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Accounting

79 Questions
Accounting Quizzes & Trivia

Acccounting 1st semester

Questions and Answers
  • 1. 
    Financial transactions are summarized in:
    • A. 

      Financial statement footnotes.

    • B. 

      The independent auditor's opinion letter.

    • C. 

      The entity's accounts.

    • D. 

      None of the above.

  • 2. 
    Which classification of accounting is most concerned with the use of economic and financial information to plan and control many of the activities of the entity?
    • A. 

      Financial accounting.

    • B. 

      Auditing-Public accounting.

    • C. 

      Managerial accounting.

    • D. 

      Income tax accounting.

  • 3. 
    The accounting equation is Assets = Liabilities - Owners Equity.
    • A. 

      True

    • B. 

      False

  • 4. 
    The distinction between a current asset and other assets:
    • A. 

      Is based on how long the asset has been owned.

    • B. 

      Is based on amounts that will be paid to other entities within a year.

    • C. 

      Is based on the ability to determine the current fair market value of the asset.

    • D. 

      Is based on when the asset is expected to be converted to cash, or used to benefit the entity.

  • 5. 
    The time frame associated with a balance sheet is:
    • A. 

      A point in time in the past.

    • B. 

      A one-year past period of time.

    • C. 

      A single date in the future.

    • D. 

      A function of the information included in it.

  • 6. 
    Owners' equity refers to which to the following?
    • A. 

      A listing of the organization's assets and liabilities.

    • B. 

      The ownership right of the owner(s) of the entity.

    • C. 

      Probable future sacrifices of economic benefits.

    • D. 

      All of the above.

    • E. 

      None of the above.

  • 7. 
    Which answer describes an internal auditor?
    • A. 

      Internal auditors state an opinion on the financial statements – this opinion is printed in the Annual Report.

    • B. 

      The internal auditor is an employee of the external auditor.

    • C. 

      The internal auditor performs tasks similar to the external auditor – but the internal auditor is employed in industry rather than public accounting.

    • D. 

      All of the above.

    • E. 

      None of the above.

  • 8. 
    The time frame associated with an income statement is:
    • A. 

      A point in time in the past.

    • B. 

      A past period of time.

    • C. 

      A future period of time.

    • D. 

      A function of the information included in it.

  • 9. 
    The purpose of the income statement is to show the:
    • A. 

      Change in the fair market value of the assets from the prior income statement.

    • B. 

      Market value per share of stock at the date of the statement.

    • C. 

      Revenues collected during the period covered by the statement.

    • D. 

      Net income or net loss for the period covered by the statement.

  • 10. 
    The accounting equation is: Assets = Liabilities + Retained Earnings
    • A. 

      True

    • B. 

      False

  • 11. 
    The accounting equation is: Assets = Liabilities / Owners Equity
    • A. 

      True

    • B. 

      False

  • 12. 
    The Statement of Cash Flows:
    • A. 

      Shows how cash changed during the period.

    • B. 

      Is an optional financial statement.

    • C. 

      Shows the change in the market value of the entity's common stock during the period.

    • D. 

      Shows the dividends that will be paid in the future.

  • 13. 
    Beg. Retained Earnings = 100,000Ending Retained Earnings = 250,000Assume that there were no dividends declared. What is Net Income for the year?
    • A. 

      150,000

    • B. 

      250,000

    • C. 

      175,000

    • D. 

      125,000

    • E. 

      100,000

  • 14. 
    The accounting equation is: Assets = Liabilities + Contributed Capital
    • A. 

      True

    • B. 

      False

  • 15. 
    Total Assets = 350,000Total Liabilities = 200,000Contributed Capital = 50,000Retained Earnings = ?
    • A. 

      75,000

    • B. 

      100,000

    • C. 

      55,000

    • D. 

      90,000

    • E. 

      Not enough data to answer the question

  • 16. 
    Beg. Retained Earnings = 110,000Ending Retained Earnings = 225,000Assume that there were 50,000 in dividends declared. What is Net Income for the year?
    • A. 

      115,000

    • B. 

