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Final Revision For Accounting Exam - 2

The document is a multiple choice quiz about accounting concepts. It contains 11 questions testing understanding of key accounting terms like financial accounting, the accounting equation, balance sheets, income statements, and the general ledger. The quiz covers the basic mechanics of accounting including debits and credits, journal entries, trial balances, and the preparation of basic financial statements.

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0% found this document useful (0 votes)
105 views29 pages

Final Revision For Accounting Exam - 2

The document is a multiple choice quiz about accounting concepts. It contains 11 questions testing understanding of key accounting terms like financial accounting, the accounting equation, balance sheets, income statements, and the general ledger. The quiz covers the basic mechanics of accounting including debits and credits, journal entries, trial balances, and the preparation of basic financial statements.

Uploaded by

david gamal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Module 1 Quiz

Multiple Choice
1. Financial accounting focuses on the specific needs of decision makers external to the
organization.Which of the following would not be an external user?

a. Stockholders
b. Internal Revenue Service
c. Vice President—Marketing
d. Banks

2. The correct version of the accounting equation is

a. assets = liabilities – owners’ equity


b. assets = liabilities + owners’ equity
c. liabilities = assets + owners’ equity
d. owners’ equity = assets + liabilities

3. The annual report does not include

a. a report from the independent auditors.


b. footnotes.
c. statements on the company’s internal controls.
d. a letter from the board of directors.

4. Another term for owners’ equity is

a. assets.
b. liabilities.
c. net assets.
d. net liabilities.

5. The balance sheet shows the financial status of a company

a. at a particular point in time.


b. for a period of a month, quarter, or year.
c. from the beginning of a period to the end of the period.
d. only at the end of the year.

6. A loan from the bank


a. increases assets and owner’s equity.
b. increases assets and liabilities.
c. increases liabilities and owner’s equity.
d. has no effect on total assets.

7. The purchase of inventory by paying cash causes


a. an increase in one asset and a decrease in another.
b. an increase in owner’s equity and a decrease in an asset.
c. an increase in an asset and an increase in a liability.
d. none of the above
8. If the owners’ (stockholders’) equity section of the balance sheet includes “Additional Paid-in-
Capital,” the type of organization is a

a. nonprofit.
b. partnership.
c. corporation.
d. governmental entity.

9. Which of the following is a disadvantage of the corporate form of ownership?

a. Separation of ownership and management


b. Continuity of existence
c. Unlimited liability
d. Ease of raising capital
e. Both c and d
f. None of the above

10. An audit opinion

a. is provided by the audited company’s president.


b. is provided by private accountants.
c. is provided by an independent CPA.
d. all of the above

Module 2 Quiz
Multiple Choice
1. A fiscal year

a. ends on December 31.


b. always ends at the end of the month.
c. ends on June 30.
d. is any 12 consecutive months.

2. The key components in measuring income are


a. revenue and assets.
b. assets and liabilities.
c. revenue and expenses.
d. retained earnings and expenses.
e. revenue and liabilities.
f. expenses and assets.

3. Which of the following help(s) determine when a sale should be included in the income
statement?
a. Recognition principle related to sales ‫تستحق خالص االيراد وهكتب في التقرير عندي اني‬
‫قدمت الخدمة ولو حتى ما اخدتش فلوس‬
b. Cost recovery principle
c. Matching principle -related to Expenses ‫ اد ايه‬، ‫هشوف انا استخدمت اد ايه من المصروفات دي‬
‫ اد ايه اهالك عن الفترة دي‬، ‫ايجار‬
d. Both a and c ‫لو كان السؤال بيتكلم عن قائمة الدخل كلها ( ايراد ومصروفات ) يبقى نختار االتنين‬
4. The recording of expenses in the same time period as the related revenues is called

a. matching.
b. recognition.
c. allocation.
d. accuracy.

5. Given the following information at the end of the year, what was the balance in retained
earnings atthe beginning of the year?

Total Assets = $190,000


Total Liabilities = 110,000
Contributed Capital = 30,000
Revenues = 85,000
Expenses = 70,000

a. $25,000
b. $35,000
c. $45,000
d. $80,000

6. Which of the following accounts is not an expense?


a. depreciation
b. salaries
c. dividends
d. delivery expense

7. Given the following information at the end of the year, how much was net income for the year?

Beginning retained earnings = $54,000


Dividends =
$20,000Ending retained earnings =
$69,000

a. $(5,000)
b. $15,000
c. $35,000
d. $40,000

8. Declaration of dividends to stockholders

a. increases paid-in capital. Assets = Liabilities + Equity ‫األرباح‬


‫ بس لو قال هو دفعها مثال فهتالقي الجانب التاني اتأثر‬، ‫المحتجزة هتقل مجرد ان قال ان فيه توزيعات‬
‫ هيزيد‬Payple ‫هيقل او‬Cash ‫ فا يا اما ال‬، ‫ ونشوف دفعها وال أل‬Declare ‫لو عملت‬
b. decreases paid-in capital.
c. increases retained earnings.
d. decreases retained earnings.
e. increases assets.
f. increases liabilities.
9. The ratio that is sometimes referred to as the earnings multiple is the

a. earnings-per-share ratio.
b. dividend-yield ratio.
c. price-earnings ratio.
d. dividend-payment ratio.

10. The only financial ratio required to be a part of the financial statements is

a. price-earnings.
b. earnings per share.
c. dividend-yield.
d. dividend-payout.

11. Which of the following formulas is used to calculate dividend-yield ratio?

a. Net income / average number of shares outstanding


b. Common dividends per share / market price per share
c. Market price per share / gross profit per share
d. Revenue / average number of shares outstanding

Module 3 Quiz
Multiple Choice
1. The general ledger

a. should always have a credit balance.


b. is a collection of accounts that support the financial statements.
c. is the book of original entry.
d. compiles all source documents.

