Accounting Final Exam MC

Beginning inventory is $40,000. Purchases of inventory during the year are $200,000. Ending inventory is $100,000. What is cost of goods sold? Multiple Choice $240,000 $260,000 $140,000 $340,000

$140,000

Which of the following does not represent an asset of a company? Multiple Choice Equipment owned and used for operations Amounts owed to suppliers Supplies held by the company Land owned by the company

Amounts owed to suppliers

Generally Accepted Accounting Principles (GAAP) are best defined as: Multiple Choice Government-mandated rules that companies must follow. The group of individuals that create and enforce all accounting rules. Standards for presenting financial accounting information. Rules that best estimate profitability for a company.

Standards for presenting financial accounting information.

Owners' claims to the company's resources are referred to as: Multiple Choice Liabilities. Assets. Stockholders' equity. Revenues.

Stockholders equity

Which of the following accounts represents a resource of the company? Multiple Choice Service revenue Salaries expense Supplies Common stock

Supplies

When a company reports a gain on the sale of a depreciable asset, which of the following is always true? Multiple Choice The company sold the asset for more than its fair value. The company sold the asset for more than it was worth. The company sold the asset before its service life was over. The company sold the asset for more than its book value.

The company sold the asset for more than its book value.

Nina Corporation had the following net income (loss) for the first three years of operations, respectively: $6,800, ($2,000), and $3,300. If the Retained Earnings balance at the end of year three is $1,500, what was the total amount of dividends paid over these three years? Multiple Choice $500 $6,600 $0 $8,100

6,600

Use the following appropriate amounts to calculate net income: Revenues, $11,400; Liabilities, $4,200; Expenses, $3,500; Assets, $17,700; Dividends, $1,600. Multiple Choice $13,500 $5,950 $7,900 $6,300

7,900

Which of the following is a contra asset account? Multiple Choice Cost of Goods Sold Deferred Revenue Goodwill Accumulated Depreciation

Accumulated Depreciation

Liabilities are best defined as: Multiple Choice Payments to stockholders. Amounts the company expects to collect in the future from customers. Amounts owed to creditors. The amounts that owners have invested in the business.

Amounts the company expects to collect in the future from customers. Amounts owed to creditors.Correct

Which of the following best describes revenue? Multiple ChoiceResources of a company An amount recognized when the company sells products or provides services to a customer Cash received from a customer Dividends paid to stockholders

An amount recognized when the company sells products or provides services to a customer

The cost of unsold inventory at the end of the year is classified as a(n) ______ in the ______. Multiple Choice Expense; Income statement Liability; Balance sheet Revenue; Income statement Asset; Balance Sheet

Asset; Balance Sheet

The accounts that represent the resources of the company are called: Expenses. Assets. Liabilities. Revenues.

Assets

Cost of goods sold equals: Multiple Choice Beginning inventory − accounts payable − net purchases. Beginning inventory + net purchases − ending inventory. Net purchases + ending inventory − beginning inventory. Beginning inventory − net purchases + ending inventory.

Beginning inventory + net purchases − ending inventory.

Retained earnings at the end of the year is calculated using: Multiple Choice Net income and dividends. Common stock and dividends. Beginning retained earnings, net income, and dividends. Stockholders' equity, net income, and dividends.

Beginning retained earnings, net income, and dividends.

The primary purpose(s) of financial accounting is (are) to: Measure and record business transactions. Prepare federal and state tax returns. Communicate financial results to investors and creditors. Both measure and communicate financial information to external parties. Correct

Both measure and communicate financial information to external parties

The form of business organization that is legally separate from its owners is a: Sole proprietorship. Corporation. Partnership. Separation entity.

Corporation

The cost of the goods that a company sold during a period is shown in its financial statements as ___________ and the cost of the goods that a company still has on hand at the end of the year is shown in the financial statements as ____________. Multiple Choice Sales revenue; cost of goods sold Inventory; cost of goods sold Goods on hand; inventory expense Cost of goods sold; inventory

Cost of goods sold; inventory

The account type that represents payments to stockholders is called: Multiple Choice Stockholders' equity. Liabilities. Dividends. Assets.

Dividends

Multiple Choice The company's financial accountant should not share information with the company's tax accountant. Employee fraud is less likely to occur when access to assets and access to accounting records are separated. The external auditors of the company should have no contact with managers while the audit is taking place. Duties of middle-level managers should be clearly separated from those of top executives.

Employee fraud is less likely to occur when access to assets and access to accounting records are separated.

The costs of providing goods and services to customers are referred to as: Multiple Choice Assets. Revenues. Liabilities. Expenses.

Expenses

Which of the following statements accurately describes depreciation? 1.Depreciation is used to allocate the cost of the asset over periods benefited. 2. Depreciation is used to track the fair value of the asset. 3. The book value of an asset is its original cost less accumulated depreciation. Multiple Choice I and III I and II II and III All of these statements are correct.

I and III

Which of the following best describes the goal of internal controls? Multiple Choice Ensuring the compliance with tax regulations Ensuring the business is profitable Enhancing the health of employees Improving the accuracy and the reliability of financial information

Improving the accuracy and the reliability of financial information

Separation of duties refers to: Multiple Choice Making each manager personally responsible for his/her department. Preventing top management and lower-level employees from interacting. Individuals who have physical responsibility for assets should not also have access to accounting records. Keeping functions across different departments separate.

Individuals who have physical responsibility for assets should not also have access to accounting records.

Which one of the following statements regarding the book value of an asset is correct? Multiple Choice It is the original cost of the asset minus the depreciation expense for that asset during the year. It is the fair value of the asset if the asset is sold. It is the original cost at which the asset was purchased. It reflects the original cost of the asset less accumulated depreciation.

It reflects the original cost of the asset less accumulated depreciation.

Amounts owed to suppliers for supplies purchased on account are an example of a(n): Multiple Choice Liability. Expense. Asset. Revenue.

Liability

The accounting equation is defined as:

Net Income = Revenues − Expenses. Assets = Liabilities + Stockholders' Equity. Correct Assets = Liabilities − Stockholders' Equity. Liabilities + Revenues = Assets.

Financial accounting: Is primarily used to compute a company's tax obligation. Provides information primarily for the use of managers of the company. Provides information primarily for external decision makers. Provides information primarily for a company's employees.

Provides information primarily for external decision makers.

Which of the following is an example of detective controls? Multiple Choice Separation of duties Proper authorization Physical controls Reconciliations

Reconciliations

When a company reports a loss on the sale of a depreciable asset, which of the following is always true? Multiple ChoiceThe company sold the asset before its service life was over. The company sold the asset for less than fair value. The company sold the asset for less than book value. The company sold the asset for less than accumulated depreciation.

The company sold the asset for less than book value.

The balance of the Cost of Goods Sold account at the end of the year represents: Multiple Choice Total purchases of inventory for the year. The total sales revenue to customers. The cost of inventory not sold in the current year. The cost of inventory sold in the current year.

The cost of inventory sold in the current year.

Which statement below best describes the accounting equation? The total resources of the company equals creditors' and owners' claims to those resources. Revenue and expense transactions tend to equal out over time. The change in retained earnings equals net income less dividends. Financing activities equal investing and operating activities.

The total resources of the company equals creditors' and owners' claims to those resources. Correct