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| 1 | |
Goals of Accounting include which of the following: |
| | A) | To provide information about what a business owns |
| | B) | To provide information about what a business owes |
| | C) | To provide information about how a business performs financially |
| | D) | All of the above |
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| 2 | |
What is a benefit of technology in modern business practice? |
| | A) | It makes up for a lack of understanding of accounting. |
| | B) | It increases the time, effort, and cost of recording transactions. |
| | C) | It is of no help in the summarizing process of accounting. |
| | D) | None of the above. |
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| 3 | |
The recording of financial transactions and events manually or electronically is called which of the following? |
| | A) | Bookkeeping |
| | B) | Recordkeeping |
| | C) | Reporting |
| | D) | Auditing |
| | E) | A and B |
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| 4 | |
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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| 5 | |
Which form of ownership provides all owners with the least amount of risk to their personal assets? |
| | A) | Sole proprietorship |
| | B) | Partnership |
| | C) | Corporation |
| | D) | Limited partnership |
| | E) | None of the above |
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| 6 | |
If at the end of the accounting period the assets total $8,000, and the liabilities total $5,000, then what must be the amount of equity? |
| | A) | $3,000 |
| | B) | $4,000 |
| | C) | $5,000 |
| | D) | $1,000 |
| | E) | None of the above |
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| 7 | |
If at the end of the accounting period the liabilities total $6,000, and equity totals $10,000, then what must be the total of the assets? |
| | A) | $16,000 |
| | B) | $14,000 |
| | C) | $15,000 |
| | D) | $11,000 |
| | E) | None of the above |
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| 8 | |
Which of the following financial statements does not cover a period of time? |
| | A) | Income Statement |
| | B) | Balance sheet |
| | C) | Statement of retained earnings |
| | D) | Statement of cash flows |
| | E) | All of the above |
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| 9 | |
Which of the following would be considered a regulator? |
| | A) | H&R Block |
| | B) | SEC |
| | C) | IRS |
| | D) | AICPA |
| | E) | B and C |
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| 10 | |
Allowing workers time to work for nonprofit organizations, making donations to schools, hospitals, and community projects, and sponsoring community programs such as the Special Olympics is a part of which of the following? |
| | A) | Ethics |
| | B) | Managerial accounting |
| | C) | Regulations |
| | D) | Research and development |
| | E) | Social responsibility |
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| 11 | |
Which of the following are specialists with designations in accounting? |
| | A) | CB |
| | B) | CPP |
| | C) | PFS |
| | D) | All of the above |
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| 12 | |
Which area of accounting emphasis is not a major part of managerial accounting? |
| | A) | General accounting |
| | B) | Regulatory |
| | C) | Budgeting |
| | D) | Internal audit |
| | E) | Cost accounting |
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| 13 | |
Public accounting provides about what percent of the total number of accounting positions? |
| | A) | 10% |
| | B) | 20% |
| | C) | 25% |
| | D) | 40% |
| | E) | 60% |
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| 14 | |
Which of the following is true about ethics in accounting? |
| | A) | For information to be useful, it must be trusted. |
| | B) | Ethics are beliefs that distinguish right from wrong. |
| | C) | They are accepted standards of good and bad behavior. |
| | D) | Identifying the proper ethical path is sometimes difficult. |
| | E) | All of the above |
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| 15 | |
If the balance of cash is $210,000, the sales revenue totals $500,000, and the net income for the period is $200,000, what is the return on assets (ROA) if the average assets total $800,000? |
| | A) | 15% |
| | B) | 20% |
| | C) | 25% |
| | D) | 40% |
| | E) | None of the above |
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| 16 | |
GAAP stands for which of the following: |
| | A) | Generally Acceptable Accounting Pronouncements |
| | B) | Generally Acceptable Auditing Procedures |
| | C) | Generally Accepted Accounting Principles |
| | D) | Generally Accountants Accept Payment |
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| 17 | |
