and expenses will be understated
b.) assets will be overstated and expenses will be understated
The maximum number of shares of capital stock that a corporation can sell is known as: a.) outstanding capital stock b.) authorized capital stock c.) issued capital stock d.) treasury capital stock
b.) authorized capital stock
Happy Valley Catering prepaid rent of $36,000 on January 1, 2019 for the following year. The Journal Entry for rent for each month during 2019 would be: a.) debit prepaid rent $3,000, credit rent expense $3,000 b.) credit prepaid rent $3,000, debit rent expense $3,000 c.) debit prepaid rent $36,000, credit rent expense $36,000 d.) credit prepaid rent $36,000, debit rent expense $36,000
b.) credit prepaid rent $3,000, debit rent expense $3,000
During the month of October, Ford advertised on the the internet. Ford received the bill for $600 in October, but waited until November to pay the advertising expense. The journal entry to record the payment in November is: a.) debit advertising expense, credit cash b.) debit accounts payable, credit cash c.) debit advertising expense, credit AP d.) the journal entry is made in November
b.) debit accounts payable, credit cash
Katelyn purchased $10,000 of new electronic equipment for her DJ Company on account. The effect on the basic accounting equation was to: a.) decrease cash $10,000 and increase AP $10,000 b.) increase equipment $10,000 and increase AP $10,000 c.) decrease cash $10,000 and increase equipment $10,000 d.) increase cash $10,000 and increase equipment $10,000
b.) increase equipment $10,000 and increase AP $10,000
A debit to a liability account was posted to an expense account. This would cause: a.) expenses to be understated b.) liabilities to be overstated c.) assets to be overstated d.) owner's equity to be overstated
b.) liabilities to be overstated
As withdrawals increase: a.) expense increases b.) owners equity decreases c.) cash increases d.) owners equity increases
b.) owners equity decreases
Which of the following ratios help evaluate how well a company is earning profit for the common stockholders? a.) return on total assets b.) return on stockholder's equity c.) times interest earned ratio d.) profit margin
b.) return on stockholder's equity
Collins restaurants reported $5,150,000 in sales for 2018 and $4,875,000 for 2017. Controllable Earnings for 2018 were $1,575,000 and $1,475,000 for 2017. Using the Industry rules, which of the following is correct? a.) both rules were met b.) rule #1 was met c.) rule #2 was met d.) neither rule was met
b.) rule #1 was met
The beginning balance in the Capital account would appear on which financial statement? a.) balance sheet b.) statement of owner's equity c.) income statement d.) none of these
b.) statement of owner's equity
If AR has been credited, it is more likely that: a.) the company made a purchase on account b.) the company collected a payment from a customer c.) the company made a payment on account d.) none of these is possible
b.) the company collected a payment from a customer
Redemption Value is defined as: a.) the total stockholder's equity minus total amount assigned to preferred stock b.) the price a corporation pays when it reserves the right to retire or redeem stock at a specific price c.) the price at which shares are bought and sold on the open market d.) the total of stockholders' equity divided by the number of shares issued
b.) the price a corporation pays when it reserves the right to retire or redeem stock at a specific price
Robert purchased a truck for $60,000 with a life expectancy of 5 years, using the straight line depreciation, the amount of depreciation adjustment for each month would be: a.) $800 b.) $12,000 c.) $1,000 d.) $4,000
c.) $1,000
At the end of 2018, Net Income on the income statement for the Badger Inn was $75,000 while net income for 2017 was $100,000. The year-over-year decrease for net income was: a.) $25,000 and 33.3% b.) $25,000 and 125% c.) $25,000 and 25% d.) $25,000 and 133.3%
c.) $25,000 and 25%
Bob Love earned 126,400 prior to the payroll period ending June 15. For the current payroll, Bob Love earned $5,000 and had the following deductions: FICA-OASDI, FICA-Medicare, federal income tax of $300, and state income tax of $40. What is his net pay? a.) $3,400 b.) $4,277.50 c.) $4,463.50 d.) $5,000
c.) $4,463.50
What would the book value be at the end of year 6 for a piece of equipment using the straight line method when cost is $11,000, residual value is $1,000 and the expected life is 10 years? a.) $4,000 b.) $3,000 c.) $5,000 d.) $4,400
c.) $5,000
Harvest Moon Company has a total assets of $20,000. If $2,000 cash is used to purchase a new computer, the total assets would be a.) 18,000 b.) 22,000 c.) 20,000 d.) 2,000
c.) 20,000
The bank statement included bank charges. On the bank reconciliation, this item is: a.) an addition to the balance per bank statement b.) a deduction from the balance per bank statement c.) a deduction from the balance per company books d.) an addition to the balance per company books
c.) a deduction from the balance per company books
The business provided services to a credit customer. To record this: a.) an expense is debited and Capital is credited b.) an asset is debited and a liability is credited c.) an asset is debited and revenue is credited d.) none of these are correct
c.) an asset is debited and revenue is credited
