Primary Arithmetic Quiz

1.

Merchandise Inventory held by a business is a(n) __________ and when sold becomes a(n) __________.

Asset; expense.

Assets received from selling products or services.

Expenses

Cost of goods sold

2.

Revenues can be defined as

Matching principle.

Expenses

Assets received from selling products or services.

Asset; expense.

3.

Which of the following activities can be performed by certified public accountants (CPAs)?

Auditing to render an opinion on the fairness of financial statements

Rapidly inventory is sold.

Purchase invoice.

There is no count of cash after the clerks shift is over.

4.

Lizzie's Ice Cream Corp. purchased supplies at a cost of $26,000 during 2006. At January 1, 2006, supplies on hand were $2,000. At December 31, 2006, supplies on hand are $2,300. Supplies expense for 2006 will be

Subscriptions Received in Advance, $1,200; Magazine Revenue, $3,800.

$25,700.

Agencies

Retained Earnings account.

5.

Closing entries result in net income being transferred to the

The customer can take a $20 discount if the invoice is paid by August 20.

Agencies

Retained Earnings account.

Matching principle.

6.

Which of the following source documents would serve as evidence that supplies had been purchased on credit?

Auditing to render an opinion on the fairness of financial statements

Purchase invoice.

There is no count of cash after the clerks shift is over.

7.

Which one of the following statements regarding internal control is true?

There is no count of cash after the clerks shift is over.

A Certificate of Deposit (CD) for 2 months

8.

Which ratio is used to assess the capital structure and risk level of a company?

Debt to Equity.

A Certificate of Deposit (CD) for 2 months

Net sales.

The oldest units.

9.

Monumental Toys sold merchandise to a customer on credit. The invoice amount was $2,000; the invoice date was August 10; credit terms were 1/10, n/30. Which one of the following statements is true?

Agencies

The customer can take a $20 discount if the invoice is paid by August 20.

Matching principle.

Assets received from selling products or services.

10. Bonzo Associates, Inc. recorded salaries expense of $130,000 in 2006. However, additional salaries of $5,000 had been earned, but not paid or recorded at December 31, 2006. After the adjustments are recorded and posted at December 31, 2006, the balances in the Salaries Expense and Salaries Payable accounts will be

$2,100

Retained Earnings account.

Agencies

11.

Which one of the following accounts most likely would appear on the income statement of a merchandise company, but not on the income statement of a service company?

Expenses

Asset; expense.

Cost of goods sold

The buyer.

12.

Inventory turnover indicates how

The buyer.

Rapidly inventory is sold.

Auditing to render an opinion on the fairness of financial statements

Cost of goods sold

13.

All of the following are forms of business entities except

Agencies

Matching principle.

Retained Earnings account.

Assets received from selling products or services.

14.

The recognition of cost of goods sold expense in the same period that sales revenue is recognized from the sale of merchandise is a good example of the

Expenses

The customer can take a $20 discount if the invoice is paid by August 20.

Assets received from selling products or services.

Matching principle.

15.

At the year end inventory count, if goods in transit are shipped FOB shipping point, they should be included in the inventory count of

Rapidly inventory is sold.

The buyer.

Auditing to render an opinion on the fairness of financial statements

Cost of goods sold

16.

On a common-size income statement, all items are expressed as a percentage of

Debt to Equity.

Net sales.

A Certificate of Deposit (CD) for 2 months

The oldest units.

17.

Which of the following items would be considered to be a cash equivalent?

A Certificate of Deposit (CD) for 2 months

Net sales.

Debt to Equity.

The oldest units.

18.

Given below are several accounts from Cunningham, Inc.'s trial balance at December 31, 2006.

Sales Revenue	$24,000	Accounts Receivable	$4,850
Accounts Payable	600	Rent Expense	4,000
Dividends	750	Interest Revenue	950
Fees Collected in Advance	400	Depreciation Expense	1,550
Supplies	500	Supplies Expense	2,000
Cash	4,500	Prepaid Rent	1,150
Wages Expense	2,800	Wages Payable	1,600
Cost of Goods Sold	12,500	Retained Earnings, Jan 1, 2006	6,000

What is the net income for the year ended December 31, 2006?