Accounting Quiz 1 Terms

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:

$74204

Norton Corporation has purchased raw materials from a vendor and was offered credit terms of 2/10, n/30. Which of the following reflects these terms?

2% discount if received in 10 days

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

Accounting system

Which of the following will required the cash on the books of the company to be adjusted?

Bank service fees

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

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

Buyer

Manufacturing products is associated with which of the following processes?

Conversion process

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

Corporation

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

Debt to equity ratio

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

Designing produce that meets the customers needs

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

Financing Activities

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 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 (Generally Accepted Accounting Principles)

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

The current ratio will be _______________ the quick ratio.

Greater than or equal to

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

Internal Control Perspective

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

Investing Activity

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

Goods shipped from a seller's warehouse on June 10, 2010, arrived at the buyer's warehouse on June 16, 2010. The invoice for the goods arrived at the buyer's accounting department on June 13, 2010 and was paid on June 20, 2010. If the goods were sold FOB destination, the buyer took legal title on:

June 16, 2010

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

Law firm

The cost and effectiveness of research and development is part of which of the following balanced scorecard perspectives?

Learning and Growth Perspective

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

When a manufacturing plant of Hays Corporation ships its finished goods the company's retail stores this is part of its

Operating Activities

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

Operating Activity

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

Operating expense

On a bank reconciliation, which of the following will reduce the bank's cash balance?

Outstanding checks

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

Which of the following is part of the revenue process?

Provide customer support

The purchase order originates with the:

Purchasing department

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 characteristics 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

T/F: Costs which increase in total amount in direct proportion to an increase in output are called variable costs.

True

T/F: If total current 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

T/F: The trend in ratios is usually more useful than looking at a single year's ratio.

True

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?

$6180

At May 31, Allegro Company had a general ledger cash balance of $7,400. At the end of May, the bank statement had a balance of $7,500. Deposits in transit amounted to $1,000 and there was a service charge of $10. Outstanding checks totaled $1,110. What is the correct amount of cash?

$7390

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

Expenditure process

T/F: A company's liquidity refers to its ability to remain profitable.

False

T/F: Inventory is an example of a quick asset.

False

T/F: One characteristic common to ALL types of costs is the tendency to rise and fall in direct proportion to changes in the volume of business output.

False

T/F: The current ratio may be less than, equal to, or greater than the quick ratio.

False

T/F: The lower the current ratio, the more liquid the company appears.

False

T/F: Vertical analysis compares the results of financial information with a business in the same industry for a number of consecutive periods of time.

False

T/F: With variable costs, the cost per unit varies with changes in volume.

False