Financial Accouting Midterm Practice Part 2
Financial Accouting Midterm Practice Part 2Questons 1-36 from Quiz 3
- 1.Which of the following best represents the expanded accounting equation?
- A.
Assets = Liabilities + Common Stock - Revenues - Expenses + Dividends
- B.
Assets - Liabilities - Common Stock = Revenues - Expenses - Dividends
- C.
Assets - Liabilities = Revenues - Exports - Dividends
- D.
Assets - Liabilities = Revenues - Expenses + Dividends
- 2.A trial balance will not balance if
- A.
A $500 payment on accounts payable is debited to Accounts Payable for $50 and credited to Cash for $50
- B.
A $350 payment of rent is debited to Rent Expense for $350 and credited to Cash for $35
- C.
A transaction is not posted at all
- D.
A journal entry is posted twice
- 3.Recognizing expense results in a(n)
- A.
Decrease to the expense account
- B.
Increase to the expense account
- C.
Increase in retained earnings
- D.
Decrease to the revenue account
- 4.The current ratio and the quick ratio are both relative measures of a compnay's liquidity. They differ in how they are computed because
- A.
The current ratio is considered to be a more conservative measure of a company's liquidity
- B.
The quick ratio is considered to be a more conservative measure of a company's liquidity
- C.
The current ratio is considered to be a more accurate measure of a company's liquidity
- D.
The quick ratio also measures profitability
- 5.In a T-account, the left side is called the
- A.
Increase side
- B.
Decrease side
- C.
Credit side
- D.
Debit side
- 6.All of the following are components of a journal entry except
- A.
Trial balance
- B.
Explanation
- C.
Debit entry
- D.
Credit entry
- 7.The Dividends account is increased with a debit because dividends
- A.
Are declared an asset
- B.
Reduce liabilities
- C.
Result in a decrease in equity, so debiting Dividends would have the effect of decreasing Owner's Equity
- D.
Are an expense
- 8.A company purchases a piece of equipment for $8,000 in exchange for $4,000 cash and a $4,000 note payable. Which of the following journal entries represents the appropriate method for recording this transaction?
- A.
Cash $4,000 Note Payable $4,000 Equipment $8,000
- B.
Equipment $8,000 Cash $4,000 Accounts Payable $4,000
- C.
Equipment $8,000 Cash $4,000 Note Payable $4,000
- D.
Equipment $8,000 Cash $8,000
- 9.In recording accounting transactions, evidence that a transaction has taken place is obtained from
- A.
The Internal Revenue Service
- B.
The Securities and Exchange Commission
- C.
Source documents
- D.
The Board of Directors
- 10.Which of the following accounts is an asset?
- A.
Supplies
- B.
Dividends
- C.
Accounts Payable
- D.
Service Revenue
- 11.The usual sequence in the steps in the accounting cycle is
- A.
Posting - journalize - analyze - trial balance
- B.
Journalize - analyze - posting - closing
- C.
Journalize - posting - analyze - closing
- D.
Analyze - journalize - posting - trial balance
- 12.When a company prepares its trial balance, which sequence of accounts below represents the proper order in which the accounts should be listed?
- A.
Assets Expenses Liabilities Revenues Equity Dividends
- B.
Assets Liabilities Equity Dividends Revenues Expenses
- C.
Assets Dividends Equity Expenses Liabilities Revenues
- D.
Assets Revenues Equity Liabilities Expenses Dividends
- 13.The trial balance does all of the following except
- A.
Help identify which accounts need to be closed
- B.
Verify that accounts with debit balances equal accounts with credit balances
- C.
Verify all of the accounts that will be used in the financial statements
- D.
Ensure there are no errors in the accounting records
- 14.If a journal entry has been posted, the accounting equation is out of balance, then one might conclude that
- A.
The transaction was a bad business decision for the company
- B.
The company owes a tax liability
- C.
The transaction was posted to the wrong accounts
- D.
The income statement will show a net loss
- 15.___________ refers to the process of transferring amounts from the journal entries to general ledger accounts.
- A.
Balancing
- B.
Journalizing
- C.
Analyzing
- D.
Posting
- 16.Recognizing an expense results in a(n)
- A.
Decrease to the expense account
- B.
Increase to the expense account
- C.
Increase in retained earnings
- D.
Decrease to the revenue account
- 17.If a company manager wants to determine the amount that the company owes to suppliers, to which account would the manager look to determine the amounts owed?
- A.
Accounts Payable
- B.
Unearned Revenue
- C.
Supplies Expense
- D.
Accounts Receivable
- 18.The normal balance of an asset account is
- A.
A credit balance
- B.
Always the same as the normal balance of the equity accounts
- C.
A debit balance
- D.
Dependent upon the financial condition of the entity
- 19.Which of the following entries shows revenues earned and billed but not yet collected?
- A.
Accounts Receivable XXX Revenue XXX
- B.
Revenue XXX Accounts Receivable XXX
- C.
Accounts Receivable XXX Cash XXX
- D.
Cash XXX Accounts Receivable XXX
- 20.One way to compute the quick ratio is
- A.
(Current Assets - Inventory) / Current Liabilities
- B.
Net Income / Net Sales
- C.
Current Inventory / Current Liabilities
- D.
Current Assets / Current Liabilities
- 21.If Jennings Corporation has Net Sales of $15,750, Interest income of $675, Research and Development Expenses of $4,125, Selling Expenses of $3,246, Interest Expense of $438, and Office Expenses of $975, what is Jennings Corporation's Operating Income (Loss)?
- A.
$7,641
- B.
$10,651
- C.
$7,404
- D.
$6,291
- 22.The record of a single transaction that is entered into a company's journal is known as
- A.
Credit
- B.
T-account posting
- C.
Debit
- D.
Journal entry
- 23.If liabilities are paid in cash, then
- A.
Assets will increase
- B.
Liabilities will increase
- C.
Owner's equity will decrease
- D.
Assets will decrease
- 24.The quick ratio measures the company's
- A.
Short-term profits
- B.
Ability to cover its long-term obligations
- C.
Ability to meet its short-term debts with its most liquid assets
- D.
Ability to meet all of its short-term obligations
- 25.Which of the following entries represents payment for wages?
- A.
Cash XXX Salaries Expense XXX
- B.
Accounts Payable XXX Cash XXX
- C.
Wages Expense XXX Cash XXX
- D.
Cash XXX Salaries Payable XXX
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