Accounting 1 Midterm Pre-examination

80 Questions | Total Attempts: 327

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Accounting 1 Midterm Pre-examination - Quiz


Questions and Answers
  • 1. 
    When using the perpetual inventory system, freight charges on goods purchased are debited to inventory.
    • A. 

      True

    • B. 

      False

  • 2. 
    2. If both purchases and ending inventory are overstated by the same amount, net income is not affected.
    • A. 

      True

    • B. 

      False

  • 3. 
    3. All freight charges are included in the computation of the cost of goods sold.
    • A. 

      True

    • B. 

      False

  • 4. 
    4. The amount of profit will appear on the credit side of the Income Statement column on a worksheet if total revenues exceed total expenses for the period.
    • A. 

      True

    • B. 

      False

  • 5. 
    5. If the ending balance of the Supplies account is greater than its beginning balance, more supplies are purchased than used during the period.
    • A. 

      True

    • B. 

      False

  • 6. 
    6. When using the percentage of accounts receivable as computation for the doubtful accounts, the amount derived when multiplying the accounts receivable with the percentage is doubtful accounts expense.
    • A. 

      True

    • B. 

      False

  • 7. 
    7. Supplies purchased that were subsequently returned without replacement will be recorded by the buyer as a credit to purchase returns and allowances.
    • A. 

      True

    • B. 

      False

  • 8. 
    8. The adjusting entry to recognize earned commission revenues not previously recorded or billed will cause total assets to increase.
    • A. 

      True

    • B. 

      False

  • 9. 
    9. Reversing entries are made to correct errors in the accounts.
    • A. 

      True

    • B. 

      False

  • 10. 
    10. When profit or loss is zero, one of the usual closing entries will be avoided.
    • A. 

      True

    • B. 

      False

  • 11. 
    11. An entry debiting inventory and crediting cost of goods sold when merchandise is returned and the perpetual inventory method is used.
    • A. 

      True

    • B. 

      False

  • 12. 
    12. The cost of goods sold is equal to the cost of inventory at the end of the period plus net purchases minus the cost of inventory at the beginning of the period.
    • A. 

      True

    • B. 

      False

  • 13. 
    13. If a supplier ships goods f.o.b. destination, title passes to the buyer when the supplier delivers the goods to the common carrier.
    • A. 

      True

    • B. 

      False

  • 14. 
    14. One of the limitations of the income statement is that items cannot be measured reliably are not reported.
    • A. 

      True

    • B. 

      False

  • 15. 
    15. The income statement reveals net earnings (net income) of a firm at a point in time.
    • A. 

      True

    • B. 

      False

  • 16. 
    16. The use of a purchase discount account implies that the recorded cost of a purchased inventory item is its invoice price less the purchase discount allowable whether or not it is taken.
    • A. 

      True

    • B. 

      False

  • 17. 
    17. Distribution costs or selling expenses may not be directly related to the entity’s efforts to generate sales.
    • A. 

      True

    • B. 

      False

  • 18. 
    18. When an entity uses the perpetual inventory system, no entry is required to transfer the beginning inventory balance to the income summary account.
    • A. 

      True

    • B. 

      False

  • 19. 
    19. In no case shall deferrals be allowed to be reversed.
    • A. 

      True

    • B. 

      False

  • 20. 
    20. Adjusting entries are mainly anchored with the matching principle.
    • A. 

      True

    • B. 

      False

  • 21. 
    21. After journalizing and posting the closing entries, the balance of the owner’s capital account represents the cumulative net result of income, expense, and withdrawal transactions.
    • A. 

      True

    • B. 

      False

  • 22. 
    22. If there is a loss, the closing entries would involve a credit to income summary.
    • A. 

      True

    • B. 

      False

  • 23. 
    23. In an income statement that uses the method of natural presentation of expense, costs are grouped according to their functions.
    • A. 

      True

    • B. 

      False

  • 24. 
    24. There is sufficient information on a post-closing trial balance to prepare a balance sheet.
    • A. 

      True

    • B. 

      False

  • 25. 
    25. Trade discounts of 10%, 20% signifies that the invoice price is 72% of its list price.
    • A. 

      True

    • B. 

      False

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