chapter 1 test

A law firm is an example of which of the following? A) service firm B) performance firm C) merchandising firm D)manufacturing firm

A: service firm

Which of the following reflects a weakness in the internal control for cash? A) The person receiving cash in the mail can not make entries into the accounting records. B) Person making out a check must get authorization before the check is sent. C) Cash register generates receipt that documents the cash sale which is given to the customer. D) Two employees have access to the same cash register in order to reduce chance of theft.

D: Two employees have access to the same cash register in order to reduce chance of theft

All of the following are external stakeholders except: A)suppliers B)customers C)creditors D)chief executive officer

D: chief executive officer

A business owned by one person whose personal possessions are at risk if the business fails is called a: A) corporation B) partnership C) merchandiser D) sole proprietorship

D: sole proprietorship

Identifying incompatible duties is divided into four sections, which of the following is not one of the four sections? A)Custody B)Scrutiny C)Authorization D)Recording

B: Scrutiny

Which of the following will require the cash on the books of the company to be adjusted? A) Bank errors B) Bank Service Charges C) Deposits in transit D) Outstanding checks

B: Bank Service Charges

A bank reconciliation will identify all of the following except? A) Double Payment of a bill B) Outstanding Check C) Deposits in Transit D)Unrecorded bank service charges

A: Double Payment of a bill

In its annual report the FCX Company reported the value of its ending inventory, rather than the number of units on hand. This best describes an application of the: A) monetary unit concept B) business entity concept C) periodicity concept D) going concern concept

A: monetary unit concept

At July 31, Sonata Company had a general ledger cash balance of $5,900. Deposits in transit amounted to $1,200 and there was a service charge of $20. Outstanding checks totaled $1,500. What is the balance shown on the bank statement at the end of July? A)unable to determine from the information given B)$6,180 C)$5,580 D)$5,880

B: $6,180

Carmen Corporation ordered materials from Bizet Manufacturing on November 1, 2003, Bizet shipped the materials by barge on November 5 and the barge company notified Carmen on November 22, that the goods had arrived. Carmen picked up the materials on November 23. The terms of the sale are FOB destination. On what date should Carmen consider this a purchase? A)November 5 B)November 23 C)November 1 D)November 22

B: November 23

Which of the following is not part of the expenditure cycle? A) Paying suppliers B) Using equipment to manufacture products C) Receiving goods and services D) Ordering goods and services

B: Using equipment to manufacture products

The owner of XYZ Corporation includes his personal liabilities with business liabilities. What accounting concept is being violated? A) Periodicity B) Going concern C) Business entity D) Monetary unit

C: Business entity

FOB shipping point indicates that goods in transit belong to the: A) Common carrier B) Either the buyer or seller depending upon the terms of the bill of lading C) Buyer D) Seller

C: Buyer

Shipping terms indicating that legal title passes to the buyer when goods arrive at the buyer's warehouse are: A)FOB purchase order B)FOB shipping invoice C)FOB destination D)FOB shipping point

C: FOB destination

Which of the following is not part of the revenue process? A) Provide customer support B) Receive and accept order for goods and services C) Receive goods and services D) Receive payments for goods and services rendered

C: Receive goods and services

Decatron, Inc. purchased $76,500 of parts from a vendor who offered credit terms of 3/15, n/45. If Decatron takes advantage of the discount, the amount paid to the vendor (rounded to the nearest dollar) will be: A) $76,500 B) $76,271 C) cannot be determined from the information given D) $74,205

D: $74,205

Which type of business may be owned by one individual? A) corporation B) sole proprietorship C)partnership D)both a sole proprietorship and a corporation

D: Both a sole proprietorship and a corporation