Test Your Knowledge On Accounting

23 Questions | Total Attempts: 58

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Accounting Quizzes & Trivia

Take this quiz to learn more Account.


Questions and Answers
  • 1. 
    The most useful financial statement for analyzing a company’s profitability is the:
    • A. 

      Balance Sheet

    • B. 

      Statement of Retained Earnings

    • C. 

      Statement of Cash Flows

    • D. 

      Income Statement

  • 2. 
    With accrual accounting, revenues should be recorded when:
    • A. 

      Cash is collected from customers

    • B. 

      It is probable that a sale will be made

    • C. 

      The company decides it wants to

    • D. 

      Earned

  • 3. 
    Which of the following is an inventory system?
    • A. 

      LIFO

    • B. 

      Perpetual

    • C. 

      Weighted Average

    • D. 

      Gross Profit

  • 4. 
    With accrual accounting, expenses should be recorded when:
    • A. 

      Costs are incurred

    • B. 

      An invoice is received

    • C. 

      The company decides it wants to

    • D. 

      Cash payments are made

  • 5. 
    A current liability is a liability that can reasonably be expected to be paid:
    • A. 

      Within one year

    • B. 

      Between six months and 18 months

    • C. 

      Out of currently recognized revenues

    • D. 

      Out of cash currently on hand

  • 6. 
    The two primary external users of financial accounting reports are
    • A. 

      The federal government and management

    • B. 

      The federal government and investors

    • C. 

      Management and creditors

    • D. 

      Investors and creditors

  • 7. 
    A measurement of an entity’s ability to pay its obligations due within the next year or operating cycle is called
    • A. 

      Profitability

    • B. 

      Long-term risk

    • C. 

      Leverage

    • D. 

      Liquidity

  • 8. 
    Which of the following is included in the computation of gross profit?
    • A. 

      Income tax expense

    • B. 

      Other income-other expense

    • C. 

      Cost of Goods Sold

    • D. 

      Operating Expenses

  • 9. 
    With accrual accounting, costs (expenses) need to be matched either to “specific accounting periods” or
    • A. 

      To operating cycles

    • B. 

      When paid for

    • C. 

      To reporting entities

    • D. 

      To the period when revenues are earned

  • 10. 
    On Oct. 1, 2014, the Landlord Corp. received $32,000 in advance for eight months of rent from Oct. 1 of 2014 through May 31 of 2015. Landlord closes its books once a year on Dec. 31. How much does Landlord want to report in “rent Income” on its 2014 Income Statement?
    • A. 

      $4,000

    • B. 

      $12,000

    • C. 

      $20,000

    • D. 

      $32,000

  • 11. 
    The financial statement that reports what a company owns, what it owes, and what the owners of the company currently have invested in the company is called:
    • A. 

      A balance sheet

    • B. 

      An income statement

    • C. 

      A Statement of Stockholders' Equity

    • D. 

      A Statement of Cash Flows

  • 12. 
    Most companies record revenue:
    • A. 

      During the production process

    • B. 

      When production is completed

    • C. 

      At the point of sale

    • D. 

      When cash is received for the sale

  • 13. 
    In performing a complete liquidation of a corporation, which of the following is the proper order of cash distributions?
    • A. 

      Common shareholders, preferred shareholders, and creditors

    • B. 

      Common shareholders, creditors, and preferred shareholders

    • C. 

      Creditors, preferred shareholders, and common shareholders

    • D. 

      Creditors, common shareholders, and preferred shareholders

  • 14. 
    In theory, the reason that depreciation is record on fixed assets is because of:
    • A. 

      Revenue recognition

    • B. 

      Consistency

    • C. 

      Conservatism

    • D. 

      Matching

  • 15. 
    What kind of adjusting entry would use a “Rent Payable” account?
    • A. 

      Accrual

    • B. 

      Depreciation

    • C. 

      Transaction

    • D. 

      Deferral

  • 16. 
    “Merchandise Inventory” is reported at lower-of-cost-market because of the accounting concept of:
    • A. 

      Matching

    • B. 

      Consistency

    • C. 

      Conservatism

    • D. 

      Materiality

  • 17. 
    All of the following requirements about internal controls were enacted under the Sarbanes Oxley Act of 2002 except:
    • A. 

      Independent outside auditors must attest to the level of internal control

    • B. 

      Companies must develop sound internal controls over financial reporting

    • C. 

      Companies must continually assess the functionality of internal controls

    • D. 

      Independent outside auditors must eliminate redundant internal control

  • 18. 
    Which one of the following represents the expanded basic accounting equation?
    • A. 

      Assets = Liabilities + Common Stock + Dividends - Revenue - Expenses

    • B. 

      Assets + Dividends + Expenses = Liabilities + Common Stock + Revenues

    • C. 

      Assets - Liabilities - Dividends = Common Stock + Revenue - Expenses

    • D. 

      Assets = Revenues + Expenses - Liabilities

  • 19. 
    If total liabilities decreased by $4,000, then:
    • A. 

      Stockholders' equity must have decreased by $4,000

    • B. 

      Assets must have decreased by $4,000, or stockholders' equity must have increased by $4,000

    • C. 

      Assets and stockholders' equity each increased by $2,000

    • D. 

      Assets must have increased by $4,000

  • 20. 
    At October 1, 2014, Metz Industries had an Accounts Payable balance of $30,000. During the month, the company made purchases on account of $25,000 and made payments on account of $40,000. At October 31, 2014, the Accounts Payable balance is
    • A. 

      $30,000 debit

    • B. 

      $10,000 credit

    • C. 

      $15,000 credit

    • D. 

      $40,000 credit

  • 21. 
    Accounts receivable are valued and reported on the balance sheet
    • A. 

      In the investment section

    • B. 

      At gross amounts less sales returns and allowances

    • C. 

      At cash realizable value

    • D. 

      Only if they are not past due

  • 22. 
    On January 15, Nifty Company sells merchandise on account to Martinez Associates for $2,000 with terms 3/10, n/30. On January 20, Martinez returns merchandise worth $400 to Nifty. On January 24, payment is received from Martinez for the balance due. What is the amount of cash received?
    • A. 

      $1,600

    • B. 

      $1,552

    • C. 

      $1,540

    • D. 

      $1,120

  • 23. 
    Under the allowance method, writing off an uncollectible account
    • A. 

      Affects only the balance sheet accounts

    • B. 

      Affects both balance sheet and income statement accounts

    • C. 

      Affects only income statement accounts

    • D. 

      Is not an acceptable practice