How does the purchase of supplies on account affect the accounting equation? a.) liabilities increase, owners equity decreases b.) assets increase, liabilities decrease c.) assets increase, liabilities increase d.) assets increase, owner's equity increases
c.) assets increase, liabilities increase
Expenditures for changing oil in a machine or car would be: a.) added to the cost of the asset b.) added as betterment c.) charged to an expense account d.) added as a capital expenditure
c.) charged to an expense account
Dividends in arrears occur when the company does NOT pay dividends to: a.) participating preferred stockholders b.) non-participating common stockholders c.) cumulative preferred stockholders d.) non-cumulative preferred stockholders
c.) cumulative preferred stockholders
During the month of January, Katelyn invested $9,000 in starting her legal practice. The proper journal entry would be: a.) debit cash $9,000, credit revenue $9,000 b.) debit Capital $9,000, credit cash $9,000 c.) debit cash $9,000, credit capital $9,000 d.) debit AP $9,000, credit cash $9,000
c.) debit cash $9,000, credit capital $9,000
You started the month with $100 in petty cash fund and at the end of the month, you have cash of $20 and valid receipts for food expenses of $40. The entry to replenish the fund would be: a.) debit food expense $40, credit over/short $40, credit cash $40 b.) debit food expense $40, credit cash $40 c.) debit food expense $40, debit over/short $40, credit cash $80 d.) debit cash $40, credit food expense $40
c.) debit food expense $40, debit over/short $40, credit cash $80
The entry to record the payment of office salaries would be: a.) debit cash, credit salaries expense b.) debit salaries expense, credit accounts payable c.) debit salaries expense, credit cash d.) debit cash, credit accounts receivable
c.) debit salaries expense, credit cash
A $100 petty cash fund has cash of $20 and valid receipts for $40. The entry to replenish the fund would include a: a.) credit to over/short for $40 b.) credit to cash for $40 c.) debit to over/short for $40 d.) debit to cash for $40
c.) debit to over/short for $40
Food Cost on the P&L, as a percentage of sales, was 27.9% for 2018 and 28.6% for 2017. Which of the following statements is correct? a.) you cannot determine with the information provided b.) food cost increased at a faster rate than sales c.) food cost increased at a slower rate than sales d.) food cost increased at the same rate as sales
c.) food cost increased at a slower rate than sales
If the average collection period is 35 days, this means: a.) from the date of discount to the date of receipt the payment is 35 days b.) from the date of purchase to the date of payment is 35 days c.) it takes on average 35 days to receive payment of credit sales d.) none of these answers are correct
c.) it takes on average 35 days to receive payment of credit sales
What type of an account is waged and salaries payable? a.) expense b.) revenue c.) liability d.) asset
c.) liability
The debit amount to the payroll tax expense represents: a.) the employee's portion of the payroll taxes b.) the employer's and employee's portion of the payroll taxes c.) the employer's portion of the payroll taxes d.) none of the above is correct
c.) the employer's portion of the payroll taxes
Vanessa's gymnastics' cash register tapes do not agree with cash receipts. The facts are: total cash register tapes $400; total coins and currency $404. The summary journal entry to record the day's transaction would include a: a) $400 debit to cash, $4 debit to cash short/over and $404 credit to sales b) $400 debit ti cash, and $400 credit to sales c) $404 debit to cash, $4 credit to cash short/over and $400 credit to sales d) $404 debit to cash, and $404 credit to sales
d) $404 debit to cash, and $404 credit to sales
Bob Stein's hourly wage is $45.00, and he worked 42 hours during the week. Assuming an overtime rate of time and a half over 40 hours, Bob's gross pay is: a.) $1,720 b.) $2,580 c.) $4,250 d.) $1,935
d.) $1,935
Equipment with a cost of $150,000 has an accumulated depreciation of $50,000. What is the book value of the equipment? a.) $50,000 b.) $150,000 c.) $200,000 d.) $100,000
d.) $100,000
Carmen's restaurant net income was $45,000 and depreciation expense was $5,000. Other accounts that changed: AR increased by $14,000, inventory decreased by $20,000, AP increased by $8,000, and salaries payable decreased by $3,000. The amount of Net Cash Flow from Operating activities is: a.) $33,000 b.) $47,000 c.) $45,000 d.) $61,000
d.) $61,000
Gino's corporation had 30,000 shares of $16 par value common stock outstanding with a market value of $30 per share. Gino announced a two-for-one stock split. After the split, the number of shares and the par value of the stock are: a.) 15,000 shares and $32 par value b.) 15,000 shares and $8 par value c.) 60,000 shares and $32 par value d.) 60,000 shares and $8 par value
d.) 60,000 shares and $8 par value
A check deposited for $646 is incorrectly accounted for as $464. The error should be shown on the bank reconciliation as: a.) added to the balance per bank statement b.) deducted from the balance per bank statement c.) deducted from the balance per books d.) added to the balance per books
d.) added to the balance per books
A corporation: a.) can continue indefinitely b.) has limited risk to stockholders c.) is owned by stockholders d.) all of the above
d.) all of the above
