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| 1 | |
The recording of financial transactions and events manually or electronically is called which of the following? |
| | A) | Bookkeeping |
| | B) | Budgeting |
| | C) | Auditing |
| | D) | Reporting |
| | E) | A and B |
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| 2 | |
Which form of ownership burdens owners with the greatest risk of loss of their personal assets? |
| | A) | Limited partnership (LP) |
| | B) | Limited liability partnership (LLP) |
| | C) | Corporation |
| | D) | Sole proprietorship |
| | E) | None of the above |
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| 3 | |
An accountant has the responsibility to coordinate the annual budget processes of the business corporation she works for. In which of the following areas of accounting is she most likely to be employed? |
| | A) | Managerial accounting. |
| | B) | Public accounting. |
| | C) | Financial accounting. |
| | D) | Not-for-Profit accounting. |
| | E) | Auditing. |
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| 4 | |
If at the end of the accounting period the liabilities total $18,000, and equity totals $32,000, then what must be the total of the assets? |
| | A) | $14,000 |
| | B) | $18,000 |
| | C) | $32,000 |
| | D) | $50,000 |
| | E) | None of the above |
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| 5 | |
Which of the following financial statements covers a period of time? |
| | A) | Income statement |
| | B) | Statement of owner's equity |
| | C) | Statement of cash flows |
| | D) | Both A & C |
| | E) | Answers A, B & C |
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| 6 | |
Which area of accounting emphasis is not a major part of financial accounting? |
| | A) | Criminal investigation |
| | B) | Regulatory |
| | C) | Internal audit |
| | D) | Planning |
| | E) | Auditing |
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| 7 | |
Private accounting provides about what percent of the total number of accounting positions? |
| | A) | 60% |
| | B) | 40% |
| | C) | 25% |
| | D) | 20% |
| | E) | 10% |
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| 8 | |
If the total of cash is $475,000, the sales revenue totals $2,500,000, and the net income for the period is $350,000, what is the ROI if the average assets total $1,750,000? |
| | A) | 15% |
| | B) | 20% |
| | C) | 25% |
| | D) | 40% |
| | E) | None of the above |
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| 9 | |
Which of the following organizations is responsible for setting accounting rules and regulations? |
| | A) | H&R Block |
| | B) | SEC |
| | C) | IRS |
| | D) | AICPA |
| | E) | FASB |
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| 10 | |
The total assets and total liabilities of a firm are reported on which of the following? |
| | A) | Income statement |
| | B) | Balance sheet |
| | C) | Statement of cash flows |
| | D) | Statement of owner's equity |
| | E) | None of the above |
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| 11 | |
The amount a firm paid for the goods it sold during he period are reported on which of the following? |
| | A) | Income statement |
| | B) | Balance sheet |
| | C) | Statement of changes in owner's equity |
| | D) | Statement of cash flows |
| | E) | None of the above |
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| 12 | |
A statement of cash flows will show cash flows from which of the following? |
| | A) | Operating activities |
| | B) | Financing activities |
| | C) | Investing activities |
| | D) | All of the above |
| | E) | Only A and C |
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| 13 | |
When equity or net assets are subtracted from total assets the amount remaining is known as which of the following? |
| | A) | Total revenue |
| | B) | Total liabilities |
| | C) | Total expenses |
| | D) | Net income or net loss |
| | E) | All of the above |
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| 14 | |
Which line of the following schedule is incorrect?| Principle | Major Focus or Assumption |
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| | A) | | Going-concern principle | A business has an indefinite life span |
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| | B) | | Business entity principle | A business is distinct from its owners |
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| | C) | | Cost principle | Assets should be recorded at appraised value |
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| | D) | | Realization principle | Revenues are recorded when earned |
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| | E) | | Objectivity principle | Independent, unbiased evidence should be used |
