Acc 255 Final

85 Questions | Total Attempts: 36

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Accounting Quizzes & Trivia

Questions and Answers
  • 1. 
    • A. 

      Sole proprietorship

    • B. 

      Creditorship

    • C. 

      Partnership

    • D. 

      Corporation

  • 2. 
    Which statement presents information as of a specific point in time?
    • A. 

      Income statement

    • B. 

      Balance sheet

    • C. 

      Statement of cash flows

    • D. 

      Retained earnings statement

  • 3. 
    Stockholders equity represents
    • A. 

      Claims of creditors

    • B. 

      Claims of employees

    • C. 

      The difference between revenues and expenses

    • D. 

      Claims of owners

  • 4. 
    Which of the following does not affect retained earnings? 
    • A. 

      Earning revenue

    • B. 

      Incurring expenses

    • C. 

      Declaration and payment of dividends

    • D. 

      Investments by stockholders

  • 5. 
    Which of the following errors will not cause the debit and credit columns of the trial balance to be unequal? 
    • A. 

      A debit was entered in an account as a credit

    • B. 

      A debit entry was recorded in the wrong account

    • C. 

      The balance of an account was incorrectly computed

    • D. 

      The account balance was carried to the wrong columns of the trial balance

  • 6. 
    • A. 

      Expense, debit

    • B. 

      Expense, credit

    • C. 

      Liability, debit

    • D. 

      Liability, credit

  • 7. 
    • A. 

      Asset, Debit

    • B. 

      Asset, credit

    • C. 

      Revenue, debit

    • D. 

      Revenue, credit

  • 8. 
    A revenue account:
    • A. 

      Is increased by debits

    • B. 

      Is decreased by credits

    • C. 

      Has a normal balance of a debit

    • D. 

      Is increased by credits

  • 9. 
    A ledger
    • A. 

      Contains only asset and liability accounts

    • B. 

      Should show accounts in alphabetical order

    • C. 

      Is a collection of the entire group of accounts maintained by a company

    • D. 

      Provides a chronological record of transactions

  • 10. 
    The concept of accrual accounting that assumes that expenses can be assigned to the accounting period in which they are used to produce revenues is
    • A. 

      Periodicity assumption

    • B. 

      Cash basis accounting principle

    • C. 

      Expense recognition (matching) principle

    • D. 

      Revenue recognition principle

  • 11. 
    An adjusting entry would not include which of the following accounts?
    • A. 

      Cash

    • B. 

      Income taxes payable

    • C. 

      Unearned revenue

    • D. 

      Common stock

  • 12. 
    Which of the following accounts is a temporary nomial account?
    • A. 

      Cash

    • B. 

      Unearned revenue

    • C. 

      Service revenue

    • D. 

      Common stock

  • 13. 
    Closing journal entries
    • A. 

      Are made at the beginning of an accounting period

    • B. 

      Are made at the end of an accounting period, clear the temporary accounts of their balances and close those balances to retained earnings

    • C. 

      Are not entered in the general ledger accounts

    • D. 

      Are optional

  • 14. 
    You are the payroll accountant for a small business. A friend asks you how much another employee is paid per hour. payroll information is confidential your most ethical course of action is to 
    • A. 

      Tell your friend to put his or her request in writing and you will respond

    • B. 

      Tell your friend you don't remember right now but will be glad to look it up for him or her tomorrow when you get to work.

    • C. 

      Tell your friend that the pay information of an employee is confidential information that cannot be disclosed.

    • D. 

      Quote the number immediately because you are very good at remembering numbers

  • 15. 
    Colleen mooney earned a salary of $400 for the last week of september. She will be paid on October 1. the adjusting entry for colleen's employer at septemeber 30 is
    • A. 

      No entry

    • B. 

      Salaries expense 400, salaries payable 400

    • C. 

      Salaries expense 400, cash 400

    • D. 

      Salaries payable 400, cash 400

  • 16. 
    • A. 