2. Which of the following is a group of accounts that all normally have a debit balance?

a. Cash, Mortgage Payable, and Inventory


b. Land, Cost of Goods Sold, and Paid-in Capital
c. Accounts Receivable, Salaries Expense, and Inventory
d. Prepaid Rent, Building, and Notes Payable

3. The term credit means

a. to increase.
b. to decrease.
c. the left side of an account.
d. the right side of an account.

4. Source documents are


a. supporting original records of financial transactions.
b. journal entries.
c. ledger accounts.
d. increases on the left side of an account.
5. What is the correct order of the accounting process?

a. Ledger, journal, trial balance, balance sheet, income statement


b. Journal, trial balance, ledger, balance sheet, income statement
c. Trial balance, journal, ledger, income statement, balance sheet
d. Journal, ledger, trial balance, income statement, balance sheet

6. To find an explanation of a transaction, one would look at the

a. journal.
b. ledger.
c. chart of accounts.
d. trial balance

7. The trial balance is

a. the listing of all accounts.


b. a listing of all accounts with their balances.
c. a place where a running balance of an account is kept.
d. the book of original entry.

8. The trial balance makes sure that

a. the proper accounts are affected.


b. each account has the appropriate dollar amount balance.
c. the debits equal the credits in the journal.
d. the debits equal the credits in the ledger.
e. None of the above

9. When the financial statements are completed, the Income Summary account is found on
whichfinancial statement?
a. Balance sheet
b. Income statement
c. Statement of cash flows
d. None of the above

10. If the company ends the year with a net income, the balance in the Income Summary
accountimmediately preceding its closing will have a

a. debit balance.
b. credit balance (usually).
c. both a and b
d. credit balance (always).

11. If the bookkeeper (in 20X2) expenses the entire cost of a truck that normally would be used for
threeyears, then
a. net income will be understated for 20X2 and overstated for the years 20X3 and
20X4.
b. total assets will not equal liabilities plus owners’ equity.
c. net income will be overstated for 20X2 and understated for the years 20X3 and 0X4.
d. assets will be overstated for 20X2.
12. If the bookkeeper fails to make a revenue entry for 20X2,

a. both 20X2’s and 20X3’s net income will be overstated.


b. only 20X2’s net income will be overstated.
c. net income for 20X2 would be understated.
d. assets will be overstated for 20X2 and 20X3.

Module 4 Quiz
Multiple Choice
Implicit explicit
1. Which of the following is an example of an implicit transaction? ‫دي حاجة‬
‫دي ضمن‬
‫بكتشفها مع‬ ‫الحاجات اللي‬
a. Payment of one year’s rent in advance ‫الوقت لما‬
b. Payment of dividends to stockholders ‫اتأثر بسببها‬
‫ ملهاش‬، ‫يعدي‬ ‫الكاش‬
c. Recording monthly depreciation on equipment ، ‫دعوة بالكاش‬
d. Expiration of prepaid rent. Payments
‫ويدخل فيها‬
e. Both a and c Received
‫االهالك والـ‬
f. Both c and d Expirations

2. Which of the following is not an application of an accrual accounting?

a. Adjusting the accounts at the end of a period Paid or Received related to


b. Recognizing revenues when earned Cash basis not accrual
c. Recognizing expenses when incurred
d. Recording expenses when paid

3. A company recorded cash purchases of supplies as a debit to what account? ‫ومقالش انه استخدمها‬
Assets ‫اول ما بشتريها بحطها في ال‬
a. Assets I haven`t T Account called Asset ‫ علشان‬، ‫ما اخترتش دي ليه‬
b. Cash
c. Office Supplies Inventory
d. Office Supplies Expense when it expired ‫لما بستخدمه او وقتها عدى‬

4. In November, cash was received in advance of rendering a service. The explicit transaction was
correctly recorded in November. If the service was not performed by December 31, the
adjustingentry would be
a. a debit to Unearned Revenue and a credit to Cash. No cash in adjusting
b. a debit to Unearned Revenue and a credit to Revenue. ‫لو الخدمة تم تأديتها هناخد دي‬
c. a debit to Revenue and a credit to Prepaid Services.
d. a debit to Prepaid Services and a credit to Revenue.
e. both b and d
f. none of the above
5. The Wages Payable account is an example of

a. an expense.
b. an asset.
c. a liability.
d. an owners’ equity item.
6. ABC Engineering completed a survey for York, Corp., on July 30 and billed the company
onAugust 1. For ABC, this is an example of

a. an accrued expense.
b. an accrued revenue.
c. a deferred expense.
d. a deferred revenue.

7. The journal entry to record the receipt of revenue received in advance requires a

a. debit to Unearned Revenue.


b. credit to Revenue.
c. credit to Cash.
d. debit to Cash.
e. debit to Revenue.

8. The journal entry to record the accrual of interest expense on a one-year note requires a credit to

a. Cash.
b. Interest Expense.
c. Interest Payable.
d. Prepaid Interest.

9. Which of the following accounts is a current asset?

a. Accounts Receivable
b. Equipment
c. Goodwill
d. Accounts Payable

10. Which of the following accounts is a current liability?

a. Wages Payable
b. Bonds Payable due in 2019
c. Prepaid Rent
d. Sales Taxes Payable
e. both a and d

11. Which of the following is used in liquidity determination?

a. Return on sales ratio


b. Profit margin
c. Current ratio
d. None of the above Quick Ratio
12. Donald, Corp.’s balance sheet as of Dec. 31, 20X2 includes the following:

Current assets $ 60,000


Current liabilities $ 15,000
Total assets $ 90,000
Total liabilities $ 45,000

What is Donald’s current

ratio?a. 2.0
b. 4.0
c. 3.0
d. 6.0
13. Morton, Corp., has the following income statement items for the year 20X2:

Sales $ 100,000
Gross profit $ 72,000
Operating expenses $ 47,000
Net income $ 25,000

What is Morton’s return on sales?

a. 5%
b. 10%
c. 25%
d. 40%

Module 5 Quiz
Multiple Choice
1. The entry to record the return of goods from a customer would include
a. debit to Sales.
b. credit to Sales.
c. debit to Sales Returns and Allowances. ( Contra Account ) ‫عكس المبيعات فيظهر مدين‬
d. credit to Sales Returns and Allowances.
e. debit to Purchases Returns and Allowances.
f. credit to Purchases Returns and Allowances.