The employer records deductions from the employee's paycheck: a.) as credits to capital accounts b.) as debits to asset accounts until paid c.) as credits to liability accounts until paid d.) as debits to expense accounts
d.) as debits to expense accounts
Which of the following groups of accounts have a normal debit balance? a.) revenue, liabilities, and capital b.) liabilities, expenses, and assets c.) assets, capital, and withdrawals d.) assets, expenses, and withdrawals
d.) assets, expenses and withdrawals
The balance sheet contains: a.) expenses, assets, and cash b.) assets, liabilities, and revenues c.) liabilities, expenses, and capital d.) assets, liabilities, and owners equity
d.) assets, liabilities, and owners equity
If the balance of food inventory at the start of the month was $24,700, and at the end of the month you had $21,500 on hand, the adjusting entries for food inventory/food expense would be: a.) debit food inventory $21,500, credit food expense $21,500 b.) credit to food inventory $21,500, debit food expense $21,500 c.) debit food inventory for $3,200, credit food expense $3,200 d.) credit food inventory $3,200, debit food expense $3,200
d.) credit food inventory $3,200, debit food expense $3,200
On July 10, a customer of Delights Restaurant paid the restaurant $500 as a partial payment towards a catering event held in June. The journal entry on the 10th to record this transaction is: a.) debit AR, credit cash b.) debit cash, credit revenue c.) credit cash, debit revenue d.) debit cash, credit AR
d.) debit cash, credit AR
If the balance of food inventory at the start of the month was $6,000 and at the end of the month you had $1,500 on hand, the adjusting entry for food expense would be: a.) debit food expense $1,500, credit food inventory $1,500 b.) debit food expense $6,000, credit food inventory $6,000 c.) debit food inventory $4,500, credit food expense $4,500 d.) debit food expense $4,500, credit food inventory $4,500
d.) debit food expense $4,500, credit food inventory $4,500
The beginning balance for the month in the Equipment account was $3,000. The company purchased an additional $1000 worth of equipment during the month. The ending balance in the account is: a.) credit of $2,000 b.) credit of $3,000 c.) debit of $2,000 d.) debit of $4,000
d.) debit of $4,000
On November 1, Duane paid $24,000 in advance for a years rent. The November 30 adjusting entry for rent expense should include a: a.) debit rent expense $24,000 b.) credit prepaid rent expense $24,000 c.) credit cash $2,000 d.) debit rent expense $2,000
d.) debit rent expense $2,000
Owner's withdrawals: a.) increase expenses b.) increase assets c.) decrease withdrawals d.) decrease assets
d.) decrease assets
Outstanding checks: a.) have been returned to the business for nonpayment b.) have been deducted from the bank balance but not the checkbook records c.) have not been processed by the bank for payment but have not been subtracted from the checkbook d.) have not been processed by the bank for payment but have been subtracted in the checkbook
d.) have not been processed by the bank for payment but have been subtracted in the checkbook
Its the end of the accounting period and no electric bill had been received (but the expense has been incurred), you should record an entry that: a.) decreases the total assets and increases the total expense b.) decreases the total liabilities and increases the total expense c.) increases the total assets and increases the total expense d.) increases the total liabilities and increases the total expense
d.) increases the total liabilities and increases the total expense
Which of the following is a non-depreciable asset? a.) desk chairs b.) building c.) parking lot d.) land
d.) land
A credit to a liability account was posted to the capital account. This would cause: a.) assets to be overstated b.) net income to be overstated c.) owners equity to be understated d.) liabilities to be understated
d.) liabilities to be understated
If beginning capital was $150,000, ending capital is $180,000, and the owner's withdrawals were $15,000, the amount of net income or net loss was: a.) net loss of $25,000 b.) net income of $25,000 c.) net loss of $45,000 d.) net income of $45,000
d.) net income of $45,000
Rick Corporation's AR increased by $25,000 during the year. What is the adjustment to the cash flow statement? a.) add the increase in the investing activities section b.) add the increase to the net income in operating activities section c.) subtract the increase in the financing activities section d.) subtract the increase from the net income in operating activities section
d.) subtract the increase from the net income in operating activities section
The depreciation of equipment will require an adjustment that results in: a.) total assets and revenue decreasing b.) total assets increasing and total expenses increasing c.) total assets increasing and total expenses decreasing d.) total assets decreasing and total expenses increasing
d.) total assets decreasing and total expenses increasing
Both employees and employers pay which of the following taxes? a) FICA taxes b.) federal income tax c.) workers compensation d.) FUTA tax
a) FICA taxes
Net slaes for James, Inc were $4,000,000, net income was $810,000, and gross profit was $1,300,000. Profit margin would be: a.) 20.25% b.) 32.50% c.) 12.75% d. 42.25%
a.) 20.25%
If total assets are $50,000 and total liabilities are $22,000, Capital must equal: a.)$8,000 b.)$20,000 c.)$28,000 d.)$18,000
c.) $28,000
