FBLA Accounting Exam: Trivia Quiz!

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FBLA Accounting Exam: Trivia Quiz! - Quiz


Are you familiar with FBLA accounting? The is an American career and technical student association headquartered in Reston, Virginia, which is The Future Business Leaders of America-phi Beta Lambda or FBLA-PBL. . It was established in 1940. It is a non-profit organization of high school, middle school, college students, and professional members who help students acclimate themselves to the corporate world. Stop right here and see if the numbers add up.


Questions and Answers
  • 1. 

    When a business uses a petty cash fund, the fund is debited each time it is replaced.

    • A.

      True

    • B.

      False

    Correct Answer
    B. False
    Explanation
    When a business uses a petty cash fund, the fund is not debited each time it is replaced. Instead, the fund is initially debited when it is established, and then it is replenished by debiting the appropriate expense accounts and crediting the petty cash fund account. This ensures that the petty cash fund remains at a constant balance, and any expenses made from the fund are recorded accurately.

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  • 2. 

    A debit to an account is always an increase.

    • A.

      True

    • B.

      False

    Correct Answer
    B. False
    Explanation
    A debit to an account is not always an increase. In accounting, a debit entry can either increase or decrease an account balance depending on the type of account. Debit entries increase asset and expense accounts, while they decrease liability, equity, and revenue accounts. Therefore, a debit entry can have different effects on different types of accounts.

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  • 3. 

    When a business buys equipment, the bookkeeper credits the asset account.

    • A.

      True

    • B.

      False

    Correct Answer
    B. False
    Explanation
    When a business buys equipment, the bookkeeper debits the asset account. This is because the purchase of equipment increases the value of the company's assets, and debiting the asset account reflects this increase.

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  • 4. 

    To determine the interest on a promissory note, the accountant will need to know the principle, interest, rate, and term.

    • A.

      True

    • B.

      False

    Correct Answer
    A. True
    Explanation
    To determine the interest on a promissory note, the accountant needs to know the principle, interest, rate, and term. This is because the interest on a promissory note is calculated based on these factors. The principle is the initial amount borrowed, the interest is the rate at which the borrower will be charged, the rate is the percentage at which the interest is calculated, and the term is the length of time for which the note is valid. By knowing these variables, the accountant can accurately calculate the interest on the promissory note.

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  • 5. 

    A payee is a person or business to whom a check is payable.

    • A.

      True

    • B.

      False

    Correct Answer
    A. True
    Explanation
    A payee is the person or business that is designated to receive payment from a check. They are the intended recipient of the funds and are entitled to cash or deposit the check. Therefore, the statement that a payee is a person or business to whom a check is payable is true.

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  • 6. 

    Today the Federal Tax Reform Law only requires persons who are over two years old to have a social security number.

    • A.

      True

    • B.

      False

    Correct Answer
    B. False
    Explanation
    The statement is false because the Federal Tax Reform Law requires all individuals, regardless of age, to have a social security number.

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  • 7. 

    A bonus, rather than a commission, is an amount paid to an employee as a percentage of sales.

    • A.

      True

    • B.

      False

    Correct Answer
    B. False
    Explanation
    A bonus is not paid as a percentage of sales, but rather as an additional amount given to an employee as a reward or incentive for their performance. A commission, on the other hand, is a percentage of sales that an employee receives as a form of compensation for generating sales. Therefore, the statement that a bonus is an amount paid to an employee as a percentage of sales is incorrect.

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  • 8. 

    Depreciation is allocating the cost of a plant asset over the asset�s useful life.

    • A.

      True

    • B.

      False

    Correct Answer
    A. True
    Explanation
    Depreciation is the process of allocating the cost of a plant asset over its useful life. This is done to match the expense of the asset with the revenue it generates over time. By spreading out the cost, it reflects the asset's gradual wear and tear or obsolescence. Therefore, the statement "Depreciation is allocating the cost of a plant asset over the asset's useful life" is true.

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  • 9. 

    When the accountant debits the withdrawals account, this will result in a decrease to the account.

    • A.

      True

    • B.

      False

    Correct Answer
    B. False
    Explanation
    When the accountant debits the withdrawals account, this will actually result in an increase to the account. Debiting an account means recording an entry on the left side, and for the withdrawals account, it represents an increase in the amount of money taken out or withdrawn from the business. Therefore, the statement "this will result in a decrease to the account" is incorrect.

