Accounting Test Final

Who is responsible for creating GAAP in the United States? A. SEC B. IASB C. FASB D. AICPA

FASB

The cost flow method that often parallels the actual physical flow of merchandise is the FIFO LIFO Average cost Gross Profit

FIFO

Which of the following is likely not a type of not-for-profit entity? A. public library B. community foundation C. university D. local movie theater

local movie theater

Debts owed by a business are referred to as: a. accounts receivable b. liabilities c. owner's equity d. expenses

liabilities

**Which of the following groups would have access to managerial accounting information? A. bankers B. investors C. competitors of the business D. managers

managers

Financial information that is capable of making a difference in a decision is a. faithfully representative b. relevant c. convergent d. generally accepted

relevant

Which of the following best describes a contingent liability that is unlikely to occur? remote probable and estimable reasonably possible probable and inestimable

remote

Assets are: a. rights of creditors over the business b. rights of owners over the business. c. resources owned by the business d. personal property of the owners

resources owned by the business

The estimated economic life of an asset is also known as ________. residual value book value salvage life useful life

useful life

What does 2/10, n/30 mean? payment due in 30 days 2% discount if paid within 10 days, net due in 30 days 10 % discount if paid within 2 days 2% extra due if not paid within 30 days

2% discount if paid within 10 days, net due in 30 days

The accounting equation is expressed as ________. A. Assets + Liabilities = Owner's Equity B. Assets - Noncurrent Assets = Liabilities C. Assets = Liabilities + Investments by Owners D. Assets = Liabilities + Owner's Equity

Assets = Liabilities + Owner's Equity

Accounting is sometimes called the "language of _____." A. Wall Street B. business C. Main Street D. financial statements

Business

FOB shipping point requires the shipping to be paid by the Shipping company Buyer Transporter Seller

Buyer

Which of these accounts is never closed? Drawing Capital Service Fee Revenue Income Summary

Capital

Which of the following statements about capitalizing costs is correct? Capitalizing costs refers to the process of converting assets to expenses. Only the purchase price of the asset is capitalized. Capitalizing a cost means to record it as an asset. Capitalizing costs results in an immediate decrease in net income.

Capitalizing a cost means to record it as an asset.

Which of the following is not a criterion to recognize revenue under GAAP? The earning process must be completed A product or service must be provided Cash must be collected GAAP requires that the accrual basis accounting principle be used in the revenue recognition process

Cash must be collected

Most states require 150 semester hours of college credit for which professional certification? A. Certified Management Accountant (CMA) B. Certified Internal Auditor (CIA) C. Certified Public Accountant (CPA) D. Certified Financial Planner (CFP)

Certified Public Accountant (CPA)

The total cost of merchandise sold during the period is know as Cost of goods manufactured Merchandise fee expense Freight Cost of goods sold

Cost of goods sold

Which of these accounts would be present in the closing entries? Drawing Accounts Receivable Unearned Service Revenue Sales Tax Payable

Drawing

Which of the following best represents the matching principle criteria? Expenses are reported in the period in which they were incurred. Expenses may be reported in a different period than the matching revenues. Revenue and expenses are matched based on when expenses are paid. Revenue is recognized when an order occurs and not when the actual sale is initiated.

Expenses are reported in the period in which they were incurred.

Which of the following accounts is considered a temporary or nominal account? Fees Earned Revenue Prepaid Advertising Unearned Service Revenue Prepaid Insurance

Fees Earned Revenue

"GAAP refers to: A. Generally Accepted Auditing Principles B. Guidelines for American Accounting Procedures C. General Association of Accounting Practitioners D. Generally Accepted Accounting Principles

Generally Accepted Accounting Principles

In a perpetual inventory system, the amount of the discount allowed for paying for merchandise purchased within the discount period is credited to Purchase Discount Inventory Sales Discount Purchase Allowance

Inventory

Which of the following is not a characteristic of a short-term note payable? Payment is due in less than a year. It bears interest. It can result from an accounts payable conversion. It is reported on the balance sheet under noncurrent liabilities.