2. Joshua, Inc., offers two trade discounts for its products. A 10% discount is offered to
wholesalers, and 5% to retailers. If Joshua, Inc., sells merchandise priced at $45,000 to a
wholesaler, at what amount should the sale be recorded?
a. $49,500
b. $40,500
c. $47,250
d. $42,750

3. A sale on October 1 with terms of 20 EOM is due to be collected by


a. October 21.
b. October 31.
c. November 1.
d. November 20.
4. Buffy sold goods to Biff on December 1, 20X2, for $20,000. The invoice was marked 2/10, net
60. If Biff pays the bill on December 10, 20X2, how much will Buffy receive?

a. $20,400
b. $19,600
c. $20,000
d. $20,600

5. Brady, Inc. had credit card sales of $50,000 for the month of July. The credit card company
charges a 3% service cost for processing the sale. How much will Brady, Inc., receive when
payment is received from the credit card company?

a. $48,500
b. $50,000
c. $51,500
d. Need more information to solve
6. Melissa Company uses the specific write-off method to recognize bad debts. The entry to
writeoff an uncollectible account would be recorded by

a. a debit to Allowance for Uncollectible Accounts and a credit to Accounts


Receivable.
b. a debit to Bad Debt Expense and a credit to Accounts Receivable.
c. a debit to Bad Debt Expense and a credit to Allowance for Uncollectible Accounts.
d. a debit to Allowance for Uncollectible Accounts and a credit to Bad Debt Expense.

7. Under the allowance method of accounting for bad debts, the journal entry to record the write-off
of a specific uncollectible account would include

a. debit Allowance for Uncollectible Accounts.


b. debit Bad Debt Expense.
c. credit Allowance for Uncollectible Accounts.
d. debit Accounts Receivable.

8. SAY Co. had $900,000 of sales during 20X2, $400,000 of which were on credit. The balances in
its Accounts Receivable and its Allowance for Uncollectible Accounts on December 31, 20X2
were $80,000 and $20,000, respectively. Past experience indicates that 5% of all credit sales
willnot be collected. What is the correct amount for SAY Co. to debit to Bad Debt Expense?

a. $35,000 % of Sales Method ( will ignore A/R)


In this case :- No on your calculator use
b. $25,000 in the entry regardless of T Account
c. $15,000 Sales 400,000 x 5% = 20,000
d. $20,000 Dr 20,000 Bad debt Expense
Cr 20,000 Allowance
9. There is a debit balance of $2,000 before adjustments in Yetmar Company’s Allowance for
Uncollectible Accounts. Based on the aging schedule prepared at the end of the accounting
period, Yetmar estimates that $40,000 of receivables are uncollectible. The amount of bad debt
expense to be recognized is
You need to cover -2000 in the first, then record 40,000 , so need to 42,000
‫ فالزم‬، 40000 ‫ فانا عاوز اشوف الحساب فيه‬، 40000 ‫ والنهاردة حسب نسبته من اللي ما اتحصلش طلع‬، 2000 ‫هو قلب مدين ب‬
a. $42,000. 40000 ‫ األول وبعدين اعمل ال‬2000 ‫اغطي ال‬
b. $40,000.
c. $38,000 If Credit ‫او مقالش‬ % of A/R Method ( will ignore Sales) Allowance for Uncollectible Accounts
d. $ 2,000. In this case :- No on your calculator is the Debit Credit
figure that must appear in closing Balance 2000 42,000
of allowance T Account
balance 40,000

10. JKY, Inc., had credit sales in the current year of $5,000,000. JKY’s beginning and ending
accounts receivable for the current year were $800,000 and $1,200,000. What was JKY’s
accounts receivable turnover for the year?

a. 2.50 Sales / ( Average of A/R )


b. 4.17 = 5,000,000 / (( 1,200,000+800,000)/2)
= 5,000,000/1,000,000
c. 5.00 =5 times
d. 6.25

11. If JKY, Inc.’s accounts receivable turnover for the current year was 10.0, what was their average
collection period?
a. 52 days
= 365 / 10 = 36.5
b. 50 days About 37 Days
c. 45 days
d. 37 days

12. Which of the following would not be considered cash?


a. Paper money and coins
b. Money orders
c. Checks
d. 60-day note receivable

13. Which of the following is true regarding the control of cash in a business? We need to Maker
and checker
a. The employee who authorizes a check should not sign the check.
b. The employee who authorizes a check should sign the check if under $100.
c. The employees who handle the cash should also be responsible for bank
reconciliations.
d. Prenumbered checks should never be used. ‫االرقام بتكون مترتبة ومعمولة‬

14. The methods and procedures for authorizing transactions, safeguarding assets, and ensuring the
accuracy of the financial records are controls.
a. financial
Internal Control divided to
b. internal
c. managerial 1- Internal Accounting Control ( Financing and account )
2- Internal Administrative control ( related to employees in the company ).
d. administrative 3- Internal Managerial control.
e. accounting 4-
f. d and e
g. b and e
15. There are numerous general objectives for internal accounting controls. Which objectives relate
to establishing the system of accountability and are aimed at preventing errors and irregularities?
a. Valuation, authorization, recording
b. Reconciliation, valuation, recording
c. Safeguarding, authorization, recording
d. Safeguarding, valuation, recording
e. None of the above

16. What is the most important element of a successful internal control system?
a. Publication of the internal controls
b. Performing a cost-benefit analysis before each internal control is put into place
c. Personnel
d. Purchasing adequate insurance coverage
The quality of receivables refers to:
A. The creditworthiness of sellers.
B. The speed of collection.
C. The likelihood of collection without loss.
D. Sales turnover.
E. The interest rate.

