Accounting Quiz

1. The sales revenue generated during the normal course of business would be an example of which type of business activity? (Points : 3)

       Operating
       Investing
       Financing
       None of these

Question 2.2. Which statement is normally prepared first? (Points : 3)

       Income statement
       Balance sheet
       Statement of cash flows
       Retained earnings statement

Question 3.3. A list of assets, liabilities, and owners’ equity as of a specific date is a(n) (Points : 3)

       income statement.
       balance sheet.
       statement of cash flows.
       retained earnings statement.

Question 4.4. Gilbert, Inc. had the following account balances at September 30, 2010. What is Gilbert’s net income for the month of September?

Accounts Payable	$5,000
Capital Stock	$10,000
Cash	$14,300
Equipment	$15,400
Fees Earned	$54,400
Miscellaneous Expense	$18,200
Rent Expense	$4,150
Retained Earnings	$6,550
Wages Expense	$13,900

(Points : 3)

       $32,450
       $27,450
       $6,550
       $18,150

Question 5.5. For EFG Co., the transaction "Payment of dividends" would (Points : 3)

       increase total assets.
       decrease total assets.
       have no effect on total assets.
       increase stockholders’ equity.

Question 6.6. The basic financial statements do NOT include the (Points : 3)

       income statement.
       tax return
       balance sheet.
       statement of cash flows.

Question 7.7. For EFG Co., the transaction "Payment of interest expense" would (Points : 3)

       increase total assets.
       decrease total assets.
       have no effect on total assets.
       increase stockholders’ equity.

Question 8.8. The payment of a liability (Points : 3)

       decreases assets and stockholders' equity.
       increases assets and decreases liabilities.
       decreases assets and increases liabilities.
       decreases assets and decreases liabilities.

Question 9.9. The __________ is prepared with various sections, subsections, and captions that aid in its interpretation and analysis. (Points : 3)

       accounting equation
       retained earnings statement
       intangible asset section
       classified balance sheet

Question 10.10. Updating accrual accounting records prior to preparing financial statements is called (Points : 3)

       the closing process.
       converting to cash basis accounting.
       the adjustment process.
       going concern adjustments.

Question 11.11. Unearned revenue is what type of an account? (Points : 3)

       Asset
       Revenue
       Stockholders’ equity
       Liability

Question 12.12. The unearned rent account has a balance of $40,000. If $3,000 of the $40,000 is unearned at the end of the accounting period, the amount of the adjusting entry is (Points : 3)

       $3,000.
       $40,000.
       $37,000.
       $43,000.

Question 13.13. Multiple-step income statements show: (Points : 3)

       gross profit but not income from operations.
       neither gross profit nor income from operations.
       both gross profit and income from operations.
       income from operations but not gross profit.

Question 14.14. Office salaries, depreciation of office equipment, and office supplies are examples of what type of expense? (Points : 3)

       Selling expense
       Miscellaneous expense
       Administrative expense
       Other expense

Question 15.15. Which expenses are subtracted from gross profit to arrive at income from operations? (Points : 3)

       All expenses
       Cost of merchandise sold
       Operating expenses
       Sales expenses

Question 16.16. Dig, Inc. had the following merchandise transactions in October:

Purchases	$50,000
Purchase returns	$ 4,000
Purchase discounts	$ 1,000
Transportation in	$ 2,000

What is the total cost of merchandise purchased for Dig, Inc.? (Points : 3)

       $50,000
       $47,000
       $52,000
       $48,000

Question 17.17. A firm’s internal control environment is influenced by (Points : 3)

       Management’s operating style.
       organizational structure.
       personnel policies.
       all of these.

Question 18.18. Which of the following would be added to the balance per books on a bank reconciliation? (Points : 3)

       Service charges
       Outstanding checks
       Deposits in transit
       Notes collected by the bank

Question 19.19. The Sarbanes-Oxley Act of 2002 requires companies and their independent accountants to (Points : 3)

       report on the financial activities of the company.
       report on any fraud and theft detected in the company.
       report on the state of the economy and likelihood of fraud.
       report on the effectiveness of the company’s internal controls.

Question 20.20. Which of the following is NOT defined as cash? (Points : 3)

       Coins
       Checks
       Money orders
       Commercial paper

Question 21.21. A written promise to pay a sum of money on demand or at a definite time is called a(n) (Points : 3)

       default.
       deferral.
       accrual.
       promissory note.

Question 22.22. A note receivable due in 18 months is listed on the balance sheet under the caption (Points : 3)

       long-term liabilities.
       fixed assets.
       current assets.
       investments.

Question 23.23. In reference to a promissory note, the person who makes the promise to pay is called the (Points : 3)

       maker.
       payee.
       seller.
       receiver.

Question 24.24. The due date of a 90-day note dated July 5 is (Points : 3)

       September 30.
       October 2.
       October 3.
       October 1.

Question 25.25. Fixed assets are ordinarily presented in the balance sheet (Points : 3)

       at current market values.
       at replacement costs.
       at cost less accumulated depreciation.
       in a separate section along with intangible assets.

Question 26.26. Salvage value has a similar meaning as (Points : 3)

       residual value.
       scrap value.
       book value.
       both residual value and scrap value.

Question 27.27. Expenditures for research and development are generally recorded as (Points : 3)

       current operating expenses.
       assets and amortized over their estimated useful life.
       assets and amortized over 40 years.
       current assets.

Question 28.28. A company acquired some land for $80,000 to construct a new office complex. Legal fees paid were $2,300, delinquent taxes assumed were $3,400, and $5,850 was paid to remove an old building from which salvaged materials sold for $1,950. What is the cost basis for the land? (Points : 3)

       $93,500
       $91,550
       $85,700
       $89,600

Question 29.29. The total earnings of an employee for a payroll period are referred to as (Points : 3)

       take-home pay.
       pay net of taxes.
       net pay.
       gross pay.

Question 30.30. What options does a business have when financing operations? (Points : 3)

       Debt financing
       Equity financing
       Asset financing
       Both debt financing and equity financing

Question 31.31. If a corporation issues only one class of stock, it is called (Points : 3)

       common stock.
       treasury stock.
       no-par stock.
       preferred stock.

Question 32.32. How is treasury stock shown on the balance sheet? (Points : 3)

       As an asset
       As a decrease in stockholders' equity
       As an increase in stockholders' equity
       Treasury stock is not shown on the balance sheet.

Question 33.33. The par value per share of common stock represents (Points : 3)

       the minimum selling price of the stock established by the articles of incorporation.
       the minimum amount the stockholder will receive when the corporation is liquidated.
       the monetary amount assigned to each share of stock in the articles of incorporation.
       the amount of dividends per share to be received each year.

Question 34.34. An employee receives an hourly rate of $27, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $350; cumulative earnings for year prior to current week, $99,700; social security tax rate, 6.0% on maximum of $106,800; and Medicare tax rate, 1.5% on all earnings. What is the net pay for the employee? (Points : 3)

       $798.85
       $873.77
       $953.16
       $1,223.77

Question 35.35. Where is interest expense listed on the income statement? (Points : 3)

       Other expense section
       Cost of merchandise sold
       Operating expenses
       Interest expense is on the balance sheet, not the income statement.

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