It is reported on the balance sheet under noncurrent liabilities.

In a period of inflation, the cost flow method that results in the lowest income taxes is the: LIFO FIFO Average Cost Gross Profit

LIFO

Which of the following is NOT a common cost flow assumption used in costing inventory? First In - first out Middle In - First out Last In - First out Average cost

Middle In - First out

Which of the following accounts is considered a permanent or real account? Interest Revenue Prepaid Insurance Insurance Expense Supplies Expense

Prepaid Insurance

The revenue account used in merchandising business is Service Revenue Fees Earned Sales Subscription Revenue

Sales

FOB destination requires the shipping to be paid by the Shipping company Buyer Transporter Seller

Seller

A 90-day, 12% note for $10,000, dated May 1. Assuming a 360-day year, the maturity value of the note is: a. $11,200 b. $10,300 c. $9,700 d. $10,000

b. $10,300

A debenture is ________. the interest paid on a bond a type of bond that can be sold back to the issuing company whenever the bondholder wishes a bond with only the company's word that they will pay it back a bond with assets such as land to back their word that they will pay it back

a bond with only the company's word that they will pay it back

If Accounts Receivable for Crawford Company are equal to $172,000 and the Allowance for Doubtful Accounts are $4,500 at December 31, 2014, what is the amount of net receivables shown on Crawford's balance sheet at December 31, 2014? a. $167,500 b. $172,000 c. $176,500 d. cannot be determined from the information given

a. $167,500

Ngo Company purchased a truck for $54,000. Sales tax amounted to $5,400; shipping costs amounted to $1,200; and one-year registration of the truck was $100. What is the total amount of costs that should be capitalized? a. $60,600 b. $66,100 c. $54,000 d. $59,400

a. $60,600

The statement that provides the financial position of a company, listing assets, liabilities and owner's equity, as of a specific date is the: a. balance sheet b. statement of owner's equity c. statement of cash flows d. income statement

a. balance sheet

The statement that provides the financial position of a company, listing assets, liabilities and owner's equity, as of a specific date is the: a. balance sheet b. statement of owner's equity c. statement of cash flows d. income statement

a. balance sheet

Merchandise inventory is found on the balance sheet as a: a. current asset b. long-term asset c. current liability d. long-term liability

a. current asset

The process of initially recording a business transaction is called: a. journalizing b. balancing c. posting d. closing

a. journalizing

A(n) _________________ sells products purchased from other businesses to make their objective of maximizing their profits. a. merchandising business b. manufacturing business c. enterprise business d. service business

a. merchandising business

Adjusting entries are: a. needed to bring accounts up to date and match revenue and expense b. the same as correcting entries c. rarely needed in large companies d. optional under generally accepted accounting principles

a. needed to bring accounts up to date and match revenue and expense

The purpose of the adjusted trial balance is to verify: a. the equality of the total debit balances and the total credit balances after adjustments have been recorded b. that all of the accounts are correct c. the equality of the total debit balances and the total credit balances before adjustments have been recorded d. that the net income reported is accurate

a. the equality of the total debit balances and the total credit balances after adjustments have been recorded

Using accrual accounting, revenue is recorded and reported only: a. when the services are rendered without regard to when cash is received b. when cash is received without regard to when the services are rendered c. when cash is received at the time services are rendered d. if cash is received after the services are rendered

a. when the services are rendered without regard to when cash is received

If an adjustment includes an entry to a payable or receivable account, which type of adjustment is it? accrual deferral (prepaid) estimate cull

accrual

Depreciation of a plant asset is the process of ________. asset valuation for statement of financial position purposes allocation of the asset's cost to the periods of use fund accumulation for the replacement of the asset asset valuation based on current replacement cost data

allocation of the asset's cost to the periods of use

If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales discount return contra asset allowance