1) The account receivable turnover measures:


A. How long it takes to sell accounts receivable to a factor.
B. How often, on average, receivables are received and collected during the period.
C. The relation of cash sales to credit sales.
D. How long it takes to sell merchandise inventory.
E. All of these.
2) Newton Company uses the allowance method of accounting for uncollectible accounts. On May 3,
the Newton Company wrote off the $3,000 uncollectible account of its customer, P. Best. On July
10, Newton received a check for the full amount of $3,000 from Best. On July 10, the entry or
entries Newton makes to record the recovery of the bad debt

is:

A. Option A
B. Option B May3
C. Option C write off
D. Option D Dr Allowance 3,000
Cr A/R 3,000
‫الراجل ضميره صحي وجه يسدد‬
Dr A/R 3,000
Cr Allowance 3,000
( Reverse )
Dr Cash
Cr A/R 3,000
3) A company uses the percent of sales method to determine its bad debts expense. At the end of the
current year, the company's unadjusted trial balance reported the following selected amounts:

All sales are made on credit. Based on past experience, the company estimates 0.6% of credit sales
to be uncollectible. What amount should be debited to Bad Debts Expense when the year-end
adjusting entry is prepared?
A. $1,275 ‫بعمل هنا‬
B. $1,775 % 0.6 ‫مديهاني‬ ‫اللي‬ ‫النسبة‬ ‫في‬ 800000 ‫المبيعات‬ ‫بضرب‬
C. $4,500 4800 =
D. $4,800
A/R & Allowance ‫وبتجاهل تماما‬
E. $5,500

4) Electron borrowed $75,000 cash from TechCom by signing a promissory note. TechCom's entry to
record the transaction should include a:
A. Debit to Notes Receivable for $75,000.
B. Debit to Accounts Receivable for $75,000.
C. Credit to Notes Receivable for $75,000.
D. Debit Notes Payable for $75,000.
E. Credit to Sales for $75,000.

5) Teller purchased merchandise from TechCom on October 17 of the current year and TechCom
accepted Teller's $4,800, 90-day, 10% note. What entry should TechCom make on December 31, to
record the accrued interest on the note?
A. Debit Cash $20; credit Notes Receivable $20.
B. Debit Cash $100; credit Notes Receivable $100.
C. Debit Interest Receivable $20; credit Interest Revenue $20.
D. Debit Interest Receivable $100; credit Interest Revenue $100.
E. Debit Cash $120; credit Interest Revenue $100; credit Interest Receivable $20.
10/17 - 12/31 ‫هحسب‬
‫كام يوم‬
‫ يوم‬75
4800 x 10% x 75 Days/365 days = 100$

120 ‫ يناير سدد‬15 ‫ يوم يعني ف‬90 ‫ولو جه عدى ال‬


Cash 120
Cr interest recev. 100 ‫من السنة اللي فاتت‬
Cr interest revenue 20 ‫ظهروا السنة دي‬
Module 6 Quiz
Multiple Choice
1. The primary purpose of the statement of cash flows is to provide information
a. about a company’s cash receipts and cash payments during an accounting period.
b. about a company’s investing and financing activities during an accounting period.
c. regarding a company’s financial position at the end of an accounting period.
d. regarding the operating activities for a period of time.

2. Which of the following is not a cash flow from operating activities?


a. Collections from customers
b. Interest and taxes paid
c. Purchase of a building for cash
d. Cash payments to employees

3. Which of the following is an increase in cash flows from investing activities?


a. Sale of property, plant, and equipment for cash
b. Purchase of property, plant, and equipment for cash
c. Payment of operating expenses
d. Purchase of securities that are not cash equivalents

4. Which of the following would not be represented in the financing section of the statement of
cashflows?
a. Long-term bonds payable issued
b. Issuing of equity securities
c. Purchase of treasury stock
d. Make a loan to a supplier the company lended other company or supplier

5. The collection of a loan repayment from a stockholder would appear in which section of the
statement of cash flows?

a. Operating
b. Investing the company collected Loan repayement
c. Financing
d. Other

6. The easiest way to identify operating cash flows under the direct method is to
a. examine the cash column of the balance sheet equation.
b. examine the income statement.
c. examine changes in current asset and current liability accounts.
d. adjust net income for non-cash items.

7. A sale of long-lived assets in exchange for cash would appear in which section of the statement
ofcash flows?

a. Operating
b. Investing
c. Financing
d. Other
8. The records of Williams Corporation showed a net loss of $10,000; depreciation expense of
$15,000; and an increase in accounts receivable of $6,000. The amount of cash provided by (usedin)
operating activities, assuming no other transactions, is

a. $(4,000)
b. $(1,000)
c. $ 5,000
d. $11,000

( -10,000 + 15000 – 6000 ) = -1000

9. Which of the following items would be added to net income to compute cash provided by
(usedin) operations under the indirect method?

a. Increase in merchandise inventory


b. Increase in accrued expenses payable
c. Decrease in accounts payable
d. Increase in bonds payable

10. Under the indirect method of preparing statement of cash flows, all of the following would
beadded to net income to arrive at cash flow from the operations, except

a. depreciation expense.
b. increase in accounts payable. ‫ ومعناها انها بالـ‬added ‫ راجعة على‬except
c. loss on the sale of equipment. included ‫ ولو عاوز يقول انها‬، positive
d. increase in accounts receivable. ‫هيقول كده‬

11. When preparing a statement of cash flows, the difference between the direct and indirect
methodoccurs in which of the following section(s)?

a. Financing activities
b. Operating activities
c. Investing activities
d. All of the above

12. Which statements would be used to analyze a company’s cash flow from the sale of an
operatingasset?

a. Income statement and the balance sheet


b. Only the income statement
c. Only the balance sheet
d. The retained earnings statement