      65,000

    • C. 

      75,000

    • D. 

      165,000

    • E. 

      Not enough Data to answer this question.

  • 17. 
    What do the following accounts have in common?Short-term investmentsAccounts payableCash equivalentsWages payable
    • A. 

      They are all found on the income statement.

    • B. 

      They are all assets.

    • C. 

      They would all be classified as "current".

    • D. 

      They are all expenses.

    • E. 

      They are all liabilities.

  • 18. 
    Which of the following is an Asset?
    • A. 

      Accumulated Depreciation

    • B. 

      Wages Payable

    • C. 

      Net Sales

    • D. 

      Depreciation Expense

    • E. 

      Contributed Capital

  • 19. 
    Total Current Assets = 300,000Total Liabilities = 200,000Contributed Capital = 50,000What is the amount of retained earnings?
    • A. 

      50,000

    • B. 

      150,000

    • C. 

      250,000

    • D. 

      300,000

    • E. 

      Not enough data to answer the question.

  • 20. 
    The current assets of most companies are usually made up of:
    • A. 

      Assets that are currently used in the operations of the company.

    • B. 

      Cash and assets expected to be converted to cash within a year.

    • C. 

      A very small proportion (less than 10%) of the total assets of the entity.

    • D. 

      Cash, marketable securities, and accounts and long-term notes receivable.

  • 21. 
    For which of the following reconciling items would an adjusting entry be necessary?
    • A. 

      A deposit in transit.

    • B. 

      The bank has made an error. They have record a deposit by you as double the amount you actually deposited.

    • C. 

      Outstanding checks.

    • D. 

      A bank service charge.

  • 22. 
    Beg. Retained Earnings = 175,000Ending Retained Earnings = 125,000Assume that there were no dividends declared. What is Net Income/Loss for the year?
    • A. 

      25,000

    • B. 

      (45,000)

    • C. 

      65,000

    • D. 

      (50,000)

    • E. 

      55,000

  • 23. 
    A debit
    • A. 

      Always increases assets.

    • B. 

      Always increases liabilities.

    • C. 

      Increases an expense account.

    • D. 

      Increases a revenue account.

  • 24. 
    The principal reason for reconciling the cash balance per books with the balance shown on the bank statement is to:
    • A. 

      Determine the amount of cash in the account actually available to the entity.

    • B. 

      Satisfy generally accepted accounting principles.

    • C. 

      Verify the amount of petty cash on hand.

    • D. 

      Determine whether or not the entity has issued an NSF check.

  • 25. 
    There are transactions that will cause your balance sheet to not balance.
    • A. 

      True

    • B. 

      False

  • 26. 
    An accounts receivable results from the sale of:
    • A. 

      Property, plant and equipment for cash.

    • B. 

      Goods and services to customers on account.

    • C. 

      Goods and services to customers for cash.

    • D. 

      The firm's common stock.

  • 27. 
    The allowance for doubtful accounts is a(n):
    • A. 

      Asset.

    • B. 

      Contra current asset.

    • C. 

      Expense.

    • D. 

      Contra revenue.

  • 28. 
    The net book value of a depreciable asset is:
    • A. 

      The fair market value of the asset.

    • B. 

      The amount for which the asset should be insured.

    • C. 

      The difference between the asset's cost and accumulated depreciation.

    • D. 

      The difference between the asset's cost and depreciation expense.

  • 29. 
    Which of the following statements best describes the process of accounting for depreciation?
    • A. 

      A process that attempts to recognize loss in economic value over a period of time.

    • B. 

      A process for setting aside cash so funds will be available to replace the asset.

    • C. 

      A process for recognizing the cost of an asset that should be matched against revenue earned as a result of using the asset.

    • D. 

      A process for recognizing all of the cost associated with using an asset in a revenue generating activity.

  • 30. 
    Accounts receivable are reported at
    • A. 

      Net realizable value.

    • B. 

      Historical cost.

    • C. 

      Weighted average cost.

    • D. 

      Market value.

  • 31. 
    The entry to record depreciation expense:
    • A. 