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  • 10. 

    Straight-line depreciation is allocating the cost of a plant equally over its useful life.

    • A.

      True

    • B.

      False

    Correct Answer
    A. True
    Explanation
    Straight-line depreciation is a method of allocating the cost of a plant or any other asset evenly over its useful life. This means that the cost of the asset is spread out in equal amounts over the number of years it is expected to be used. This method assumes that the asset will depreciate in a straight line, meaning that its value will decrease by the same amount each year. Therefore, the given statement that straight-line depreciation allocates the cost of a plant equally over its useful life is true.

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  • 11. 

    The basic accounting equation may be expressed as

    • A.

      A. A + E

    • B.

      B. A = OE - L

    • C.

      C. Assets = Liabilities + Owner’s Equity

    • D.

      D. Assets + Liabilities = Owner’s Equity

    Correct Answer
    C. C. Assets = Liabilities + Owner’s Equity
    Explanation
    The correct answer is c. Assets = Liabilities + Owner's Equity. This equation represents the fundamental principle of accounting, stating that the total value of a company's assets is equal to the sum of its liabilities and owner's equity. It shows the relationship between what a company owns (assets), what it owes (liabilities), and the owner's investment in the business (owner's equity). This equation is used as the foundation for preparing financial statements and analyzing the financial position of a company.

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  • 12. 

    The year and month are written in a general journal

    • A.

      A. on each journal page.

    • B.

      B. for each entry on each journal page.

    • C.

      C. only at the top of page one of the journal page.

    • D.

      D. at the bottom of each journal page.

    Correct Answer
    A. A. on each journal page.
    Explanation
    The year and month are written on each journal page to provide a clear and organized record of the transactions. This helps in identifying and categorizing the entries by date, making it easier to locate and analyze specific transactions. Additionally, including the year and month on each page ensures that the information remains accurate and consistent throughout the journal.

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  • 13. 

    Debts that are not required to be paid within the next accounting period are called

    • A.

      A. wages.

    • B.

      B. liabilities.

    • C.

      C. taxes.

    • D.

      D. long-term liabilities.

    Correct Answer
    D. D. long-term liabilities.
    Explanation
    Long-term liabilities are debts that are not required to be paid within the next accounting period. This means that they are obligations that will not be settled within the next 12 months. Examples of long-term liabilities include long-term loans, bonds payable, and mortgages.

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  • 14. 

    Which of the following transactions will result in the trial balance being out of balance?

    • A.

      A. $500 salary payment posted as a $500 debit to cash and a $500 credit to salaries expense.

    • B.

      B. $200 check from a customer in payment of his/her account posted as $200 debit to cash and a $200 credit to accounts receivable.

    • C.

      C. $75 cash from a customer in payment of his/her account posted as a $75 debit to cash and a $57 credit to cash.

    • D.

      D. $50 cash purchase of office supplies posted as a $50 debit to office equipment and a $50 credit to cash

    Correct Answer
    C. C. $75 cash from a customer in payment of his/her account posted as a $75 debit to cash and a $57 credit to cash.
  • 15. 

    At the close of the fiscal year in June, Bernard�s Novelty had a cash balance of $8,000. What was the cash balance on June 1 if Bernard�s cash receipts for June were $15,526 and his disbursements were $12,200?

    • A.

      A. $3,326

    • B.

      B. $7,526

    • C.

      C. $4,200

    • D.

      D. $4,674

    Correct Answer
    D. D. $4,674
    Explanation
    To find the cash balance on June 1, we need to subtract the cash receipts and disbursements for June from the closing cash balance. Therefore, the cash balance on June 1 would be $8,000 - $15,526 + $12,200 = $4,674.

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  • 16. 

    Assume that Bernard�s Novelty is a partnership. Which transaction would occur if Partner A withdraws cash for personal use to purchase an automobile?

    • A.

      A. Debit salary expense and credit cash

    • B.

      B. Debit cash and credit Partner A, withdrawal

    • C.

      C. Debit Partner A, withdrawal and credit cash

    • D.