13. The beginning balance in Accounts Receivable was $15,000; cash collections during the
periodwere $200,000; and the ending balance in Accounts Receivable was $7,500. The
revenue from sales during the period was
a. $192,500 Sales ??? ( 192,500 )
b. $200,000 + decrease in A/R 7,500
c. $207,500 ……………………….
d. $215,000 Cash collected 200,000
14. The Wages Payable account had a beginning balance of $5,000 and an ending balance of $7,000.
Wage expense for the period was $79,000. How much cash was paid for wages during the period?
15. a. $77,000
16. b. $79,000 Wages expense -79,000
17. c. $81,000 Wages payable increased + 2,000
18. d. $86,000 ……………………….
Wages paid - 77,000
Module 7 Quiz
Multiple Choice
1. Inventory becomes part of cost of goods sold when a company

a. sells the inventory.


b. purchases the inventory.
c. pays for the inventory.
d. receives the payment from the customer.

2. Accountants refer to the difference between sales and cost of goods sold as the

a. net sales.
b. holding gain.
c. goods available for sale.
d. gross profit.

3. The correct entry under the perpetual system for recording an inventory purchase includes

a. debit to Purchases.
b. debit to Merchandise Inventory.
c. debit to Accounts Payable.
d. credit to Purchases.

4. The cost of goods sold in a periodic inventory system is found by


a. deducting the cost of the ending inventory from the net cost of purchases.
b. deducting the cost of the ending inventory from the cost of goods available for sale.
c. deducting the cost of the beginning inventory from the cost of goods available
forsale.
d. adding the net cost of purchases to the ending inventory.

5. Under a perpetual inventory system, the purchase of goods for resale would result in
a. a debit to the Accounts Receivable account.
b. a debit to the Purchase account.
c. a debit to the Cost of Goods Sold account.
d. a debit to the Inventory account.

6. Which of the following is not acceptable for determination of inventory cost?


a. FIFO method
b. Average Cost method
c. Specific identification method
d. All of the above are acceptable.
7. In a periodic inventory system, if the ending inventory is understated by $7,000 as of December
31, 20X2,
a. cost of goods sold will be overstated.
b. cost of goods sold will be understated.
c. retained earnings will be understated.
d. a and c
e. none of the above

8. ABC, Inc., projects sales for the year 20X1 to be $60,000,000. For the past five years ABC’s
gross profit margin has averaged 65%. What amount should ABC, Inc., project for gross profit
for 20X2?
Gross Profit = Sales x Gorss Profit Margin
a. $39,000,000 = $60,000,000 x 65% = $39,000,000
b. $35,000,000
c. $21,000,000
d. $10,000,000

9. Merkey, Inc.’s cost of goods sold for 20X2 was $65,000. They had beginning and ending
inventory of $12,000 and $14,000, respectively. What was Merkey, Inc.’s inventory turnover for
20X2?

a. 5.6 Average of Inv. =


Beginning Inv $12,000 (+) Ending Inv. $14,000 = Total Inv. = $26,000
b. 5.4 Average = $26,000/2 = $13,000
c. 5.0 Inventory Turnover = COGS/average of Ending Inventory = $65,000 / $13,000 = 5.0 times
d. 4.6

10. Labor costs can be found in which type of inventory?

a. Finished goods inventory


b. Raw materials inventory
c. Work in process inventory
d. b and c
e. a and c

11. Which of the following is the correct flow of inventory costs?


a. Finished goods, raw materials, work in process
b. Work in process, finished goods, raw materials
c. Raw materials, work in process, finished goods
d. none of the above
Module 8 Quiz
Multiple Choice
1. Which of the following assets is carried indefinitely at its original cost?
a. Buildings
b. Equipment
c. Copyright
d. Land

2. Which of the following costs would be included in the cost of the machinery?
a. Invoice price
b. Installation costs
c. Testing of machinery prior to its intended use
d. b and c
e. a, b, and c

3. The primary purpose of depreciation is to

a. show the fair market value of an asset on the balance sheet.


b. provide for the replacement of an asset.
c. allocate the cost of an asset over the periods benefited.
d. record a decline in the value of an asset based on changes in the current
replacement cost of that asset.

4. For financial reporting purposes, the most frequently used depreciation method is

a. double-declining balance.
b. straight-line.
c. modified accelerated cost recovery system.
d. unit depreciation.

5. Cross Co. purchased a machine at the beginning of the year that cost $30,000 and has a $3,000
salvage value and a 6-year life. The depreciation expense for the first year under the straight-
linemethod should be

a. $4,000. Depreciable value= (C–R)


b. $4,500. = $30,000-$3,000 = $27,000
c. $5,000. Depreciation expense = ( C – R ) / n
= ( $27,000 / 6 Y = $4,500
d. $5,500.
6. Wingert Co. purchased a new truck for $62,000. The truck is expected to have a salvage value of
$12,000, a useful life of 4 years and 100,000 miles. The company uses units-of-production
depreciation. During the first and second years of operation, Wingert put 25,000 and 10,000
miles, respectively, on the vehicle. For the second year, depreciation expense should be

a. $5,000. Depreciable value= (C–R)


b. $7,400. = $62,000-$12,000 = $50,000
c. $12,500. Depreciation expense per unit of service = ( C-R)/n
d. $18,500. = $50,000 / 100,000 mile
= 0.5 Per mile
Dep. Exp for the first Year = 25,000 miles x $0.5
= $ 12,500
Dep. Exp for the second Year = 10,000 miles x $0.5
= $ 5,000
7. Nicoll Co. purchased a machine that cost $40,000 and has a $4,000 salvage value and a 4-year
life. The depreciation expense for the second year under the double-declining balance should be

a. $9,000. DDB rate = (100% ÷ 4 Years ) x 2= 50%


b. $10,000. Dep. Exp for Y1 = $ 40,000 x 50% = $20,000
c. $11,000. Dep. Exp for Y2 = $ 20,000 x 50% = $10,000
d. $20,000. Dep. Exp for Y3 = $ 10,000 x 50% = $5,000
Dep. Exp for Y4 = $ 5,000 x 50% = $2,500
ignoring residual value

8. The depreciation method that uses the residual value at the end of the depreciation process is

a. double-declining balance.
b. unit depreciation.
c. straight-line.
d. a and b

9. On January 1, 20X2, The MaLady Co. has machinery on the books that originally cost
$100,000.During 20X2, the following expenditures were made:

Minor repairs $ 5,000


Improvements 20,000
Accumulated depreciation 9,000

What is the balance in the machinery account on December 31, 20X2?a.

