Basic Accounting Multiple Choice 4 total

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QUESTION 1

1. Retrievable documentation for every transaction and the basis for preparing financial statements are the two basic core elements of a proper __________.

accounting system

database structure

accounting equation

contra account

1.25 points   

QUESTION 2

1. If you sell $3,000.00 worth of clothing at your boutique, in which account would you post this amount to reflect the transaction?

Revenues

Liabilities

Equity

Expenses

1.25 points   

QUESTION 3

1. The collection of all accounts in an accounting system is called the __________.

general ledger

debit

financial statement

accounting equation

1.25 points   

QUESTION 4

1. When asset, expense, and dividend accounts have more debits than credits, they are said to have a

normal debit balance.

general ledger balance.

normal credit balance.

contra account balance.

1.25 points   

QUESTION 5

1. If you sell $250.00 worth of smoothies at your juice bar, in which account would you post this amount to reflect the transaction?

Revenues

Liabilities

Equity

Expenses

1.25 points   

QUESTION 6

1. The is the overall process that leads to the capture and communication of essential accounting information.

accounting cycle

balance sheet

general ledger

general journal

1.25 points   

QUESTION 7

1. The numbering system called the is used by a business for account hierarchy.

chart of accounts

debit

credit

accounting equation

1.25 points   

QUESTION 8

1. In the accounting cycle, the fourth step is __________.

preparing the unadjusted trial balance

posting general journal entries to the general ledger

preparing an adjusted trial balance

preparing financial statements

1.25 points   

QUESTION 9

1. You have just paid off an open credit card balance with cash and you would record the entry as a .

debit to accounts payable, credit to cash

credit to accounts payable, debit to cash

debit to accounts payable, credit to sales

debit to accounts payable, and debit to cash

1.25 points   

QUESTION 10

1. Which type of transaction is reflected on the right side of a t-account?

Credit accounts

Debit accounts

Chart of accounts

General ledger accounts

1.25 points   

QUESTION 11

1. What is the third step of the accounting cycle?

Posting general journal entries to the general ledger

Preparing an unadjusted trial balance

Preparing an adjusted trial balance

Preparing financial statements

1.25 points   

QUESTION 12

1. The two basic core elements of a proper accounting system include retrievable documentation for every transaction and the basis for preparing what?

Financial statements

Database structure

Accounting equation

Contra account

1.25 points   

QUESTION 13

1. Useful financial data for purposes of investment and business management comes from business transactions that have been analyzed and interpreted by

accounting systems.

source documents.

a chart of accounts.

a general ledger.

1.25 points   

QUESTION 14

1. What is the process of sorting data from the journal into the relevant general ledger accounts?

Posting

Transaction analysis

Adjusting entries

Period closing

1.25 points   

QUESTION 15

1. If you wish to look at all transactions for a given period according to the posting date, which of the following items would be the best choice to consult?

General journal

General ledger

Account ledger

Journal account

1.25 points   

QUESTION 16

1. What is the name for the numbering system used by a business for account hierarchy?

Chart of accounts

Debit

Credit

Accounting equation

1.25 points   

QUESTION 17

1. An entry that debits cash to increase the account is reflected on of the t-account.

the left side

the right side

both sides

neither side

1.25 points   

QUESTION 18

1. What is the name for the computerized accounting system component that serves as the basis for storing, indexing, and organizing data?

Database structure

General journal

General ledger

Source document

1.25 points   

QUESTION 19

1. An accounting system is essential for recording the daily transactions of a business as part of the .

accounting cycle

balance sheet

general ledger

general journal

1.25 points   

QUESTION 20

1. Which of the following requires an understanding of how to increase or decrease an account using debits and credits?

Transaction analysis

Adjusting entry

Trial balance

Journal entry

Part 2

QUESTION 1

1. In the accounting cycle, the ________ is prepared after the adjusting entries are posted.

recorded transactions

general ledger

source documents

adjusted trial balance

2.5 points   

QUESTION 2

1. A _________ is an expense that is recorded before it is paid for.

prepaid expense

depreciation

accrued expense

revenue

2.5 points   

QUESTION 3

1. The two primary accounts in the journal that are impacted by accrued interest are .

notes payable and accounts receivable

revenue and expenses

revenue and accounts receivable

cash and notes payable

2.5 points   

QUESTION 4

1. As you prepare payroll for the next pay period, the primary accounts impacted are

cash and salaries expense.

salaries payable and accounts receivable.

cash and salaries payable.

salaries payable and salaries expense.

2.5 points   

QUESTION 5

1. _________ is the prevailing income measurement model that is primarily driven by a transactions and events and uses past data that are viewed as objective and verifiable.

The periodicity assumption

Revenue recognition

The historical cost principle

Depreciation

2.5 points   

QUESTION 6

1. Earned Interest that is yet to be paid to the holder of the note is __________.

periodicity assumption

accrued interest

prepaid expense

systematic allocation

2.5 points   

QUESTION 7

1. The expense recognition principle that explains the manner in which a large proportion of business costs are to be recorded is called the ___________.

systematic allocation.

immediate recognition.

matching principle.

periodicity assumption.