      D. Debit capital and credit cash

    Correct Answer
    C. C. Debit Partner A, withdrawal and credit cash
    Explanation
    Partner A withdrawing cash for personal use to purchase an automobile would result in a decrease in the partnership's cash balance and an increase in Partner A's withdrawal account. Therefore, the correct transaction would be to debit Partner A, withdrawal and credit cash. This accurately reflects the movement of funds from the partnership to Partner A for personal use.

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  • 17. 

    The accountant will write off a customer as a bad debt using the direct-write method by

    • A.

      A. debiting bad debts expense and crediting accounts receivable/customer in the general journal.

    • B.

      B. posting to the bad debts expense and accounts receivable accounts.

    • C.

      C. posting to the customer’s account showing it to be uncollectible.

    • D.

      D. All of the above

    Correct Answer
    D. D. All of the above
    Explanation
    The correct answer is d. All of the above. This means that the accountant will write off a customer as a bad debt using the direct-write method by debiting bad debts expense and crediting accounts receivable/customer in the general journal, posting to the bad debts expense and accounts receivable accounts, and posting to the customer's account showing it to be uncollectible. This method allows the company to recognize the loss from the uncollectible debt and remove it from the accounts receivable balance.

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  • 18. 

    Adjusting entries journal entries to update the ledger. Therefore, to adjust and account for depreciation expense, the bookkeeper will

    • A.

      A. debit the account and credit the related expense account.

    • B.

      B. debit the depreciation account and credit the accumulated depreciation account.

    • C.

      C. debit the accumulated depreciation account and credit the depreciation expense account.

    • D.

      D. debit the depreciation account and credit the owner’s equity account.

    Correct Answer
    B. B. debit the depreciation account and credit the accumulated depreciation account.
    Explanation
    The correct answer is b. When adjusting for depreciation expense, the bookkeeper will debit the depreciation account to record the expense and credit the accumulated depreciation account to update the carrying value of the asset. This allows for the recognition of the gradual decrease in the value of the asset over time.

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  • 19. 

    Which tax is paid by both employer and employee on the employee�s gross wages?

    • A.

      A. Federal income tax

    • B.

      B. FICA tax

    • C.

      C. State income tax

    • D.

      D. State unemployment tax

    Correct Answer
    B. B. FICA tax
    Explanation
    FICA tax is the correct answer because it is a tax that is paid by both the employer and the employee on the employee's gross wages. FICA stands for Federal Insurance Contributions Act, and it includes both Social Security tax and Medicare tax. These taxes are used to fund social security benefits and healthcare for retired and disabled individuals.

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  • 20. 

    Which of the following accounts needs no closing entries?

    • A.

      A. Capital

    • B.

      B. Supplies expense

    • C.

      C. Fees owed

    • D.

      D. All of the above

    Correct Answer
    A. A. Capital
    Explanation
    The capital account represents the owner's equity in the business and is not closed at the end of the accounting period. It is a permanent account that carries forward the balance from one period to the next. Closing entries are only required for temporary accounts, such as supplies expense and fees owed, which need to be reset to zero at the end of the period to start fresh in the next period. Therefore, the correct answer is a. Capital.

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  • 21. 

    Ending inventory is merchandise a business has on hand at the

    • A.

      A. beginning of the fiscal period

    • B.

      B. end of the fiscal period.

    • C.

      C. during the fiscal period.

    • D.

      D. midpoint of the fiscal period.

    Correct Answer
    B. B. end of the fiscal period.
    Explanation
    The ending inventory refers to the merchandise that a business has on hand at the end of the fiscal period. This includes any unsold goods or products that are still in the company's possession. It is important for businesses to accurately determine their ending inventory as it is used in calculating the cost of goods sold and ultimately impacts the financial statements and profitability of the business.

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  • 22. 

    A business had gross sales of $4,500 and sales discounts of $250 at the end of May. Net sales at the end of May were $4,100 as there was a sales return and allowance on May 15. How did the bookkeeper record the return and for what amount?

    • A.

      A. Debit sales discounts for $250, credit accounts receivable/customer.

    • B.

      B. Credit sales returns and allowances for $150, debit accounts receivable/customer.

    • C.

      C. Debit sales returns and allowances for $150, credit accounts receivable/customer

    • D.