allowance

The balance sheet lists which of the following? A. assets, liabilities, and owners' equity B. revenues, expenses, gains, and losses C. assets, liabilities, and investments by owners D. revenues, expenses, gains, and distributions to owners

assets, liabilities, and owners' equity

A 90-day, 12% note for $10,000, dated May 1, is received from a customer on account. Assuming a 360-day year, the maturity value of the note is: a. $11,200 b. $10,300 c. $9,700 d. $10,000

b. $10,300

The chart of accounts is: a. a group of accounts for a business b. a list of the accounts in the ledger c. a list of all income and expense accounts d. a list of all the accounts with their balances

b. a list of the accounts in the ledger

Debts owed by a business are referred to as: a. accounts receivable b. liabilities c. owner's equity d. expenses

b. liabilities

The inventory system employing accounting records that continuously disclose the amount of inventory is called: a. physical b. perpetual c. periodic d. retail

b. perpetual

The trial balance will include: a. only the debits of each account b. the ending balance of each account c. only the credits of each account d. only balance sheet accounts

b. the ending balance of each account

An amortization table ________. breaks each payment into the amount that goes toward interest and the amount that goes toward the principal is a special table used in a break room to make people feel equitable separates time value of money tables into present value and future value separates time value of money tables into single amounts and streams of cash

breaks each payment into the amount that goes toward interest and the amount that goes toward the principal

The accounting concept which relates to separating the reporting of business economic transactions and personal economic transactions is: a. cost concept b. unit of measure concept c. objectivity concept d. business entity concept

business entity concept

The primary ledger containing all the balance sheet and income statement accounts is the: a. customer's ledger b. creditor's ledger c. general ledger d. subsidiary ledger

c. general ledger

The inventory system where companies do not keep detailed inventory records of goods on hand is called: a. physical b. perpetual c. periodic d. retail

c. periodic

The process of copying the journal to the ledger is called: a. journalizing b. balancing c. posting d. closing

c. posting

At the end of the accounting period, four closing entries are required. The first one is to close _______, the second one is to close _______, the third one is to close _______, and the last one is to close _______. a. drawing account, income summary, expense accounts, revenue accounts b. capital account, drawing account, income summary, assets c. revenue accounts, expense accounts, income summary, drawing account d. expense accounts, assets, income summary, capital account

c. revenue accounts, expense accounts, income summary, drawing account

Which of these accounts is included in the post-closing trial balance? Sales Revenue Salaries Expense Capital Drawing

capital

Which of the following is not an example of a retailer? A. electronics store B. grocery store C. car dealership D. computer manufacturer E. jewelry store

computer manufacturer

Determine the gross profit using the following information:Sales $702,000 Sales R&A 13,800 Sales discount 8,000 Cost of Goods Sold 504,000 Selling Expense 50,400 Administrative expense 25,000 a. 125,800 b. 690,200 c. 100,800 d. 176,200

d. 176,200

Regardless how careful a company is in granting credit, some credit sales will be uncollectible. The operating expense recorded as a result of uncollectible receivables is called: a. sales returns and allowances b. credit expense c. net realizable value d. bad debt expense

d. bad debt expense

The accounting concept which relates to separating the reporting of business economic transactions and personal economic transactions is: a. cost concept b. unit of measure concept c. objectivity concept d. business entity concept

d. business entity concept

The unearned subscriptions account reflected a balance of $32,500 prior to any adjustments. It is determined that $9,800 in subscriptions remains unearned at the end of the period. The adjusting journal entry should include a: a. debit Unearned Subscriptions for 9,800 b. credit to Unearned Subscriptions for 22,700. c. credit to Subscriptions Earned for 9,800. d. credit to Subscriptions Revenue for 22,700.

d. credit to Subscriptions Revenue for 22,700.