      Increases a contra long-term asset and decreases net income.

    • B. 

      Decreases a contra long-term asset and decreases net income.

    • C. 

      Decreases working capital and decreases net income.

    • D. 

      Decreases a long-term asset and increases a contra long-term asset.

  • 32. 
    Your company purchased inventory for $470,000 and paid cash. The journal entry to record the transaction would be:Cash..$470,000 Inventory.............$470,000
    • A. 

      True

    • B. 

      False

  • 33. 
    Sometimes your balance sheet will not balance, and in those situations it is ok.
    • A. 

      True

    • B. 

      False

  • 34. 
    The journal entry to record employee wage expenses, which you will not pay yet, would be:Wage Expense.........$xx,xxxWages Payable.............$xx,xxx
    • A. 

      True

    • B. 

      False

  • 35. 
    Sales for the year were $750,000. Half was paid to you on account, half in cash. These sales cost you $250,000. The journal entry would be:Cash................$350,000AR...................$350,000 Sales......................$750,000COGS...............$250,000 Inventory.................$250,000
    • A. 

      True

    • B. 

      False

  • 36. 
    A contra-asset will increase with a debit.
    • A. 

      True

    • B. 

      False

  • 37. 
    The purpose of reporting Current Maturities of Long-Term debt is to:
    • A. 

      To report any portion of a long-term borrowing that is to be paid in the upcoming accounting period.

    • B. 

      To reclassify a portion of debt from the noncurrent section of the balance sheet to the current section of the balance sheet.

    • C. 

      To properly classify liabilities.

    • D. 

      All of the above.

  • 38. 
    A contra asset will increase with a credit.
    • A. 

      True

    • B. 

      False

  • 39. 
    A customer of your company has filed for bankruptcy. He owed you $25,000. The journal entry to record the write-off would increase your bad debt allowance.
    • A. 

      True

    • B. 

      False

  • 40. 
    A magazine publisher has an account called "unearned subscription revenue". The transaction that causes the balance of this account to decrease is:
    • A. 

      Cash is received from new subscribers.

    • B. 

      Magazines are printed for the publisher.

    • C. 

      Magazines are mailed to subscribers.

    • D. 

      Subscriptions are sold to new subscribers.

  • 41. 
    Depreciation expense for the year on a given piece of equipment is $100,000. The journal entry to record this would be: Depreciation Expense.........$100,000 Accumulated Depreciation.............$100,000
    • A. 

      True

    • B. 

      False

  • 42. 
    You recently sold a piece of land for a gain of $250,000. This gain would be included on the income statement in the revenue section.
    • A. 

      True

    • B. 

      False

  • 43. 
    Retained earnings represents:
    • A. 

      Cash that is available for dividends.

    • B. 

      The total net income of the firm since the beginning of the year.

    • C. 

      Net income (minus dividends) that has been reinvested in the company

    • D. 

      Net income plus gains (or minus losses) on treasury stock transactions.

  • 44. 
    A transaction that is likely to cause an increase in a current liability is:
    • A. 

      Payment of accrued wages.

    • B. 

      Accrual of interest expense.

    • C. 

      Depreciation of equipment.

    • D. 

      Accrual of bad debts expense.

  • 45. 
    The declaration of a dividend by the company results in:
    • A. 

      A decrease in cash and a decrease in retained earnings.

    • B. 

      A decrease in retained earnings and an increase in current liabilities.

    • C. 

      A decrease in net income and a decrease in cash.

    • D. 

      A decrease in net income and an increase in current liabilities.

  • 46. 
    Which of the following is not an owner's equity account?
    • A. 

      Common stock.

    • B. 

      Preferred stock.

    • C. 

      Retained earnings.

    • D. 

      Minority interests.

    • E. 

      Paid-in-capital in excess of par.

  • 47. 
    With regards to dividends, the declaration date pertains to:
    • A. 

      The date used to determine who receives dividends.

    • B. 

      The date on which the board of directors declares it's going to liquidate the firm.

    • C. 

      The date on which the board of directors declares a dividend.

    • D. 

      The date a dividend is paid.