2.5 points   

QUESTION 8

1. Which of the following accounts is used when you record a deposit for work that will not begin until next month?

Cash

Revenue

Unearned revenue

Prepaid expense

2.5 points   

QUESTION 9

1. The is used for costs that are not seen as benefiting any future periods and are not linked to any revenue production.

periodicity assumption

immediate recognition

matching principle

systematic allocation

2.5 points   

QUESTION 10

1. _____________ is the process for recording the purchase of assets and then gradually transferring their cost to expense.

Matching principle

Immediate recognition

Depreciation

Prepaid expenses

part 3

QUESTION 1

1. When reviewing a worksheet, an accountant can quickly identify the balance of accounts, which are carried forward each period.

dividend

expense

permanent

temporary

5 points   

QUESTION 2

1. At the end of an accounting cycle, which of the following is the best indication that a company had a net income?

Moving a negative amount from temporary accounts to retained earnings

Resetting all revenue, expense, and dividend accounts to a zero balance

Experiencing a lower than anticipated rate of accumulated depreciation

Transferring a positive amount from temporary accounts to retained earnings

5 points   

QUESTION 3

1. At the end of an accounting cycle, the accountant for Carson Manufacturing transfers $10,000 from the firm's temporary accounts to its retained earnings account. The accountant's action most likely suggests that Carson Manufacturing

doubled its profitability.

adjusted its trial balance.

experienced a net income.

experienced a net loss.

5 points   

QUESTION 4

1. The primary purpose of the closing process is to

post journal entries to the appropriate ledger accounts.

transfer net income into temporary accounts.

prepare for the start of the next accounting period.

set permanent accounts back to a zero balance.

5 points   

QUESTION 5

1. A fiscal year reporting period is often based on what?

Government requirements

A firm's natural business cycle

The natural calendar

A firm's mission and vision

Part 4

QUESTION 1

1. Which account from the business is reconciled to the bank statement in the process of a bank reconciliation?

Retained earnings

cash

Assets

equity

5 points   

QUESTION 2

1. Meryl wants to tighten the process of making payments, buying assets, and paying expenses and liabilities for her company. What is an example of a cash control she could put in place for her company's disbursements?

Using point-of-sale terminals

Using formal petty cash procedures

Preparing a cash budget

5 points   

QUESTION 3

1. What is a primary cause for the possible difference in the bank's balance and the company's balance?

Cash Receivable Accounts

Deposits made at the bank

NSF checks

5 points   

QUESTION 4

1. Stephanie is reviewing the bank statement for her company and notes that a check was returned due to non-sufficient funds (NSF), requiring an additional journal entry. She will credit the Cash account and debit the .

Expense Account

Accounts payable

Accounts Receivable

5 points   

QUESTION 5

1. What is an item that seems like cash, but would be reported as supplies?

Stamps

IOUs

Undeposited checks

liabilites

Part 5

QUESTION 1

1. Which method for recording uncollectible accounts receivable ensures that a bad debt expense is recorded in the same period as the initial credit sale?

Direct write-off method

Allowance method

Net realizable value method

Contra asset method

5 points   

QUESTION 2

1. Rockwell Used Cars sells a truck to Marcus for $12,000 on October 1, 2015. Rockwell issues a 6-month note to Marcus at an interest rate of 5%. Which of the following belongs in the blank space of the following journal entry? 

10-01-15

________________________

12,000              

                                  

 

Sales

 

12,000

Interest Receivable 

Accounts Receivable 

Cash

Notes Receivable

5 points   

QUESTION 3

1. An accountant who uses an income statement approach to estimate the expected amount of bad debts is using the method:

percentage of sales

percentage of accounts receivable

aging of accounts receivable

direct write-off

5 points   

QUESTION 4

1. Which of the following represents amounts that customers owe to a business for purchasing goods or services from the business on credit?

Accounts payable

Interest charges

Accounts receivable

Operating expenses

5 points   

QUESTION 5

1. A customer for Dailey Enterprises had a $1,000 balance in his account that was deemed uncollectible and written off using an allowance method. However, the customer has now contacted Dailey Enterprises and stated he will pay the $1,000 balance in the next 10 days. Which of the following phrases belongs in the journal entry?

3-1-X5

Accounts receivable

1,000

                     

 

 _______________

 

1,000 

Net Realizable Value

Cash

Accounts payable

Allowance for Uncollectible Accounts

Part 6

QUESTION 1

1. The future value of $1,000, assuming an interest rate of 5%, compounded yearly, for three years is $.

(Your answer should be to two decimal places.)

5 points   

QUESTION 2

1. The present value of $2,000 invested at 6% interest, compounded yearly, for three years is ________.

$1,689.24

$1,679.24

$1,699.24

$1,669.24

5 points   

QUESTION 3

1. Arnold wishes to open a small business and has the opportunity to borrow $30,000 from his brother, Fred, at an interest rate of 2%.Though the money is available to him now, Arnold is not logistically ready to open the business for another year. What would be the advantage for Arnold to take the money now?

There is no advantage.

He will pay less interest.

He could earn interest on the money in the meantime.

5 points   

QUESTION 4

1. Chad has borrowed $80,000 from the bank to open a second espresso cart. The interest rate is 7% and the loan term is one year. Once the repayment is completed, Chad will have repaid __________ to the bank.

$136,000

$85,600

$74,400

$87,000

5 points   

QUESTION 5

1. The present value of an annuity that you make payments of $1,000 yearly for three years, has an interest rate of 5%, compounded yearly, is __________.

$2,523.25

$2,823.25

$2,923.25

$2,723.25