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| 15 | |
When cash is received from a customer in payment for an account receivable, how are the elements of the accounting equation affected? |
| | A) | Decrease assets (cash and increase assets (accounts receivable) |
| | B) | Increase assets (cash) and decrease assets (accounts receivable) |
| | C) | Increase assets and increase liabilities |
| | D) | Increase assets and increase equity |
| | E) | None of the above |
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| 16 | |
The investment of cash in the business will result in which of the following? |
| | A) | An increase in cash and a decrease in equity |
| | B) | An increase in cash and an increase in equity |
| | C) | A decrease in cash and an decrease in liabilities |
| | D) | An increase in fees earned and an increase in equity |
| | E) | A increase in cash and a increase in liabilities |
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| 17 | |
Keith Farfalle withdrew $5,000 from his pet store, KM's Pets. Recording the withdrawal will result in which of the following changes to the components of the accounting equation? |
| | A) | Increase in an asset and increase a liability |
| | B) | Decrease in an asset and decrease a liability |
| | C) | Increase in an asset and increase in equity |
| | D) | Decrease in an asset and decrease in equity |
| | E) | Increase in one asset and decrease in another asset |
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| 18 | |
Assets total $100,000 and liabilities total $20,000. What is the equity of the business? |
| | A) | $80 |
| | B) | $800 |
| | C) | $8,000 |
| | D) | $80,000 |
| | E) | None of the above |
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| 19 | |
If during the accounting period the assets decreased by $10,000, and equity increased by $2,000, then how did liabilities change? |
| | A) | Increased by $12,000 |
| | B) | Increased by $8,000 |
| | C) | Decreased by $12,000 |
| | D) | Decreased by $8,000 |
| | E) | Decreased by $6,000 |
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| 20 | |
If during the accounting period the assets increased by $14,000, and equity increased by $4,000, then how did liabilities change? |
| | A) | Increased by $10,000 |
| | B) | Increased by $4,000 |
| | C) | Decreased by $4,000 |
| | D) | Decreased by $10,000 |
| | E) | Decreased by $18,000 |
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| 21 | |
Purchasing equipment on account will have what effect on the components of the accounting equation? |
| | A) | Increase in equipment and a decrease in equity |
| | B) | Increase in equipment and an increase in equity |
| | C) | Increase in equipment and an increase in liabilities |
| | D) | Increase in equipment and a decrease in liabilities |
| | E) | None of the above |
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| 22 | |
Services rendered for which cash has not yet been received will have what effect on the components of the accounting equation? |
| | A) | Increase in accounts receivable and a decrease in equity |
| | B) | Increase in accounts receivable and an increase in equity |
| | C) | Decrease in accounts receivable and an increase in equity |
| | D) | Increase in fees earned and a decrease in equity |
| | E) | Decrease in accounts receivable and a decrease in equity |
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| 23 | |
Beginning capital was $10,000. Withdrawals were $24,000. The owner made additional investments during year of $60,000. The ending capital balance was $90,000. What was the net income or net loss for the period? |
| | A) | Net income, $56,000 |
| | B) | Net loss, $44,000 |
| | C) | Net income, $44,000 |
| | D) | Net income, $30,000 |
| | E) | None of the above |
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| 24 | |
Total revenues were $105,000, total expenses, except for wage expense were $50,000, and net income was $35,000. What was the amount of wage expense? |
| | A) | $15,000 |
| | B) | $20,000 |
| | C) | $55,000 |
| | D) | $70,000 |
| | E) | Cannot be determined from information provided |
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| 25 | |
When compared to other types of bond investments, U.S. treasury bonds will usually provide which of the following? |
| | A) | Low risk |
| | B) | High risk |
| | C) | Moderate return |
| | D) | Moderate risk |
| | E) | High return |
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| 26 | |
Which activity is a financing activity? |
| | A) | Issuing common stock of a corporation |
| | B) | Lending money |
| | C) | Purchasing inventory to sell to customers |
| | D) | Purchasing production equipment for a factory |
| | E) | None of the above |
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