Question
1.
Question : An entity that is organized according to state or federal statutes
and in which ownership is divided into shares of stock is a
Student
Answer: proprietorship.
corporation.
partnership.
governmental
unit.
2.
Question : When a product is sold, this cost is often called
Student
Answer: cost of goods sold.
revenue.
products.
retained
earnings.
3.
Question : Which of the following are business stakeholders?
Student
Answer: Stockholders
Suppliers
Customers
All
of these
4.
Question : The role of accounting in business is best defined as
Student
Answer: an information system that provides reports to stakeholders about the
economic activities and condition of a business.
a method of forecasting the future profitability of a company.
the
policies, procedures, and strategies used in a business.
transaction
analysis.
5.
Question : The following are examples of internal stakeholders EXCEPT:
Student
Answer: managers.
creditors.
employees.
All
of these are internal stakeholders.
6.
Question : Costs incurred in operating a business are also known as
Student
Answer: revenues.
expenses.
liabilities.
dividends.
7.
Question : More than 70% of businesses are organized as what type of business?
Student
Answer: Community Not-for-profit
Corporation
General
Partnership
Sole
proprietorship
8.
Question : Which of the following must receive IRS permission AND is reportable
in the financial records?
Student
Answer: The value of goodwill earned through business operations
The
value of human resources
Changes
in personnel
Changes
in inventory costing methods
9.
Question : A chart of accounts is a
Student
Answer: subsidiary ledger.
listing
of all account titles.
general
ledger.
general
journal.
10.
Question : The last step in the accounting cycle is to
Student
Answer: prepare a post-closing trial balance.
journalize
and post-closing entries.
prepare
financial statements.
journalize
and post adjusting entries.
11.
Question : Under the cash basis of accounting,
Student
Answer: revenues are recorded when they are earned.
accounts
receivable would appear on the balance sheet.
depreciation
of assets having an economic life of more than one year is recognized.
the matching principle is ignored.
12.
Question : The basic financial statements are listed below:
(1) Balance sheet
(2) Statement of retained earnings
(3) Income statement
(4) Statement of cash flows
In which of the following sequences does the accountant ordinarily prepare the
statements?
Student
Answer: 1, 4, 3, 2
2,
1, 3, 4
3,
2, 1, 4
3,
2, 4, 1
13.
Question : If an inventory account is understated at year end, the effect will
be to overstate the
Student
Answer: net purchases.
gross
margin.
cost
of goods available for sale.
cost
of goods sold.
14.
Question : An adjusting entry will not take the format of which one of the
following entries?
Student
Answer: A debit to an expense account and a credit to an asset account
A
debit to an expense account and a credit to a revenue account
A
debit to an asset account and a credit to a revenue account
A
debit to a liability account and a credit to a revenue account
15.
Question : Sky Company collected $12,350 in interest during 2013. Sky showed
$1,850 in interest receivable on its December 31, 2013, balance sheet and
$5,300 on December 31, 2012. The interest revenue on the income statement for
2013 was
Student
Answer: $3,450.
$8,900.
$12,350.
$14,200.
16.
Question : On August 1 of the current year, Kyle Company borrowed $278,000 from
the local bank. The loan was for 12 months at 9 percent interest payable at the
maturity date. The adjusting entry at the end of the fiscal year relating to
this obligation would include a
Student
Answer: debit to interest expense of $25,020.
debit
to interest expense of $10,425.
credit
to note payable of $10,425.
debit
to interest receivable of $10,425.
17.
Question : Which of the following criteria must be met before recording an
accounting event?
Student
Answer: The event must be an arm’s-length transaction.
The
event must be repeatable in a future period.
The
event must be measurable in financial terms.
The
event must be disclosed in the reported footnotes.
18.
Question : How would proceeds received in advance from the sale of
nonrefundable tickets for the Super Bowl be reported in the seller’s financial
statements published before the Super Bowl?
Student
Answer: Revenue for the entire proceeds.
Revenue
less related costs.
Unearned
revenue less related costs.
Unearned
revenue for the entire proceeds.
19.
Question : The Supplies on Hand account balance at the beginning of the period
was $6,600. Supplies totaling $12,825 were purchased during the period and
debited to Supplies on Hand. A physical count shows $3,825 of Supplies on Hand
at the end of the period. The proper journal entry at the end of the period
Student
Answer: debits Supplies on Hand and credits Supplies Expense for $9,000.
debits
Supplies Expense and credits Supplies on Hand for $12,825.
debits
Supplies on Hand and credits Supplies Expense for $15,600.
debits
Supplies Expense and credits Supplies on Hand for $15,600.
20.
Question : The inventory turnover ratio
Student
Answer: measures management’s ability to productively employ all of its
resources.
measures the efficient use of assets held for resale.
is
a stringent measure of liquidity.
provides
a measure of the strength of the sales mix the company currently employs.
21.
Question : Statements in which all items are expressed only in relative terms
(percentages of a common base) are
Student
Answer: horizontal statements.
percentage
statements.
vertical
statements.
common-size
statements.
22.
Question : Which of the following ratios does NOT measure efficiency or
activity of an entity?
Student
Answer: Accounts receivable turnover
Age
of accounts receivable
Net
cash flow to current liabilities
Times
interest earned
23.
Question : The percent of fixed assets to total assets is an example of
Student
Answer: vertical analysis.
solvency
analysis.
profitability
analysis.
horizontal
analysis.
24.
Question : Which of the following is included in the computation of the quick
ratio?
Student
Answer: Prepaid rent
Accounts
receivable
Inventory
Supplies
25.
Question : Which of the following ratios would not be affected by the choice of
depreciation methods?
Student
Answer: Working capital turnover
Earnings
per share of common stock
Debt
to equity
Price-earnings
ratio