      D. Debit sales discounts for $150, credit accounts receivable/customer

    Correct Answer
    C. C. Debit sales returns and allowances for $150, credit accounts receivable/customer
    Explanation
    The bookkeeper recorded the return by debiting sales returns and allowances for $150 and crediting accounts receivable/customer. This means that the business received a return or allowance from a customer for $150, which reduced the amount of net sales. This is reflected in the financial records by decreasing the sales returns and allowances account and reducing the accounts receivable/customer balance.

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  • 23. 

    ___________ stock is the type of stock issued by a corporation when only one class of stock is issued.

    • A.

      Preferred

    • B.

      Common

    • C.

      Capital

    • D.

      Dividend

    Correct Answer
    B. Common
    Explanation
    Common stock is the type of stock issued by a corporation when only one class of stock is issued. This means that there are no other classes or types of stock available, such as preferred stock. Common stock represents ownership in a company and typically carries voting rights and the potential for dividends. It is the most common type of stock that investors can purchase and is often traded on public exchanges.

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  • 24. 

    Retained earnings are earnings of a ________ and will be shown on the ______________.

    • A.

      Sole proprietorship, balance sheet

    • B.

      Partnership, income statement

    • C.

      Corporation, balance sheet

    • D.

      Corporation, income statement

    Correct Answer
    C. Corporation, balance sheet
    Explanation
    Retained earnings are the profits that a corporation has earned and kept for reinvestment or distribution to shareholders. They represent the accumulated earnings of the company over time. Retained earnings will be shown on the balance sheet of a corporation, which is a financial statement that provides a snapshot of the company's financial position at a specific point in time. The balance sheet includes assets, liabilities, and shareholders' equity, where retained earnings are a component of shareholders' equity.

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  • 25. 

    The balance sheet will show:

    • A.

      Asset accounts only on a specific date

    • B.

      Preliminary balances of all the asset and liability accounts on a specific date.

    • C.

      Final balances of all accounts on a specific date.

    • D.

      Final balances in all asset, liability, and owner’s equity accounts

    Correct Answer
    B. Preliminary balances of all the asset and liability accounts on a specific date.
    Explanation
    The balance sheet is a financial statement that shows the financial position of a company at a specific date. It includes the assets, liabilities, and owner's equity. The answer states that the balance sheet will show the preliminary balances of all the asset and liability accounts on a specific date. This means that the balance sheet will reflect the initial balances of these accounts before any adjustments or changes have been made. It does not include the final balances or the owner's equity accounts.

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  • 26. 

    A store purchased an insurance policy for $1,800 on September 1.  Its fiscal period ended on December 31.  What is the amount of the adjustment, and what accounts are debited and credited on December 31?

    • A.

      $1,800; insurance expense and prepaid insurance

    • B.

      $1,200; insuracne expense and prepaid insurance

    • C.

      $600; insurance expense and prepaid insurance

    • D.

      $600; prepaid insurance and insurance expense

    Correct Answer
    C. $600; insurance expense and prepaid insurance
    Explanation
    The correct answer is $600; insurance expense and prepaid insurance. On December 31, the store needs to make an adjustment to reflect the portion of the insurance policy that has been used up during the fiscal period. Since the policy was purchased on September 1 and the fiscal period ends on December 31, there are 4 months (September, October, November, December) that have passed. Each month represents 1/12th of the policy's value, so 4/12th or $600 has been used up. Insurance expense is debited to reflect the expense incurred, and prepaid insurance is credited to reduce the prepaid asset.

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  • 27. 

    To calculate the cost of merchandise sold, the accountant will

    • A.

      Add ending inventory to the beginning inventory and deduct gross purchases.

    • B.

      Determine transportation costs, purchase discounts, and purchase returns and allowances; add the next amount to beginning inventory; deduct the ending inventory from the total.

    • C.

      Add only purchases to beginning inventory and deduct ending inventory

    • D.

      Complete the steps in item C, but consider only the amount of Transportation In plus purchases to determine the net amount.

    Correct Answer
    C. Add only purchases to beginning inventory and deduct ending inventory
    Explanation
    The correct answer is to add only purchases to beginning inventory and deduct ending inventory. This method calculates the cost of merchandise sold by considering only the purchases made during the accounting period and deducting the value of the ending inventory. This approach ensures that only the cost of the goods actually sold is accounted for, providing an accurate measure of the cost of merchandise sold.