$105,000
b. $109,000
c. $111,000 $100,000 + $20,000 -= $120,000
d. $120,000

10. Cue Co. purchased a new truck in 20X0 for $27,000. On January 1, 20X3, when accumulated
depreciation was $20,000, the truck was sold for $7,000 cash. What amount of gain or loss
should Cue report for this sale?

a. $ -0-
b. $ 7,000
c. $10,000
d. $14,000

11. Which of the following would not be considered an intangible asset?


a. Leasehold
b. Trademark
c. Franchise
d. Accounts receivable

12. Natural resources may be called

a. intangible assets.
b. plant assets.
c. wasting assets.
d. none of the above
13. The term used to refer to the expiration or exhaustion of a natural resource asset is

a. amortization.
b. depreciation.
c. depletion.
d. termination.

Module 9 Quiz
Multiple Choice
1. Current liabilities are debts that are expected to be satisfied within

a. 1 year.
b. the normal operating cycle.
c. 1 year or the normal operating cycle, whichever is shorter.
d. 1 year or the normal operating cycle, whichever is longer. ‫ممكن تكون دورة التشغيل نفسها‬
‫بتاخد اكبر من سنة وان البضاعة ممكن تقعد عنده اكتر من سنة‬

2. On January 1, 20X2, Hoffman Company, a calendar year company, issued $75,000 of notes
payable, of which $15,000 is due on January 1 for each of the next 5 years. The proper
balancesheet presentation on December 31, 20X2, is

a. Current Liabilities – $75,000.


b. Long-Term Liabilities – $75,000.
c. Current Liabilities – $15,000, Long-Term Liabilities – $60,000.
d. Current Liabilities – $60,000, Long-Term Liabilities – $15,000.

3. The Tom Root Corporation guarantees its product against defects for 1 year. In what year
shouldthe corporation report the warranty expense?

a. In the year the product is sold. (Matching)


b. In the year the product becomes defective and is repaired or replaced.
c. The cost of warranty is included in the product’s selling price, and
thereforewarranty expense is never recorded.
d. Expense is not disclosed because of the Liability for Warranty.

4. Long-term liabilities are reported on a company’s balance sheet at the present value of all future
payments using
a. the current market interest rate.
b. the interest rate provided by the government.
c. the market interest rate at the time the liability was incurred.
d. the prime interest rate.

5. Which of the following bonds is secured with a general claim against the company’s total assets?
a. Debenture it’s for General asset
b. Subordinated debenture
c. Mortgage it’s for specific asset
d. Callable
6. On January 1, 20X2, Andrew Company issued $100,000 of 10% bonds at par. Andrew pays
interest semiannually on June 30 and December 30. To record the payment at maturity,
AndrewCompany
a. credits Bonds Payable for $100,000.
b. debits Cash for $100,000.
c. debits Bonds Payable for $100,000. And credit Cash
d. none of the above
semiannually interest 6 ‫الفايدة كل‬
Issuance‫هصدر‬ Payment‫هسدد‬
‫شهور‬
$100,000 Cash $100,000 Bonds Payable Dr Interest $5,000
$100,000 Bonds Payable sh $100,000 Cash Cr Cash $5,000

7. The amortization of a bond discount will result in reporting an amount of interest expense for
aninterest period that

a. equals the amount of cash to be paid for interest for the period.
b. exceeds the amount of cash to be paid for interest for the period.
c. is less than the amount of cash to be paid for interest for the period.
d. has no relationship with the amount of cash to be paid for interest for the period.

8. If bonds are issued at a premium, the net long-term liability Bonds Payable reported on
the balance sheet

a. increases each year during the life of the bond issue.


b. decreases each year during the life of the bond issue.
c. remains at the maturity value during the life of the bond issue.
d. remains at the issue price during the life of the bond issue.

9. A lease must be accounted for as a capital lease if it meets any one of four conditions. Which
ofthe following is not one of the conditions?

a. The lease contains a bargain purchase option.


b. The lease transfers ownership of property to lessee.
c. The lease term is 90% or more of the estimated economic life of the
75%
leasedproperty.
d. The present value of the minimum lease payments is at least 90% of the
property’sfair value.

10. A pension liability is


a. compensation paid to employees after retirement from employment.
b. the process of making payments to a pension fund.
c. the liability of an employer for future payments to existing retired
employees andto future retirees.
d. included in cost of goods sold.
11. Which of the following items would cause a permanent difference between taxable income
and financial income?
a. Bad debts
b. Rent received in advance
c. Municipal bond interest
d. Warranty expense

One common example is the interest received on municipal bonds. If a company receives tax-free interest, it should include
that income on its financial statements. However, it does not have to include that interest in its tax filing or pay taxes on it.
12. On May 1, 20X2, Pioneer, Inc.’s board of directors voted to restructure the company by closing
the seed division. The board estimated the process would be completed by August 31, 20X3.
The cost of closing the seed division facilities was anticipated to be $300,000 and there would
beadditional costs of $100,000 associated with terminating employees. Which of the following
is true as to the amount of the restructuring charge and when it would be recognized?
a. A loss of $400,000 on May 1, 20X2
b. A loss of $400,000 on December 31, 20X2
c. A loss of $300,000 on August 31, 20X3
d. A loss of $400,000 on December 31, 20X3

13. Drum, Inc., had the following balances at December 31, 20X2:

Total Liabilities $ 80,000


Total Shareholders’ Equity $ 20,000
Total Assets $100,000
Pretax Income $ 10,000

What is Drum’s debt-to-equity ratio?

a. 3:1
b. 4:1 Debt-to-equity ratio =Total liabilities/ Total shareholders’ equity
c. 5:1
d. 10:1

14. Drum, Inc., had the following balances at December 31, 20X2:

Total Liabilities $60,000


Total Shareholders’ Equity $20,000
Total Assets $80,000
Pretax Income $20,000

What is Drum’s debt-to-total asset ratio?