      Chart of accounts

    • B. 

      Trial balance

    • C. 

      General journal

    • D. 

      General ledger

  • 17. 
    • A. 

      Adjusting entries are necessary to properly measure the periods net income

    • B. 

      Adjusting entries are used to correct posting errors

    • C. 

      Adjusting entries are a major aspect of cash basis accounting

    • D. 

      Adjusting entries do not affect balance sheet accounts

  • 18. 
    Which of the following transactions or events will not result in the recognition of an expense?
    • A. 

      Declaration and payment of a dividend

    • B. 

      Expiration of prepaid insurance

    • C. 

      Interest accrued on a bank loan

    • D. 

      Use of machinery during the period

  • 19. 
    In accounting, depreciation, refers to the 
    • A. 

      Wearing away of a long lived asset

    • B. 

      Allocation of the cost of a long lived asset to expense

    • C. 

      Decline in fair value of a long lived asset

    • D. 

      Payment of cash for a long lived asset

  • 20. 
    If a company has assets of $320,000, liabilities of $90,000, and retained earnings of $60,000, investments by the stockholders must be
    • A. 

      $320,000

    • B. 

      $230,000

    • C. 

      $170,000

    • D. 

      $60,000

  • 21. 
    • A. 

      Comparability

    • B. 

      Consistency

    • C. 

      Materiality

    • D. 

      Cost

  • 22. 
    Which of the following is not a component of the operating cycle
    • A. 

      Payment of employees wages

    • B. 

      Purchase of inventory

    • C. 

      Collection of cash from inventory sales

    • D. 

      Sale of inventory

  • 23. 
    A company should classify land held for a planned manufcaturing facility as
    • A. 

      An intangible asset

    • B. 

      An investment

    • C. 

      Property, plant and equipment

    • D. 

      Sale of inventory

  • 24. 
    In a classified balance sheet, assets are usually classified as:
    • A. 

      Currents assets, long term assets, property,plant, and equipment, and intangible assets

    • B. 

      Current assets, long term investments, property, plant and equipment, and common stock

    • C. 

      Current assets, long term investments, tangible assets, and intangible assets

    • D. 

      Current assets, long term investments, property, plant and equipment, and intangible assets

  • 25. 
    An example of a cash equivalent is
    • A. 

      Accounts receivable

    • B. 

      Unearned revenue

    • C. 

      Prepaid expenses

    • D. 

      A 60-day treasury bill

  • 26. 
    Under the allowance method of accounting for uncollectible accounts, when a specific account is written off:
    • A. 

      Net income will decrease

    • B. 

      Total assets will increase

    • C. 

      Total assets will decrease

    • D. 

      Total assets will be unchanged

  • 27. 
    The use of the allowance method for recording uncollectible accounts follows the accounting concept of:
    • A. 

      Full disclosure

    • B. 

      Going concern

    • C. 

      Expense recognition (matching)

    • D. 

      Cost- benefit

  • 28. 
    Which of the following items would be recorded in the inventory account of a grocery store?
    • A. 

      Milk and eggs

    • B. 

      Cash registers

    • C. 

      Building

    • D. 

      Display cases

  • 29. 
    An annual physical count of inventory should be made under
    • A. 

      Only the periodic inventory system

    • B. 

      Only the perpetual inventory system

    • C. 

      Both the periodic and perpetual inventory systems

    • D. 

      Neither systems

  • 30. 
    If beginning inventory is $60,000, cost of goods purchased is $380,000, and ending inventory is $50,000, what is the cost of goods sold under a periodic system? 
    • A. 

      390,000

    • B. 

      370,000

    • C. 

      330,000

    • D. 

      420,000

  • 31. 
    Each of the following is a merchandising business except a 
    • A. 

      Laundry & dry cleaners

    • B. 

      Grocery store

    • C. 

      Department store

    • D. 

      Greeting card store

  • 32. 
    On a classified balance sheet, patents are classified as
    • A. 