The two methods of accounting for uncollectible receivables are the allowance method and the: a. interest method b. equity method c. cost method d. direct write-off method

d. direct write-off method

The statement that is a summary of the revenue and expenses for a specific period of time is the: a. balance sheet b. statement of owner's equity c. statement of cash flows d. income statement

d. income statement

All of the following assets will be included as intangible assets on the balance sheet except: a. copyrights b. goodwill c. patents d. investments

d. investments

Gross profit is net sales: a. less inventory. b. plus cost of goods sold c. less operating expenses d. less cost of goods sold

d. less cost of goods sold

Mortgage Payable is found on the balance sheet as a: a. current asset b. long-term asset c. current liability d. long-term liability

d. long-term liability

The matching concept: a. requires that the dollar amount of debits equal the dollar amount of credits on a trial balance b. addresses the relationship between the journal and the balance sheet c. determines whether the normal balance of an account is a debit or credit d. states that the revenues and related expenses should be reported in the same period.

d. states that the revenues and related expenses should be reported in the same period.

Which type of adjustment occurs when cash is either collected or paid, but the related income or expense is notreportable in the current period? accrual deferral (prepaid) estimate cull

deferral (prepaid)

An accelerated depreciation method that takes more expense in the first few years of the asset's life is ________. units-of-production depreciation double-declining-balance depreciation accumulated depreciation straight-line depreciation

double-declining-balance depreciation

External users of financial accounting information include all of the followingexcept________. A. lenders such as bankers B. governmental agencies such as the IRS C. employees of a business D. potential investors

employees of a business

Which of the following skills/attributes is not a primary skill for accountants to possess? A. written communication B. verbal communication C. ability to work independently D. analytical thinking E. extensive computer programing background

extensive computer programing background

Which of the following is a twelve-month reporting cycle that can begin in any month, except January 1, and records financial data for that twelve-month consecutive period? fixed year interim period calendar year fiscal year

fiscal year

A governmental agency can best be described by which of the following statements? A. has a primary purpose of making a profit B. has a primary purpose of using taxpayer funds to provide services C. produces goods for sale to the public D. has regular shareholder meetings

has a primary purpose of using taxpayer funds to provide services

When a bond sells at a discount, the carrying value ________ after each amortization entry. increases decreases stays the same cannot be determined

increases

Which of the following would not be considered an intangible asset? goodwill patent copyright inventory

inventory

Stockholders can best be defined as which of the following? A. investors who lend money to a business for a short period of time B. investors who lend money to a business for a long period of time C. investors who purchase an ownership in the business D. analysts who rate the financial performance of the business

investors who purchase an ownership in the business

O'Shea Inc. issued bonds at a face value of $100,000, a rate of 6%, and a 5-year term for $98,000. From this information, we know that the market rate of interest was ________. more than 6% less than 6% equal to 6% cannot be determined from the information given.

more than 6%

The legal protection that provides a company exclusive rights to produce and sell a unique product is known as which of the following? trademark copyright patent goodwill

patent

Which of the following best describes a contingent liability that is likely to occur but cannot be reasonably estimated? reasonably possible probable and estimable probable and inestimable remote

probable and inestimable

What type of organization primarily offers tax compliance, auditing, and consulting services? A. corporations B. public accounting firms C. governmental entities D. universities

public accounting firms

Which of these statements is not one of the financial statements? A. income statement B. balance sheet C. statement of cash flows D. statement of owner investments

statement of owner investments

Financial accounting information ________. A. should be incomplete in order to confuse competitors B. should be prepared differently by each company C. provides investors guarantees about the future D. summarizes what has already occurred

summarizes what has already occurred

Property, Plant, and Equipment is considered why type of asset? current assets contra assets tangible assets intangible assets

tangible assets

Which of the following is not considered a current liability? Accounts Payable Unearned Revenue the component of a twenty-year note payable due in year 20 current portion of a noncurrent note payable

the component of a twenty-year note payable due in year 20

The principal of a bond is ________. the person who sold the bond for the company the person who bought the bond the interest rate printed on the front of the bond the face amount of the bond that will be paid back at maturity

the face amount of the bond that will be paid back at maturity