How Much You Know Business Law? Quiz
How much do you know about business law? Could you pass this quiz? Business law is also known as commercial law, and it is the framework of rules through convention, agreement, or national or international legislation. It is the governing aspect of people in commercial matters. Business law starts with setting up a business. If you are studying business law, take this quiz and see how much you know.
- 1.Which of the following does not require an entry on the company's books?
- A.
Sales of preferred stock
- B.
sales of common stock
- C.
Sales of stock by one investor to another investor
- D.
Declaration of dividends
- 2.When a special payroll account is used, the balance after all payroll checks have been cashed is ____.
- A.
Zero
- B.
The amount of payroll taxes due
- C.
the total amount of deductions
- D.
cannot be determined from the information given
- 3.Responsibility accounting traces revenues, costs, and expenses to ____.
- A.
The accounting department
- B.
Each employee
- C.
The income statement
- D.
Individual managers who are responsible for making decisions about those revenues, costs, and expenses
- 4.When an account that has been written off using the direct write-off method is collected, the revenue account used is ____.
- A.
Allowance of Uncollectible Accounts
- B.
Collection of Uncollectible Accounts
- C.
Resales
- D.
Uncollectible Accounts Revenue
- 5.Recording uncollectible accounts expense at the time the amount is actually known to be uncollectible is known as the ____.
- A.
Adjusting method of recording losses from uncollectible accounts
- B.
allowance method of recording losses from uncollectible accounts
- C.
bad debts method of recording losses from uncollectible accounts
- D.
Direct write-off method of recording losses from uncollectible accounts
- 6.If the cost of ending merchandise inventory is understated, the cost of merchandise sold will be ____.
- A.
understated
- B.
overstated
- C.
not affected
- D.
Undetermined
- 7.If the principal of a 90-day note is $5,000.00 and the interest due at maturity is $125.00, the interest rate on the note is ____.
- A.
9.0%
- B.
9.5%
- C.
10.0%
- D.
12.0%
- 8.If the departmental margins are 30% of net sales, the company's net income for the fiscal period will normally be ____.
- A.
30% of net sales
- B.
More than 30% of net sales
- C.
Less than 30% of net sales
- D.
Greater than the cost of merchandise sold
- 9.In estimating inventory using the retail method, the estimated inventory at cost equals the inventory at retail times a percentage that is determined by dividing the ____.
- A.
Net purchases at cost by the net purchases at retail
- B.
Merchandise available for sale at cost by the merchandise available for sale at retail
- C.
net sales at cost by the net sales at retail
- D.
beginning inventory at cost by the beginning inventory at retail
- 10.The sales returns and allowances account is known as a ____.
- A.
Contra cost account
- B.
Contra revenue account
- C.
Contra sales discount account
- D.
Departmental cost account
- 11.In the check register, the Bank Balance column indicates the ____
- A.
Balance of cash in the checking account
- B.
amount of the last credit to Cash
- C.
amount of the last deposit to the checking account
- D.
bank balance for reconciling the bank statement
- 12.In the entry to journalize the employer payroll taxes expense for a semimonthly period, the account debited would be
- A.
Salary Expense
- B.
Payroll Taxes Expense
- C.
Unemployment Tax Payable-Federal
- D.
Cash
- 13.Which accounting concept is applied when it is stated that the earnings of a business must be satisfactory to continue operations?
- A.
Adequate Disclosure
- B.
Consistent Reporting
- C.
Going Concern
- D.
Materiality
- 14.The adjusting entry to record the estimated uncollectible accounts expense using the percentage of sales method is ____.
- A.
A debit to Uncollectible Accounts Expense and a credit to Allowance for Uncollectible Accounts
- B.
A debit to Allowance for Uncollectible Accounts and a credit to Uncollectible Accounts Expense
- C.
a debit to Uncollectible Accounts Expense and a credit to Accounts Receivable
- D.
a debit to Allowance for Uncollectible Accounts and a credit to Income Summary
- 15.If a company has a total revenue of $150,000, the cost of goods sold of $59,600, and total expenses of $72,985, its gross profit is
- A.
$77,315
- B.
$17,415
- C.
$132,585
- D.
$90,400
- 16.Purchases of equipment are an ____.
- A.
Operating activity and cash inflow
- B.
Operating activity and cash outflow
- C.
investing activity and cash inflow
- D.
investing activity and cash outflow
- 17.The amount withheld from employees' total earnings for federal income tax is determined ____.
- A.
By a percentage of total earnings
- B.
from tax base tables
- C.
From withholding tax tables
- D.
By a percentage of total deductions
- 18.Recording an adjusting entry for accrued interest income is an application of the accounting concept ____.
- A.
Objective Evidence
- B.
Historical Cost
- C.
Consistent Reporting
- D.
Matching Expenses with Revenue
- 19.At the end of a fiscal period, a business must show how much rent received in advance has become ____.
- A.
An expense
- B.
A revenue
- C.
An asset
- D.
A liability
- 20.A business that prepares departmental margin statements for two departments should have ____.
- A.
No income summary accounts
- B.
One income summary accounts
- C.
two income summary accounts
- D.
three income summary accounts
- 21.Charging more than the maximum legal interest rate is
- A.
Fraud
- B.
Usury
- C.
Extortion
- D.
Price-fixing
- 22.At the bottom level of the federal court system are the federal.
- A.
Small claims courts
- B.
district courts
- C.
Municipal courts
- D.
appellate courts
- 23.The doctrine stating that an employer can fire an employee at any time for any reason is known as
- A.
Wrongful discharge
- B.
loyment-at-will
- C.
collective bargaining
- D.
grievance procedure
- 24.Goods must be fit for ordinary purposes under the implied warranty of
- A.
Merchantibility
- B.
title
- C.
fitness for a particular purpose
- D.
privity
- 25.A contract that at first appears to bind both parties, but really binds no one is
- A.
Unconscionable
- B.
illusory
- C.
gratuitous
- D.
promissory estoppel
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