If the total of cash is $10,000, the sales revenue totals $500,000, and the net income for the period is $100,000, what is the return on assets (ROA) if the average assets total $400,000? |
| | A) | 15% |
| | B) | 20% |
| | C) | 30% |
| | D) | 40% |
| | E) | None of the above |
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| 18 | |
Accounting is an information system that performs which of the following tasks? |
| | A) | Identifying business activities |
| | B) | Recording business activities |
| | C) | Communicating business activities |
| | D) | None of the above |
| | E) | All of the above |
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| 19 | |
Which of the following users of accounting information are internal users? |
| | A) | Lenders |
| | B) | Shareholders |
| | C) | Production Managers |
| | D) | Governments |
| | E) | Customers |
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| 20 | |
If a company had a beginning retained earnings balance of $100,000, net income for the year of $40,000, and paid dividends of $10,000, what would the ending retained earnings balance be? |
| | A) | $110,000 |
| | B) | $130,000 |
| | C) | $140,000 |
| | D) | $80,000 |
| | E) | $90,000 |
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| 21 | |
A broad rule adopted by the accounting profession as a guide in measuring, recording, and reporting the financial affairs and activities of a business is known as which of the following? |
| | A) | Accounting concept |
| | B) | Accounting principle |
| | C) | Basic accounting equation |
| | D) | Objectivity principle |
| | E) | Recognition principle |
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| 22 | |
FASB stands for the |
| | A) | Federal Accounting Standards Board. |
| | B) | Federal Accountants Standards Board. |
| | C) | Financial Accounting Standards Board. |
| | D) | Financial Associates Subsidiary Board. |
| | E) | None of the above |
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| 23 | |
Which line of the following schedule is incorrect? Principle \ Major Focus or Assumption |
| | A) | Going-concern principle \ A business has an indefinite life span |
| | B) | Business entity principle \ A business is distinct from its owners |
| | C) | Cost principle \ Assets and services should be recorded at cost |
| | D) | Revenue recognition principle \ All inflows of revenue are in the form of cash |
| | E) | Objectivity principle \ Independent, unbiased evidence should be used |
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| 24 | |
Using a sales invoice as the basis for recording a sale of merchandise is an example of using which principle as the basis for recording the transaction? |
| | A) | Revenue recognition principle |
| | B) | Objectivity principle |
| | C) | Realization principle |
| | D) | Continuing-concern concept |
| | E) | Accounting concept |
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| 25 | |
Keeping the records of the business separate from the personal records of the owner of the business is said to be adherence to which concept or principle? |
| | A) | Continuing-concern concept |
| | B) | Business entity principle |
| | C) | Realization principle |
| | D) | Objectivity principle |
| | E) | Recognition principle |
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| 26 | |
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 increase in equity |
| | D) | An increase in fees earned and an increase in equity |
| | E) | A decrease in cash and a decrease in equity |
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| 27 | |
Keith Manich deposited $5,000 in a bank account he established for a pet store that he is going to own and operate as KM's Pets, Incorporated. Recording the deposit 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 equity |
| | D) | Decrease in an asset and decrease equity |
| | E) | Increase in one asset and decrease in another asset |
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| 28 | |
The owner of a computer services business was able to acquire a new computer, valued at $5,000, by establishing an account with the computer vendor, Com Pewters Unlimited. There was no down payment. Recording the transaction will do which of the following? |
| | A) | Increase an asset, increase a liability |
| | B) | Decrease an asset, decrease a liability |
| | C) | Increase an asset, increase equity |
| | D) | Decrease an asset, decrease equity |
| | E) | Increase one asset and decrease another asset |
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| 29 | |
A Molly's Real Estate recorded the payment of an account payable to an office supplies store. What effect will recording the transaction have on the components of the accounting equation? |
| | A) | Increase an asset, increase a liability |