  • 48. 
    An Accounts Payable could result from which of the following transactions?
    • A. 

      Purchasing supplies for cash.

    • B. 

      Purchasing property, plant and equipment for cash.

    • C. 

      Purchasing goods and services from suppliers on credit.

    • D. 

      All of the above.

  • 49. 
    Many current liabilities are affected by accrual accounting entries. This happens because:
    • A. 

      Liabilities are usually paid when they are incurred.

    • B. 

      Accrual accounting involves recognizing liabilities before they are paid.

    • C. 

      The only way to reduce a liability account balance is with an adjusting entry.

    • D. 

      Accrual accounting frequently involves recognizing liabilities before they are incurred.

  • 50. 
    Which of the following accounts are not usually associated with owners equity?
    • A. 

      Contributed capital

    • B. 

      Retained earnings

    • C. 

      Common stock

    • D. 

      Unearned revenue

  • 51. 
    Gains differ from revenues because gains:
    • A. 

      Are not a result of the entity's ongoing, central operations.

    • B. 

      Do not have to be realized.

    • C. 

      Are reported as income from operating activities.

    • D. 

      Do not involve any offsetting costs or expenses.

  • 52. 
    Under most circumstances, in order to recognize revenue:
    • A. 

      Cash must have been received.

    • B. 

      The entity mhttps://online.uen.org/webct/urw/lc257461621151.tp0/cobaltMainFrame.dowebctust expect to receive cash in the future.

    • C. 

      The entity must have paid for all expenses incurred in generating the revenue.

    • D. 

      The revenue must be realized or realizable, and earned

  • 53. 
    The concept of matching revenue and expense refers to the fact that:
    • A. 

      Expenses for a period equal the revenues for the period.

    • B. 

      All costs incurred in the process of earning revenue during a period are recorded as an expense in that period.

    • C. 

      All cash disbursements during a period are subtracted from all cash receipts during the period.

    • D. 

      Costs incurred in the process of earning revenue during a period are deferred and expensed in a future period.

  • 54. 
      Most entities satisfy the accounting criteria for recognizing revenue when:
    • A. 

      An order is received from a customer.

    • B. 

      Cash is received from a customer.

    • C. 

      An unearned revenue account is credited.

    • D. 

      A product is delivered or a service is provided.

  • 55. 
    Most entities satisfy the accounting criteria for recognizing an expense when:
    • A. 

      A commitment is made to purchase a product or service.

    • B. 

      Cash is paid to a supplier.

    • C. 

      A cost is incurred in the revenue generating process.

    • D. 

      A dividend is paid to stockholders.

  • 56. 
    Which of the following accounts are not included in the calculation for Gross Profit?
    • A. 

      Revenue.

    • B. 

      Cost of goods sold.

    • C. 

      Net sales

    • D. 

      General and selling expenses.

  • 57. 
    An item that cost $90 is sold for $120. The gross margin for this item is:
    • A. 

      20%

    • B. 

      25%

    • C. 

      33.3%

    • D. 

      60%

  • 58. 
    An item that cost $240 is to be sold for a price that will yield a gross margin of 20%. The selling price should be:
    • A. 

      $192

    • B. 

      $288

    • C. 

      $300

    • D. 

      $1200

  • 59. 
    In order for me to pass this class
    • A. 

      I need to read/study the material prior to coming to class.

    • B. 

      Won't take much - I'm sure this guy will generate a huge curve.

    • C. 

      Won't take much - he always tells us that he passes everyone.

    • D. 

      Will be a piece of cake - he told us that his final is easier than the midterm.

  • 60. 
    In the statement of cash flows, using the indirect method, the amount of depreciation and amortization expense is added back to net income because:
    • A. 

      These expenses do not affect cash, but were subtracted in the determination of net income.

    • B. 

      These expenses affect investing activities, not operating activities.

    • C. 

      The cash disbursements for these accrued expenses will be made in a future period.

    • D. 

      These expenses are recognized for accounting purposes, but they do not represent economic costs.

  • 61. 
    When calculating EPS - which of the following accounts are part of the equation?
    • A. 

