Financial Accouting Midterm Practice Part 2

57 Questions | Total Attempts: 69

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Financial Accounting Quizzes & Trivia

Financial Accouting Midterm Practice Part 2Questons 1-36 from Quiz 3


Questions and Answers
  • 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