| | B) | Decrease an asset, decrease a liability |
| | C) | Increase an asset, increase owner's equity |
| | D) | Decrease an asset, decrease owner's equity |
| | E) | Increase one asset and decrease another asset |
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| 30 | |
One of the local fast-food outlets hired a first-year accounting student to oversee the cash-collection procedures. When the firm pays the student her weekly wage, what will be the effect on the components of the accounting equation? |
| | A) | Increase an asset, increase a liability |
| | B) | Decrease an asset, decrease a liability |
| | C) | Increase an asset, increase owner's equity |
| | D) | Decrease an asset, decrease owner's equity |
| | E) | Increase one asset and decrease another asset |
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| 31 | |
Cash dividends are declared and paid to the stockholders of the corporation. How will this transaction affect the components of the accounting equation? |
| | A) | Increase an asset, increase a liability |
| | B) | Decrease an asset, decrease a liability |
| | C) | Increase an asset, increase equity |
| | D) | Decrease an asset, decrease equity |
| | E) | Increase one asset and decrease another asset |
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| 32 | |
Purchasing supplies for cash will have what effect on the components of the accounting equation? |
| | A) | Increase cash and decrease equity |
| | B) | Increase cash and increase supplies |
| | C) | Increase supplies and decrease cash |
| | D) | Increase equipment and increase equity |
| | E) | None of the above |
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| 33 | |
Services rendered for cash will have what effect on the components of the accounting equation? |
| | A) | Increase cash and decrease equity |
| | B) | Increase cash and increase equity |
| | C) | Decrease cash and increase equity |
| | D) | Increase fees earned and decrease equity |
| | E) | Decrease cash and decrease equity |
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| 34 | |
Cash is received from a client for office rental space. What effect will this transaction have on the components of the accounting equation? |
| | A) | Increase cash and decrease equity |
| | B) | Increase cash and increase equity |
| | C) | Decrease cash and increase equity |
| | D) | Decrease cash and increase dividends |
| | E) | None of the above |
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| 35 | |
Assets total $60,000 and Liabilities total $15,000. What is the equity of the business? |
| | A) | $4,000 |
| | B) | $45,000 |
| | C) | $400 |
| | D) | $40 |
| | E) | None of the above |
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| 36 | |
If during the accounting period the assets increased by $5,000, and equity increased by $1,000, then how did liabilities change? |
| | A) | Increased by $6,000 |
| | B) | Increased by $4,000 |
| | C) | Decreased by $4,000 |
| | D) | Decreased by $6,000 |
| | E) | Decreased by $1,000 |
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| 37 | |
If during the accounting period the assets increased by $7,000, and equity decreased by $3,000, 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 $2,000 |
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| 38 | |
Which of the following are building blocks for GAAP? |
| | A) | Full disclosure |
| | B) | Aggressiveness in recording profits |
| | C) | Inconsistency |
| | D) | Subjectivity |
| | E) | All of the above |
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| 39 | |
If your primary goal of starting a new business is to minimize your liability from potential lawsuits, you should for a: |
| | A) | Sole Proprietorship |
| | B) | Partnership |
| | C) | Corporation |
| | D) | All of them provide limited liability |
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| 40 | |
Failure to comply with the Sarbanes-Oxley Act can result in: |
| | A) | Mandatory jail time for all violators |
| | B) | Stock market delisting |
| | C) | Automatic demotion to a clerical position |
| | D) | All of the above |
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| 41 | |
Which of the following are creditors' claim on the assets of a company? |
| | A) | Accounts Receivables |
| | B) | Owner's Equity |
| | C) | Retained Earnings |
| | D) | Liabilities |
| | E) | None of the above |
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| 42 | |
Which of the following statements describes a company's financial position at a point in time? |
| | A) | Income Statement |
| | B) | Statement of Retained Earnings |
| | C) | Balance Sheet |
| | D) | Statement of Cash Flows |
| | E) | None of the Above |
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