Debt-to-total-assets ratio = Total liabilities/ Total assets
a. 33%
b. 75% or 0.75
c. 100%
d. 133%
15. Compound interest

a. is the length of time between interest calculations.


b. is a method of computing interest that adds accrued but unpaid interest
to theprincipal amount due at regular intervals. ‫مش بسحب الفوائد هي بتتضاف‬
‫ ويتحسب عليها فوائد كلها‬، ‫على األصل‬
c. is the percentage multiplied by the beginning-of-period account balance.
d. can be used to measure the depreciation expense for the current period.
Compound interest = interest rate x principal amount that increases each time interest is earned but not paid
16. The term future value means

a. the amount principal and interest accumulate to.


b. the present worth of a series of future cash flows.
c. the sum of a series of future cash flows.
d. the percentage that is multiplied by the end-of-period account balance.

17. An ordinary annuity is

a. the sum of a series of payments at equal time intervals that are unequal in amount.
b. equal amounts of annual net income.
c. the compound interest earned on a single cash flow.
d. a number of cash flows occurring one interest period apart that are equal in amount.

Module 10 Quiz
Multiple Choice
1. The basic rights usually attached to shares of common stock include

a. the guaranteed right to receive dividend payments each year.


b. the right to determine CEO’s pay rate.
c. the right to vote on matters brought before the annual shareholder meeting.
d. all of the above

2. Outstanding shares of stock are

a. authorized shares that have not yet been issued.


b. shares of stock owned by unknown individuals.
c. also called treasury shares.
d. issued shares that are still in circulation.

3. Which of the following is the appropriate journal entry on the dividend date of record?

a. Retained Earnings
Cash
b. Paid-In Capital in Excess of Par Value
Dividends Payable
c. Retained Income
Dividends Payable
d. None of the above no entry in date of record

4. The following characteristic is usually not available to preferred stockholders:

a. Voting rights
b. Dividend preferences
c. Liquidation preferences
d. Conversion privileges
5. Which of the following is not a possible feature of preferred stock?
a.
b. Convertible
c. Participating
d. Callable
e. All of the above are possible features of preferred stock.

6. Which of the following characteristics of bonds and preferred stock are similar?

a. Dividends on preferred stock and interest on bonds automatically become liabilities


each year.
b. Dividends and interest are both deducted on the income statement.
c. Both preferred stock and bonds have specific maturity dates.
d. Preferred stock and bonds pay a specific return to the investor.

7. Stock options typically do not specify

a. the time period during which the related stock may be purchased.
b. the market price of the related stock at the time the stock may be purchased.
c. the number of shares that may be purchased.
d. the option price per share of the related stock.

8. The primary reason for a corporation to have a stock split is to

a. decrease the number of shares of stock outstanding.


b. decrease the market price of the stock.
c. increase the book value of the stock.
d. increase the paid-in capital of the corporation.

9. The declaration of a 30% stock dividend on a corporation’s common stock will

a. increase the total amount of paid-in capital by the par value of the shares
to beissued.
b. increase the total amount of paid-in capital by the market value of the shares to be
issued.
c. increase the total amount of retained earnings by the par value of the shares to be
issued.
d. increase the total amount of retained earnings by the market value of the shares to
be issued.

10. The declaration of a 10% stock dividend on 100,000 outstanding shares with a par value of $1
and a market value of $20 would include a debit to Retained Earnings of
a. $ - 0 -.
b. $27,000.
c. $200,000.
d. $210,000.

11. A stock split normally


a. increases the per-share price of the stock.
b. does not change the par value of the stock.
c. changes the par value of the stock.
12. increases total stockholders’ equityTreasury stock is

a. unissued but authorized stock.


b. stock repurchased by the originating corporation.
c. an asset acquired by making a cash disbursement.
d. government securities.

13. Bush Corporation reacquired 2,000 shares of its own $10 par value common stock for $30 per share. If
it reissues all the treasury stock for $35 per share, the entry to record the reissue would be

a. Cash 70,000
Treasury stock 60,000
Additional paid-in Capital 10,000
b. Cash 70,000
Common Stock 70,000
c. Cash 70,000
Common Stock 10,000
Paid-In Capital in Excess of Par 60,000
d. Cash 70,000
Treasury Stock 70,000

14. Groucho Co. issued 750,000 shares of $10 par value common stock in exchange for a building
valued at $800,000. The stock does not trade in an active market. The entry for this transaction
would include a

a. debit to the Building account for $750,000.


b. debit to the Building account for $800,000.
c. credit to Common Stock for $800,000.
d. credit to the Building account for $50,000.

15. We compute the book value per share of stock with only common shares outstanding as follows:
a. Divide the amount of retained earnings as of a balance sheet date by the number of
common shares issued as of that date.
b. Divide the amount of stockholders’ equity as of a balance sheet date by the
numberof common shares outstanding as of that date.
c. Divide the amount of stockholders’ equity as of a balance sheet date by the number
of common shares issued as of that date.
d. Divide the amount of stockholders’ equity as of a balance sheet date by the number
of common shares authorized as of that date
16. Journey Corp. reported net income of $50,000 for 20X2. Journey paid preferred dividends of
$20,000 and common dividends of $15,000 during 20X2. Average common stockholders’ equity
was $400,000 for the year. What was Journey’s rate of return on common equity?

a. 3.75%
b. 7.50%
c. 8.75%
d. 12.50%

Module 12 Quiz
Multiple Choice
1. Ankeny Corporation purchased 2,000 shares of ABC’s common stock for $33 per share on
February 28, 20X2. Ankeny intends to hold this stock as available-for-sale. At the end of 20X2
ABC’s market price was $35 per share. The $4,000 difference in value would be reported by
Ankeny as

a. an unrealized gain on the income statement.


b. an unrealized gain in other comprehensive income.
c. a footnote to the income statement.
d. The difference would not be reported.

