Test Your Knowledge On Accounting

23 Questions | By Mcquistan.2015 | Last updated: Mar 20, 2022 | Total Attempts: 149

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Test Your Knowledge On Accounting - Quiz

Take this quiz to learn more Account.

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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