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Multiple Choice Quiz
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1
Which of the following is the first phase of the typical operating cycle?
A)sell goods and services to customers
B)purchase goods and services
C)receive cash from customers
D)pay cash to suppliers
2
Although income is earned continuously, companies measure income for a specific period of time. Accountants refer to this practice as:
A)unit of measure assumption.
B)time period assumption.
C)matching principle.
D)continuity assumption.
3
Consider the following totals:

Revenues$100,000
Cost and expenses45,000
Other revenues and expenses5,000
Income taxes18,000
Net income$42,000


What was the total of operating income?
A)$42,000
B)$55,000
C)$60,000
D)$37,000
4
Which of the following is an expense?
A)purchasing operating equipment
B)purchasing cleaning services
C)purchasing an investment in another company
D)purchasing a computer for the accounting office
5
On September 15, Indigo Company received the following payments from customers. Customer A paid $10,000 for goods to be delivered October 15, customer B paid $6,000 for goods delivered on August 15 and customer C paid $3,000 for goods delivered on September 15. The company should recognize what amount of revenue for the month ending September:
A)$3,000
B)$9,000
C)$9,000
D)$18,000
6
What is the last expense listed on the income statement?
A)salaries and wages expense
B)general and administrative expenses
C)interest expense
D)income tax expense
7
Which of the following is a peripheral transaction?
A)income tax expense
B)interest expense
C)general and administrative expenses
D)depreciation expense
8
Current year sales revenues total $1,250,000. The total assets at the end of the previous year totaled $900,000. Total assets at the end of the current year totaled $980,000. What is the asset turnover ratio?
A)1.329
B)1.389
C)1.276
D)1.156
9
Which of the following, when all else remains unchanged, will increase the asset turnover ratio?
A)decrease in sales revenue
B)decrease in total average assets
C)increase in total average assets
D)both (A) and (C).
10
Which criteria does not need to be met before the revenue principle has been satisfied?
A)Cash must be received.
B)Delivery has occurred or services have been rendered.
C)Collection is reasonably assured.
D)The price is fixed or determinable.
11
When a delivery of goods and services for $25,000 results in a cash receipt of $15,000 and the balance of $10,000 on account, the reported revenues for the time period are
A)$15,000
B)$25,000
C)$10,000
D)$5,000
12
A customer paid you $3,500 for tractor work to be performed when weather permits. How much of the $3,500 should be recognized as revenue if you are unable to perform any tractor work during the current accounting period?
A)$-0-
B)$3,500
C)$1,750
D)$3,000
13
Your company received $45,000 in advance for services to be performed during the accounting period, 1/3 of the services were rendered. At the beginning of the period, you paid $12,000 for insurance covering three accounting periods. If these are the only transactions during the accounting period, how much operating income should you report on the income statement?
A)$11,000
B)$15,000
C)$3,000
D)$33,000
14
Which of the following accounts would be increased with a debit?
A)Contributed Capital
B)Retained Earnings
C)Revenues
D)Expenses
15
Langhurst Company sold hardware for $12,000 cash and $18,000 of hardware to credit customers. Which of the following is the correct journal entry to record this transaction?
A)Cash, debit, $12,000; Accounts Receivable, credit, $18,000; Unearned Revenues, credit, $30,000
B)Cash, debit, $12,000; Accounts Receivable, debit, $18,000, Hardware Revenues, credit, $30,000
C)Cash, debit, $12,000; Unearned Revenues, debit, $18,000; Hardware Revenues, $30,000
D)Cash, debit, $30,000; Hardware Revenues, credit, $30,000
16
Langhurst Company sold hardware for $12,000 cash and $18,000 of hardware to credit customers. The cost of sales was $24,000. Which of the following is the correct journal entry to record the cost of sales?
A)Cost of Sales, debit, $24,000; Inventories, credit, $24,000
B)Cost of Sales, debit, $30,000; Inventories, credit, $24,000; Unearned Revenues, credit, $6,000
C)Cost of Sales, debit, $30,000; Inventories, credit, $30,000
D)Cost of Sales, debit, $24,000; Inventories, credit, $24,000; Hardware Income, credit, $6,000
17
On January 29, Langhurst Company sold lumber for $30,000 to a cash customer and on the same day another customer paid $14,000 for lumber to be delivered on March 5. Which of the following is the correct journal entry to record a summary of the transactions of January 29?
A)Cash, debit, $30,000; Accounts Receivable, debit, $14,000; Lumber Revenues, credit, $44,000
B)Cash, debit, $44,000; Lumber Revenues, credit, $44,000
C)Cash, debit, $30,000; Lumber Revenues, credit, $30,000; Unearned Revenues, credit, $14,000
D)Cash, debit, $44,000; Lumber Revenues, credit, $30,000; Unearned Revenues, credit, $14,000
18
The Langhurst Company purchased $31,000 in supplies inventory, paying $16,000 in cash and charging the rest on account to the supplier. Which of the following is the correct journal entry for recording this transaction?
A)Inventories, debit, $31,000; Cash, credit, $16,000; Accounts Payable, credit, $15,000
B)Inventories, debit, $16,000; Cash, credit, $16,000; Accounts Payable, credit, $15,000
C)Inventories, debit, $31,000; Cash, credit, $16,000; Unearned Revenues, credit, $15,000
D)Inventories, debit, $31,000; Cash, credit, $16,000; Accounts Receivable, credit, $15,000
19
At the beginning of January, Langhurst Company paid $6,000 for insurance for the next four months beginning January 1, $3,000 for advertising to be run from February 1 to March 15, and $8,000 for rent over the next two months beginning January 1. What is the correct journal entry for recording a summary of these transactions?
A)
General and Administrative Expenses17,000 
Cash 17,000
B)
General and Administrative Expenses17,000 
Accounts Payable 17,000
C)
Prepaid Expenses17,000 
Cash 17,000
D)
Prepaid Expenses14,000 
Advertising Expense3,000 
Cash17,000
20
In January, Langhurst Company paid $9,000 for utilities, repairs, and maintenance of delivery vehicles. Which of the following is the correct journal entry for recording this transaction?
A)
Other Expenses and Losses9,000 
Cash 9,000
B)
General and Administrative Expenses9,000 
Accounts Payable 9,000
C)
General and Administrative Expenses9,000 
Cash 9,000
D)
Prepaid Expenses9,000 
Cash 9,000
21
Consider the following information provided in no particular order:

Lumber Revenues$120,000
General and Administrative Expenses45,000
Rent Expense6,000
Depreciation Expense3,000
Loss on Sale of Land2,000
Hardware Revenues85,000
Interest Expense4,000
Income Taxes11,000
Cost of sales115,000


What is the dollar amount of the operating income?
A)$36,000
B)$15,000
C)$17,000
D)$205,000
22
The balance of Cash at the beginning of the period was $45,000. The net cash provided by investing activities was $120,000. The net cash used by financing activities was $130,000. The net change increase in cash was $15,000. What was the cash flow from operating activities?
A)$25,000 was used by operating activities.
B)$25,000 was provided from operating activities.
C)$10,000 was used by operating activities.
D)$10,000 was provided from operating activities.





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