      Intangible assets

    • B. 

      Current assets

    • C. 

      Property plant and equipment

    • D. 

      Investments

  • 33. 
    The journal entry to record a return of merchandise by a customer for credit on account would include a 
    • A. 

      Debit to sales revenue

    • B. 

      Debit to sales returns

    • C. 

      Credit to inventory

    • D. 

      Credit to cash

  • 34. 
    Which of the following measures a company's short-term ability to pay its obligations when due?
    • A. 

      Activity

    • B. 

      Profitability

    • C. 

      Solvency

    • D. 

      Liquidity

  • 35. 
    Which inventory costing method can be used if each item of inventory is identifiable?
    • A. 

      Specific identification

    • B. 

      Average cost

    • C. 

      FIFO

    • D. 

      LIFE

  • 36. 
    Which inventory costing method matches recent costs with recent revenues?
    • A. 

      Specific identification

    • B. 

      Average cost

    • C. 

      FIFO

    • D. 

      LIFO

  • 37. 
    Which of the following items in a cash drawer at Novemeber 30, is not reported as cash?
    • A. 

      Money orders

    • B. 

      Coins and currency

    • C. 

      A customer check dated december 1

    • D. 

      A customer check dated november 28

  • 38. 
    A company purchased land that it intended to pave for a parking lot. which of the following would not be included in the cost of land?
    • A. 

      Cost of paving the parking lot

    • B. 

      Cost of clearing an unneeded building from the land

    • C. 

      Sewer assessment from local government

    • D. 

      Commission to real estate agent

  • 39. 
    Which of the following would be considered a revenue expenditure?
    • A. 

      Purchase of office furniture

    • B. 

      Installation of audiovisual equipment in a classroom

    • C. 

      Cleaning the office carpets

    • D. 

      Addition of a storeroom to the building

  • 40. 
    Purdue publishing company purchased the copyright to an introductory financial accounting textbook for $63000. The usual ife of a textbook is three years. The copyright will remain in effect for 50 years. What amount of annual amortization expense should Purdue Publishing record?
    • A. 

      0

    • B. 

      21000

    • C. 

      1260

    • D. 

      1575

  • 41. 
    A company would minlimize its depreciation expense in the first year of owning an asset if it used:
    • A. 

      A high estimated life, a high salvage value, and declining balance deprecation

    • B. 

      A low estimated life, a high salvage value, and straight line depreciation

    • C. 

      A high estimated life, a high salvage value, and straight line depreciation

    • D. 

      A low estimated life, a low salvage value, and declining balance depreciation

  • 42. 
    Pierce company incurrred $150,000, or R&D costs in its laboratory to develop a new product. It spend $20,000 in legal fees for a patent granted on January 2, 2011. On July 31, 2011, Pierce paid $15,000 in legal fees in a successful defense of the patent. What is the total amount that should be debited to patents through July 31, 2011?
    • A. 

      150000

    • B. 

      35000

    • C. 

      185000

    • D. 

      Some other amount

  • 43. 
    • A. 

      The contractual rate is less than the market rate

    • B. 

      The contractual rate equals the market rate

    • C. 

      The contractual rate is greater than the market rate

    • D. 

      The relationship cannot be determined without additional information

  • 44. 
    Which of the followin is least likely to be classified as a current liability? 
    • A. 

      Accounts payable

    • B. 

      Bonds Payable

    • C. 

      Sales taxes payable

    • D. 

      Unearned revenues

  • 45. 
    A cusomter is injured using a company's product. The potential liability that may result is called a(n)
    • A. 

      Long term liability

    • B. 

      Current liability

    • C. 

      Commitment

    • D. 

      Contingent liability

  • 46. 
    • A. 

      Callable bonds

    • B. 

      Convertible bonds

    • C. 

      Discount bonds

    • D. 

      Secured bonds

  • 47. 
    The times interest earned ratio is a measure of the 
    • A. 