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  • 28. 

    In a corporation, the capital stock account is to the corporation what the ____________ account is to a sole proprietorship.

    • A.

      Partner’s equity

    • B.

      Owner’s equity

    • C.

      Stockholder’s equity

    • D.

      Retained earnings

    Correct Answer
    B. Owner’s equity
    Explanation
    In a corporation, the capital stock account represents the ownership interest of the shareholders. Similarly, in a sole proprietorship, the owner's equity account represents the owner's ownership interest in the business. Therefore, the correct answer is owner's equity.

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  • 29. 

    A price reduction given to a customer would affect which account?

    • A.

      Capital

    • B.

      Purchase allowance

    • C.

      Sales allowance

    • D.

      Purchase return

    Correct Answer
    C. Sales allowance
    Explanation
    When a price reduction is given to a customer, it is considered a sales allowance. This is because a sales allowance is a deduction or discount given to a customer on the selling price of a product or service. It is a reduction in the amount of revenue earned from the sale. Therefore, a price reduction given to a customer would affect the sales allowance account.

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  • 30. 

    A form for recording accounting information in chronological order is called a

    • A.

      Journal

    • B.

      Ledger

    • C.

      General Ledger

    • D.

      All of the above

    Correct Answer
    A. Journal
    Explanation
    A form for recording accounting information in chronological order is called a journal. This is where all financial transactions are initially recorded before being transferred to the ledger. The journal serves as a primary record of all the transactions, including the date, description, and amount. It helps in maintaining a systematic and organized approach to record-keeping in accounting. The ledger and general ledger, on the other hand, are secondary records that summarize and categorize the information from the journal. Therefore, the correct answer is journal.

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  • 31. 

    On what document is net income or net loss reported?

    • A.

      Balance sheet

    • B.

      Income statement

    • C.

      General ledger

    • D.

      A and B

    Correct Answer
    B. Income statement
    Explanation
    Net income or net loss is reported on the income statement. The income statement provides a summary of a company's revenues, expenses, and net income or net loss for a specific period of time. It shows the financial performance of a company by detailing its revenues and gains, as well as its expenses and losses. The net income or net loss is calculated by subtracting the total expenses and losses from the total revenues and gains. Therefore, the income statement is the document on which net income or net loss is reported.

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  • 32. 

    Double-entry accounting is

    • A.

      An accounting system in which each transaction affects and is recorded in two or more accounts with unequal debits and equal credits.

    • B.

      An accounting system in which each transaction affects and is recorded in two or more accounts with total debits equal to total credits.

    • C.

      An accounting system in which the sum of the debit account balances never equal the sum of the credit account balances.

    • D.

      An accounting system in which errors never occur

    Correct Answer
    B. An accounting system in which each transaction affects and is recorded in two or more accounts with total debits equal to total credits.
    Explanation
    Double-entry accounting is a fundamental accounting method that ensures accuracy and reliability in recording financial transactions. In this system, each transaction affects at least two accounts, with one account debited and another credited. The total debits must always equal the total credits, ensuring that the accounting equation (Assets = Liabilities + Equity) remains balanced. This approach provides a comprehensive view of the financial health of a business and helps detect errors and discrepancies. By recording transactions in this manner, double-entry accounting enhances transparency, facilitates financial analysis, and enables stakeholders to make informed decisions based on accurate and complete financial information.

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  • 33. 

    The financial position of a business reflected on a balance sheet shows how a business is doing

    • A.

      Over a specific period of time

    • B.

      For 12 months

    • C.

      On a specific date.

    • D.

      All of the above

    Correct Answer
    C. On a specific date.
    Explanation
    The correct answer is "on a specific date." This is because a balance sheet provides a snapshot of a business's financial position at a specific point in time. It includes information about the company's assets, liabilities, and equity on that particular date. The balance sheet does not show how the business is doing over a specific period of time, such as 12 months. Instead, it provides a static view of the business's financial health at a given moment.

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  • 34. 

    Which of the following is classified as a long-term liability?

    • A.

      Wages

    • B.

      Bond payable

    • C.

      Taxes payable

    • D.

