Accounting Quiz 1

FOB shipping point indicates that goods in transit belong to the:

Buyer

The purchase order originates with the:

Purchase department

Costs which increase in total amount in direct proportion to an increase in output are called variable costs. True or false?

True

The trend in ratios is usually more useful than looking at a single year's ratio. True or false?

True

FOB Destination

Seller

Identify the effects of an increase in the volume of activity on the following costs.

a. Total variable costs: Increase b. Variable cost per unit: Remains constant c. Total fixed cost: Remains constant d. Fixed cost per unit: Decreases e. Total semivariable costs: Increases f. Semivariable cost per unit: Decreases

If the exchange rate for a foreign currency (stated in dollars) has risen, a dollar will purchase:

A smaller amount of that foreign currency

A system used to identify, analyze, measure, record, summarize, and communicate relevant economic information to interested parties us referred to as a(n):

Accounting System

Manufacturing products is associated with which of the following processes?

Conversion process

A business entity which is legally separate and distinct form its owners is called a:

Corporation

The price of one currency stated in terms of another currency is the:

Exchange rate

Selecting suppliers for a company's goods and services is part of the:

Expenditure process

A company's liquidity refers to its ability to remain profitable. True or false?

False

Inventory is an example of a quick asset. True or false?

False

One charcteristic common to all types of costs is the tendency to rise and fall in direct proportion to changes in the volume of business output. True or False?

False

The current ratio may be less than, equal to, or greater than the quick ratio. True or false?

False

A fitness center repays $10,000 it borrowed from the bank to purchase an exercise machine. This is an example of a(n):

Financing activity

Every three months, Ashmont Antiques produces a report showing profits earned during the most recently ended quarter. This best describes an application of the:

Periodicity concept

The accounting concept requiring that the profits of a business be determined at regular intervals throughout the life of the business is the:

Periodicity concept

A burger shop requires employees to ring up sales and place all cash receipts in the cash register. This is an application of which of the following internal controls:

Physically controlling assets and documents

A law firm is an example of which of the following:

Service firm

If total currents assets are $140,000 at the end of Year 1, increase by $50,000 by the end of Year 2, and increase by $50,000 in Year 3, the percentage increase over the preceding year is less in Year 3 than in Year 2. True or false?

True

Which of the following is part of the revenue process?

a. Provide customer service b. pay suppliers for inventory c. convert raw material into inventory for sale d. order inventory for resale Answer: A

The current ratio will be ________ the quick ratio

greater than or equal to

The lower the current ration, the more liquid the company appears. True or false?

False

Vertical analysis compares the results financial information with a business in the same industry for a number of consecutive periods of time. True or False?

False

With variable costs, the cost per unit varies with changes in volume. True or false?

False

Activities involving obtaining necessary funds to purchase long-term assets, repay existing obligations, and provide a return for owners are referred to as:

Financing activities

The accounting concept which assumes that, absent any information to the contrary, the business will continue into the foreseeable future is the:

Going concern concept

A delivery service purchase a new truck for $130,000. This is an example of a(n):

Investing activity

Wal-Mart is an example of which of the following:

Merchandising firm

Which of the following would not be collected from the customer when an order is received?

Name of common carrier that will deliver the goods

Which of the following is not part of an internal control system?

a. Providing independent checks b. separating incompatible duties c. physically controlling assets d. designing produce that meet the customers needs Answer: D

The balanced scorecard approach has four perspectives, which of the following is not one of those perspectives?

Internal Control Perspective

The profit making activities of an enterprise are referred to as:

Operating activities

A health-food retailer buys food for resale. This an example of a(n):

Operating activity

The owner of a dry cleaning business maintains separate checkbooks for his business and his personal affairs. This best describes an application of the:

Business entity concept

The statements of financial accounting standards, and other authoritative pronouncements that define what constitutes acceptable accounting practice for financial reporting are collectively referred to as:

GAAP

Activities involving the purchase and sale of long-term assets as well as other major items used in a business's operation are referred to as:

Investing activities

The bookkeeper who records cash receipts also deposits daily cash receipts at the bank on his way home from work. This is a violation of which of the following of good internal control?

Separating incompatible duties

A business owned by one person whose personal possessions are at risk if the business fails is called a:

Sole proprietorship

All of the following ratios are considered measures of liquidity except:

a. Quick Ratio b. Debt to Equity ratio c. Current ratio d. Accounts Receivables turnover Answer: B