      Company's ability to meet interest payments as they come due

    • B. 

      Company's liquidity

    • C. 

      The number of times each year that interest payments are due

    • D. 

      The amount of semi-annual interest that a company must pay on its bonds payable.

  • 48. 
    The time period for classifying a liability as current is one year or the operating cycle, whichever is:
    • A. 

      Longer

    • B. 

      Shorter

    • C. 

      Probable

    • D. 

      Possible

  • 49. 
    On the balance sheet, treasury stock is properly classified as
    • A. 

      Current assets

    • B. 

      Long term investments

    • C. 

      Contra stockholders equity

    • D. 

      Paid in capital within stockholders equity

  • 50. 
    All of the following are characteristics more closesly associated with preferred stock except
    • A. 

      Receives assets first in liquidation

    • B. 

      May be entitled to cumulative dividends

    • C. 

      Receives dividends before common stockholders

    • D. 

      Likely to have full voting rights

  • 51. 
    Par value
    • A. 

      Represents the original selling price for a share of stock

    • B. 

      Is established for a share of stock after it is issued

    • C. 

      Is an arbitrary value per share established in the corporate charter.

    • D. 

      Represents the market value of a share of stock

  • 52. 
    The maximum number of shares of common stock that may be issued according to the corporation's charter is reffered to as
    • A. 

      Issued shares

    • B. 

      Authorized shares

    • C. 

      Outstanding shares

    • D. 

      Unissued shares

  • 53. 
    Ibram corporation had 200,000 shares of $1 par value common stock outstanding. If ibram announces a 4-for-1 stock split, the par value and number of shares outstanding after the split would be:
    • A. 

      .25 par, 800,000 shares

    • B. 

      .25 par, 200,000 shares

    • C. 

      1 par, 50,000 shares

    • D. 

      1 par, 800,000 shares

  • 54. 
    Which of the following statements is false?
    • A. 

      The stockholders equity section begins with paid in capital

    • B. 

      The authorization of capital stock does not result in a formal accounting entry

    • C. 

      Legal capital is intended to protect stockholders

    • D. 

      Ownership of common stock gives the owner a voting right

  • 55. 
    Which of these is not a major advantage of a corporation? 
    • A. 

      Separate legal existence

    • B. 

      Continuous life

    • C. 

      Government regulations

    • D. 

      Transferable ownership rights

  • 56. 
    Raptor INc. has retained earning of $500,000 and total stockholders equity of $2,000,000. It has 100,000 shares of $8 par value common stock outstanding, which is currently selling for $30 per share. If raptor declares a 10% stock dividend on its common stock:
    • A. 

      Net income will decrease by 80,000

    • B. 

      Retained earnings will decrease by 80,000 and total stockholders equity will increase by 80,000

    • C. 

      Retained earnings will decrease by 300,000 and total stockholders equity will increase by 300,000

    • D. 

      Retained earnings will decrease by 300,000 and total paid in capital will increase by 300,000

  • 57. 
    Revenues should be recorded when
    • A. 

      They are earned

    • B. 

      A contract is signed

    • C. 

      Work is begun on a job

    • D. 

      Cash is received from a customer

  • 58. 
    • A. 

      Common stock and rent expense

    • B. 

      Cash and accounts receivable

    • C. 

      Treasury stock and common stock

    • D. 

      Notes payable and service revenue

  • 59. 
    Which of the following errors will cause a trial balance to to be out of balance?
    • A. 

      A debit to office equipment is incorrectly debited to office supplies

    • B. 

      The bookkeeper forget to journalize a transaction

    • C. 

      The bookkeeper forgot to post a journal entry to the ledger

    • D. 

      A credit was posted to an account as a debit

  • 60. 
    • A. 

      Debits cash and credits subscription revenue

    • B. 

      Debits cash and credits unearned subscriptions revenue

    • C. 

      Debits uneared subscriptions revenue and credits cash

    • D. 