2. On January 1, Jones pays $4,800 for a $6,000, 8% bond that pays interest on December 31 and
June 31. Jones plans on selling the bond within one operating cycle. What entry is needed for the
bond purchase?

a. Investment in Bonds should be debited for $4,800.


b. Bonds Payable should be debited for $6,000.
c. Cash should be debited for $4,800.
d. Discount on Bonds Payable should be debited for $1,200.

3. Under the market method of accounting for intercorporate investments in common stock,

a. dividends received from the investee are credited to Dividend Revenue.


b. dividends received from the investee are credited to Investment in the Company.
c. the investor company debits the Investment in the Company account for its share of
investee net income.
d. the investor company credits the Investment in the Company account for its share
of investee net income.

4. Which method is required for accounting for investment in common stock of 20% to 50%?

a. Lower-of-cost-or-market method
b. Equity method
c. Consolidation method
d. All of the above are acceptable.
5. Under the equity method of accounting for intercorporate investments in common stock,

a. the investor company debits the Investment in the Company account for its
share ofinvestee net income.
b. the investor company credits the Investment in the Company account for its share
of investee net income.
c. dividends received from the investee are debited to Investment in the Company.
d. dividends received from the investee are credited to Dividends Revenue.

6. When a corporation owns more than 50% of the voting stock of another corporation,

a. a parent/subsidiary relationship exists.


b. the two become part of an economic unit.
c. consolidated statements would normally be prepared.
d. all of the above

7. Generally, work sheet procedures to prepare consolidated financial statements include which of
the following steps?

a. Elimination of the parent company’s investment account


b. Elimination of the intercompany receivables and payables
c. Elimination of the intercompany sales and purchases
d. All of the above

8. P Company purchased 100% of the voting stock of S Company for $300,000 in cash. Assuming P
Company purchased S Company at its book value, one part of the work sheet elimination entryat
acquisition date is to

a. credit Stockholders’ Equity for $300,000.


b. debit Cash for $300,000.
c. credit Investment in S Company for $300,000.
d. debit Investment in S Company for $300,000.

9. Noncontrolling interests

a. represent ownership of stockholders who own less than 60% of the outstanding stock in a
consolidated company.
b. represent the rights of non-majority shareholders to assets and earnings of a consolidated
company.
c. represent ownership of those stockholders who own between 20 and 50%.
d. represent ownership of those stockholders who own less than 20% of the stock in a
consolidated corporation.

10. Goodwill is recorded as an asset

a. when favorable factors combine to create goodwill.


b. when it is paid for as a part of the purchase of a business.
c. when a company has superior earning power.
d. under no circumstances.
Quiz 1 Aug 2021
1- When closing entries are made:

A. All ledger accounts are closed to start the new accounting period.
B. All temporary accounts are closed but not the permanent accounts.
C. All real accounts are closed but not the nominal accounts.
D. All permanent accounts are closed but not the nominal accounts.
E. All balance sheet accounts are closed.

2- All of the following are inflows of cash EXCEPT

A. a decrease in accounts receivable.


B. net profits after taxes.
C. an increase in accounts receivable.
D. an increase in accruals.

3) Which of the following assets is not depreciated?

A. Store fixtures.
B. Computers.
C. Land.
D. Buildings.
E. All of these are depreciated.

4) Cash flows associated with the purchase and sale of fixed assets are called

A. operating flows.
B. investment flows.
C. financing flows.
D. none of the above.

5) Cash $20,500; A/R, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is
the amount of owner's equity

A. $8,300
B. $13,050
C. $20,500
D. $31,100
E. $40,400

6) Peter Company paid $30,000 of its accounts payable in cash. What would be the effects of this
transaction on the accounting equation?

A. Assets, $30,000 increase; liabilities, no effect; equity, $30,000 increase.


B. Assets, $30,000 decrease; liabilities, $30,000 decrease; equity, no effect.
C. Assets, $30,000 decrease; liabilities, $30,000 increase; equity, no effect.
D. Assets, no effect; liabilities, $30,000 decrease; equity, $30,000 increase.
E. Assets, $30,000 decrease; liabilities, no effect; equity $30,000 decrease.
7) Which of the following statements is incorrect?

A. The normal balance of accounts receivable is a debit.


B. The normal balance of owner's withdrawals is a debit.
C. The normal balance of unearned revenues is a credit.
D. The normal balance of an expense account is a credit.
E. The normal balance of the owner's capital account is a credit.

8) Two common subgroups for liabilities on a classified balance sheet are:

A. current liabilities and intangible liabilities.


B. present liabilities and operating liabilities.
C. general liabilities and specific liabilities.
D. intangible liabilities and long-term liabilities.
E. current liabilities and long-term liabilities.

9) The credit terms 2/10, n/30 are interpreted as:

A. 2% cash discount if the amount is paid within 10 days, or the balance due in 30 days.
B. 10% cash discount if the amount is paid within 2 days, or the balance due in 30 days.
C. 30% discount if paid within 2 days.
D. 30% discount if paid within 10 days.
E. 2% discount if paid within 30 days.

10) Herald Co had sales of $135,000, sales discounts of $2,000, and sales returns of $3,200, COGS of
90,000. Herald Co's net sales is:

A. $39,800.
B. $129,800.
C. $133,000.
D. $135,000.
E. $140,200.

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