      Note payable due in 15 months

    Correct Answer
    D. Note payable due in 15 months
    Explanation
    A long-term liability refers to a debt or obligation that is not expected to be settled within the next year. Wages, taxes payable, and bond payable are all short-term liabilities as they are expected to be settled within a year. However, a note payable due in 15 months is classified as a long-term liability because it is not expected to be settled within the next year.

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  • 35. 

    You are given the following information:  cost of merchandise sold, $404,000; operating expenses, $785,122; and net sales, $557,225.  What is the company’s gross profit on sales?

    • A.

      $381,122

    • B.

      $227,897

    • C.

      $267,135

    • D.

      $153,225

    Correct Answer
    D. $153,225
    Explanation
    The company's gross profit on sales can be calculated by subtracting the cost of merchandise sold from the net sales. In this case, the net sales are $557,225 and the cost of merchandise sold is $404,000. Therefore, the gross profit on sales is $557,225 - $404,000 = $153,225.

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  • 36. 

    June earns $8.50 per hour.  She is paid overtime for hours worked over 40.  One week, she worked 42.5 hours.  Her gross earnings for the week are

    • A.

      $375.00

    • B.

      $357.00

    • C.

      $371.88.

    • D.

      $372.00

    Correct Answer
    C. $371.88.
    Explanation
    June earns $8.50 per hour and is paid overtime for hours worked over 40. In this week, she worked 42.5 hours, which means she worked 2.5 hours of overtime. To calculate her gross earnings, we need to calculate her regular earnings for 40 hours and her overtime earnings for the remaining 2.5 hours. Her regular earnings for 40 hours would be 40 * $8.50 = $340. Her overtime earnings for 2.5 hours would be 2.5 * ($8.50 * 1.5) = $31.88. Adding these two amounts together, her gross earnings for the week would be $340 + $31.88 = $371.88.

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  • 37. 

    Beginning inventory is

    • A.

      Merchandise a business has on hand at the beginning of the fiscal period.

    • B.

      Merchandise a business sells during the fiscal period

    • C.

      Merchandise a business has on hand at the end of the fiscal period.

    • D.

      Merchandise a business purchases during the fiscal period.

    Correct Answer
    A. Merchandise a business has on hand at the beginning of the fiscal period.
    Explanation
    The correct answer is "merchandise a business has on hand at the beginning of the fiscal period." This means that the beginning inventory refers to the goods or products that a business has in its possession at the start of the fiscal period. It represents the stock that the business already has before any sales or purchases are made during that period.

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  • 38. 

    The difference between net sales and the cost of merchandise sold is called

    • A.

      Gross profit

    • B.

      Gross profit on sales

    • C.

      Net income on sales.

    • D.

      Difference between gross income and operating expense.

    Correct Answer
    B. Gross profit on sales
    Explanation
    The correct answer is "gross profit on sales" because it accurately describes the difference between net sales and the cost of merchandise sold. Gross profit on sales represents the amount of revenue remaining after subtracting the direct costs associated with producing or acquiring the merchandise being sold. It is an important financial metric that indicates the profitability of a company's core operations before considering other expenses such as operating expenses.

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  • 39. 

    Asset accounts from the worksheet are extended to the

    • A.

      Income statement

    • B.

      Balance sheet

    • C.

      Trial balance

    • D.

      Statement of owner’s equity

    Correct Answer
    B. Balance sheet
    Explanation
    The correct answer is balance sheet. Asset accounts from the worksheet are extended to the balance sheet because the balance sheet provides a snapshot of an organization's financial position at a specific point in time. It includes assets, liabilities, and owner's equity. By extending asset accounts from the worksheet to the balance sheet, the organization can accurately represent its assets and their respective values. This allows stakeholders to understand the organization's financial health and make informed decisions.

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  • 40. 

    The amount of interest on a 90-day, $7,500 interest-bearing note at 8.5% is

    • A.

      $637.50.

    • B.

      $157.19.

    • C.

      $1,746.58.

    • D.

      174.66

    Correct Answer
    B. $157.19.
    Explanation
    The correct answer is $157.19. To calculate the amount of interest on a 90-day, $7,500 interest-bearing note at 8.5%, we can use the formula: Interest = Principal x Rate x Time. Plugging in the values, we get: Interest = 7,500 x 0.085 x (90/365) = $157.19.

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