      Debits prepaid subscriptions and credits cash

  • 61. 
    The supplies account had a $360 debit balance at the end of the accounting period before adjustment for supplies used, and an inventory of $80 worth of unused supplies were on hand. Which of the following is the required adjusting entry? 
    • A. 

      Debit supplies 280 and credit supplies expense 280

    • B. 

      Debit supplies expense 280 and credit supplies 280

    • C. 

      Debit supplies 80 and credit supplies expense 80

    • D. 

      Debit supplies expense 80 and credit supplies 80

  • 62. 
    A company's weekly payroll of $750 is paid on fridays. there are five days in a pay period. assume that the last day of the month falls on wednesday. which of the folloiwng is the required adjusting entry?
    • A. 

      Debit unpaid salaries and credit salaries payable for 450

    • B. 

      Debit salaries expense and credit salaries payable for 450

    • C. 

      Debit salaries expense and credit salaries payable for 300

    • D. 

      Debit salaries payable and credit salaries expense for 450

  • 63. 
    Which of the following is not an application of accrual accounting?
    • A. 

      Recording advertising fees revenue at the time the work is done

    • B. 

      Recording telephone expense in the accounting period covered by the monthly bill

    • C. 

      Adjusting unearned advertising fees to the proper balance at the end of the month

    • D. 

      Recording advertising fees revenue only when the cash payment is received

  • 64. 
    An accountant is preparing adjusting journal entires. Which of the following entries could not possible be a correct adjusting journal entry?
    • A. 

      Rent expense 5,000, rent payable 5,000

    • B. 

      Accounts receivable 5,000, service revenue 5,000

    • C. 

      Interest expense 5,000, interest revenue 5,000

    • D. 

      Unearned revenue 5,000, service revenue 5,000

  • 65. 
    An important purpose of closing entries is to 
    • A. 

      Set temporary account balances to zero to begin the next period

    • B. 

      Help in preparing financial statements

    • C. 

      Adjust the accounts in the ledger

    • D. 

      Set permanent account balances to zero to begin the next period

  • 66. 
    The accounting convention that requires a company to use the same accounting principles from one period to the next is 
    • A. 

      Consistency

    • B. 

      Converatism

    • C. 

      Materiality

    • D. 

      Periodicity assumption

  • 67. 
    • A. 

      Accounts receivable

    • B. 

      Accumulated depreciation

    • C. 

      Franchises

    • D. 

      Land held for future use

  • 68. 
    Which of the following is most likely to appear on the balance sheet as a current liability?
    • A. 

      Bonds payable

    • B. 

      Accumulated depreciation

    • C. 

      Long term notes payable

    • D. 

      Wages payable

  • 69. 
    Gross profit equals the difference between net sales and
    • A. 

      Net income

    • B. 

      Operating expenses

    • C. 

      Cost of goods sold plus operating expenses

    • D. 

      Cost of goods sold

  • 70. 
    A physical inventory is usually taken
    • A. 

      At the peak of the busy season

    • B. 

      In the middle of the fiscal year

    • C. 

      When the perpetual inventory system but not the periodic system, is being used

    • D. 

      At the end of the fiscal year

  • 71. 
    Under the perpetual inventory system, in addition to making the entry record a sale, a company would
    • A. 

      Make no additional entry until the end of the period

    • B. 

      Debit cost of goods sold and credit inventory

    • C. 

      Debit cost of goods sold and credit purchases

    • D. 

      Debit inventory and credit cost of goods sold

  • 72. 
    Jones company accepted a sales return from a customer. the journal entry to record the transaction would include a 
    • A. 

      Debit to sales revenue

    • B. 

      Credit to sales revenue

    • C. 

      Credit to sales returns and allowances

    • D. 

      Debit to sales returns and allowances

  • 73. 
    The allowance for doubtful acounts is necessary because 
    • A. 

      Uncollected accounts that are written off must be accumulated in a separate account

    • B. 

