Financial Quiz Conceptuals

Which of the following is not a requirement of the Sarbanes-Oxley Act?

A. Internal audit outsourcing can no longer be provided by a publicly-traded corporation's external auditors. B. The audit committee of a publicly-traded corporation must report to the company's board of directors. C. All publicly-traded corporations must have an internal audit function. D. All publicly-traded corporations must provide internal controls over financial reporting that guarantees financial accuracy. D

During 2016, the accounts receivable turnover rate for Toadstool Company increased from 10 to 14 times per year. Which of the following statements is the most likely explanation for the change?

A. The company's credit departments has followed up with customers whose account balances are past due in order to generate quicker collections B. The company has extended the amount of time that customers are required to pay their accounts before they are considered past due C. Company management decided to decrease sales to only the most credit worthy customers D. In an effort to boost sales, the company has extended credit to more risky customers A

Which of the following statements would be true in regards to expenses?

A. They increase through a credit B. They are costs that are incurred to help generate revenues C. They are the accumulation of cash outflows, recorded only at the end of the year D. They only occur when a transaction with cash occurs B

Which of the following is not a requirement of a company's top managers under the Sarbanes-Oxley Act?

A. They must certify that the company's financial statements are fairly presented. B. They must certify that they are primarily responsible for the company's internal controls over financial reporting. C. They must give an opinion about the effectiveness of the company's internal control over financial reporting. D. They may deny responsibility for certain financial reporting matters if they are not knowledgeable about the proper accounting procedures for those transactions. D

Which one of the following is an example of an accrued liability?

A. an insurance policy that expires in a future period had been acquired B. Supplies are purchased and used over several months C. Equipment that will benefit several months has been purchased. D. Rent that has been incurred, but have not been paid at the end of the period D

Internal control systems provide assurance in each of the following areas except

A. consolidation of responsibility within the accounting function B. effectiveness and efficiency of the company's operations C. reliability of financial reporting. D. compliance with applicable laws and regulations A

All of the following would be considered internal control weaknesses except

A. the person who opens the mail also makes the journal entry to record any customer payments received in the mail. B. it takes two days to get a check written because of the approvals required. C. the practice of shipping goods to customers right before year-end even though the customers had not ordered them. D.no physical inventory is ever taken to confirm the amount of inventory recorded in the accounting records. B

Which one of the following is a correct fundamental accounting equation?

Assets = Liabilities + Stockholders' Equity

The university satellite office operates five days per week with a daily payroll of $5,000. Employees are paid every Saturday for the work week just completed (Mon-Fri). The last day of the month is Thursday, October 31. What is the effect of the correct adjustment at Oct 31?

Increase Wages Payable and increases Wages Expense by $20,000

The current U.S. G.A.A.P. standards indicate that the costs of intangible assets with an indefinite life, such as Goodwill, should:

Not be amortized, but instead reviewed annually for any impairment

Dividends are best described as:

Payments to shareholders of a company

Lake Co sells custom built accounting software, and sells a software package to 2600 Labs Inc. 2600 Labs signs a contract to purchase the custom built software and later Lake Co builds and implements the accounting software into 2600's ERP system. Lake gives 2600 90 day terms for payment. Conceptually, when should Lake recognize revenue.

When the software is built and implemented for 2600

Having one employee prepare company checks and another employee sign those checks relates to which internal control activity?

a good example of proper segregation of duties

Oak Corp purchased land and a building for a combined cost of 500,000. Oak should

allocate the 500,000 acquisition cost to separate Land and Buildings accounts based on their respective fair market values

Which financial statement would you refer to in order to analyze your debt and ownership within the company?

balance sheet

Adjusting journal entries are made at the end of the period when

cash receipts and payments occur before or after the point in time when revenues and expenses should be recognized under the accrual basis of accounting

Based on its income for the month, a company estimates that it will owe 23,000 of federal income taxes for the month of May. What is the effect of the adjustment on the financial statements?

increase income taxes expense

A credit will

increase liabilities, revenues and decreases expenses

What is the effect on the accounting equation when a company recognizes rent as earned that had previously been received in advance from customers

net income increases

According to accounting standards, Depreciation is a process in which:

the cost of operating assets is expensed over their individual useful life

G.A.A.P require that all research and development costs incurred to develop a new product be:

treated as expenses when they are incurred

Revenues are recorded

when services are completed or products are delivered, despite the collection of cash