      Contributed Capital

    • B. 

      Treasury Stock

    • C. 

      Shares Authorized

    • D. 

      Common Shares Outstanding

  • 62. 
    Calculate Gross Profit Margin based on the following data.COGS = 73.5%
    • A. 

      100%

    • B. 

      26.5%

    • C. 

      29%

    • D. 

      73.5%

  • 63. 
    Calculate Gross Profit based on the following data:Sales $450Cogs 50%Interest Expense 5%Wage Expense 10%Advertising Expense 12%
    • A. 

      $275

    • B. 

      25%

    • C. 

      $225

    • D. 

      33%

  • 64. 
    Calculate Gross Profit for your future projections based on your past history. Your historical COGS is equal to 45%.Your future projections for Sales are $1,000,000
    • A. 

      $550,000

    • B. 

      26%

    • C. 

      $450,000

    • D. 

      Unable to determine.

  • 65. 
    A customer is returning your product for a full refund. Which account below is NOT one of the accounts that will be in your Journal Entry?
    • A. 

      Sales Returns

    • B. 

      Sales

    • C. 

      Inventory

    • D. 

      COGS

    • E. 

      All of the above accounts will be in the journal entry to record the return.

  • 66. 
    An expanded version of the accounting equation could be:
    • A. 

      A + Rev = L + OE - Exp

    • B. 

      A - L = Paid-in Capital - Rev - Exp

    • C. 

      A = L + Contributed Capital + Beginning Retained Earnings + Rev - Exp -Dividends

    • D. 

      A = L + Paid-in Capital - Rev + Exp

  • 67. 
    What type of an account is accumulated depreciation?
    • A. 

      A credit

    • B. 

      A debit

    • C. 

      A liability

    • D. 

      An expense

    • E. 

      A contra-asset

  • 68. 
    What is the normal balance for the account "allowance for uncollectable accounts"?
    • A. 

      A debit

    • B. 

      A credit

    • C. 

      A contra-asset

    • D. 

      A liability

    • E. 

      An expense

  • 69. 
    What are the three sections of the Cash Flow Statement?
    • A. 

      Operating, Investing and Financing.

    • B. 

      Operating, Investing and Expenses.

    • C. 

      Assets, Liabilities and Owners Equity

    • D. 

      Net Sales, Expenses and Gains/Losses

    • E. 

      Net Income, Investing and Financing

  • 70. 
    Who is ultimately responsible for the financial statements of the company?
    • A. 

      The internal auditor

    • B. 

      The external auditor

    • C. 

      The IRS

    • D. 

      The company's management

  • 71. 
    The role of the auditor is to make sure the financial statements are perfect.
    • A. 

      True

    • B. 

      False

  • 72. 
    It does not matter if a significant event happens after your balance sheet date, but prior to you releasing your financial statements to the public.  You have no responsibility to your shareholders to disclose such an event.
    • A. 

      True

    • B. 

      False

  • 73. 
    In your notes section, you need to disclose the valuation methods used by your company so that your investors will be able to compare your data with other companies.
    • A. 

      True

    • B. 

      False

  • 74. 
    There usually is not difference between GAAP prepared financial statements and tax forms prepared using IRS rules.
    • A. 

      True

    • B. 

      False

  • 75. 
    There is nothing wrong with recording revenue "too soon" if you have a contract signed with that customer and plan on shipping your product later anyway. It really is just a timing issue so nobody will care.
    • A. 

      True

    • B. 

      False

  • 76. 
    It is ok to shift current expenses to an earlier or later period, as long as you eventually record them.
    • A. 

      True

    • B. 

      False

  • 77. 
    The annual report filed with the SEC is called the 10-Q.
    • A. 

      True

    • B. 

      False

  • 78. 
    The second paragraph of the auditors report is called the opinion paragraph. This is generally the most important paragraph of the entire letter.
    • A. 

      True

    • B. 

      False

  • 79. 
    In the Independent Auditor's Report, the company hopes to receive a qualified opinion.
    • A. 

      True

    • B. 

      False