      When recording bad debts expense, it is not possible to predict specifically which accounts will not be collected

    • C. 

      Management should know how much in credit losses have occurred over the years

    • D. 

      A liability results when a credit sale is made

  • 74. 
    The generel ledger account for accounts reveivable shows a debit balance of $50,000. the allowance for doubtful accounts has a credit balance of $1000. if management estimates that 5% of accounts receivable will prove uncollectible, bad debts expense would be recorded for 
    • A. 

      1500

    • B. 

      2540

    • C. 

      2500

    • D. 

      3500

  • 75. 
    Interest on a 3-month, 10 percent, $10,000 note receivable is 
    • A. 

      250

    • B. 

      2500

    • C. 

      288

    • D. 

      1000

  • 76. 
    The inventory costing method that matches recent costs with recent revenues is 
    • A. 

      LIFO

    • B. 

      FIFO

    • C. 

      Average cost

    • D. 

      Specific identification

  • 77. 
    Jones borrowed $960 from the bank, issuing a 12.5%, 4-month promissory note. Assuming that the note is issued and paid in the same accounting period, Jones' entry on the date of payment will include a 
    • A. 

      Debit to notes payable for $960

    • B. 

      Debit to interest payable for $40

    • C. 

      Credit to cash for $960

    • D. 

      Debit to interest receivable for $40

  • 78. 
    On june 30, 2011 riddle corporation issued $500,000 of 8%, 5-year bonds at 100. Interest is payable semi-annually. The journal entry to record the semiannual interest payment on december 31,2011 would credit
    • A. 

      Interest expense for 20,000

    • B. 

      Cash for 20,000

    • C. 

      Cash for 200,000

    • D. 

      Bonds payable for 500,000

  • 79. 
    Discount on bonds payable should be reported on the balance sheet of the issuing corporation as a(n)
    • A. 

      Direct deduction from the face amount of the bonds payable in the long term liability section

    • B. 

      Direct deduction from retained earnings in the stockholders equity section

    • C. 

      Asset

    • D. 

      Direct addition to the face amount of the bonds payable in the long term liability section

  • 80. 
    Bonds with a face value of $10,000 were issued at 97. the cash account will be debited for 
    • A. 

      970

    • B. 

      10097

    • C. 

      10000

    • D. 

      9700

  • 81. 
    The paid-in capital in excess of par value account normally is credited in a journal entry to record the issuance of stock when 
    • A. 

      The earnings per share of the stock exceeds par value

    • B. 

      The number of shares issued exceeds the par value

    • C. 

      Stock is sold at an amount greater than par value

    • D. 

      The stated value of the capital stock is greater than par value

  • 82. 
    • A. 

      Increase

    • B. 

      Decrease

    • C. 

      No effect

    • D. 

      Cannot determine with information given

  • 83. 
    The purpose of the statement of stockholders equity is too
    • A. 

      Summarize the changes in the components of the stockholders equity for a period of time

    • B. 

      Replace the statement of retained earnings

    • C. 

      Summarize the computation of net income during the period

    • D. 

      Budget the transactions expected to occur during the coming accounting period

  • 84. 
    Martinez corporation has 30,00 shares of $10 par value common stock oustanding. On March 17, the board of directios declard a 10 percent stock dividend. Market value of the stock was $13 on march 17. The effect of the declaration and issuance of hte stock dividend for Martinez would include a 
    • A. 

      Decrease to cash for 39000

    • B. 

      Decrease to retained earnings for 39000

    • C. 

      Decrease to retained earnings for 30000

    • D. 

      Increase to common stock for 39000

  • 85. 
    The primary purpose of the statement of cash flows is to provide information 
    • A. 

      Regarding the results of operations for a period of time

    • B. 

      Regarding a companys financial position at the end of an accounting period

    • C. 

      About a companys cash receipts and cash payments during an accounting period

    • D. 

      About a companys investing and financing activities