1. Which of the following types of organization would probably sell goods?

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1.  Which of the following types of organization would probably sell goods?

a.Merchandising operation

b.Service operation

c.Not-for-profit operation

d.Manufacturing operation

 

2.  Which of the following types of organizations would produce goods?

a.Merchandising operation

b.Service operation

c.Not-for-profit operation

d.Manufacturing operation

 

3.  Which type of business organization is owned by its stockholders?

a.Corporation

b.Partnership

c.Limited liability company

d.Sole proprietorship

 

4.  Which of the following is considered an asset?

a.Accounts payable

b.Sales

c.Accounts receivable

d.Common stock

 

5.  Obligations that are owed to others due to past transactions are categorized as:

a.Stockholders’ equity.

b.Expenses.

c.Assets.

d.Liabilities.

 

6.  All payables are listed as:

a.Assets.

b.Liabilities.

c.Stockholders’ equity.

d.Revenue.

 

7.  A type of company asset in which a customer owes the company money would be a:

a.Dividend.

b.Receivable.

c.Payable.

d.Sale.

 

8.  Dividends are paid with cash to shareholders. Dividends are in what category of the chart of accounts?

a.Revenue

b.Assets

c.Stockholders’ equity

d.Liabilities

 

9.  If revenues are recognized and recorded when earned, the company is using the:

a.Cash basis of accounting.

b.Accrual basis of accounting.

c.Adjustment basis of accounting.

d.The expense basis of accounting.

 

10.  The matching principle in accounting requires the matching of:

a.Revenue earned with the assets used to product the revenue.

b.Revenue earned with the assets used less the liabilities incurred.

c.Revenue earned with the liabilities used to produce the revenue.

d.Revenue earned with the expenses incurred to produce the revenue.

 

11.  The type of accounting required by GAAP is:

a.Modified cash.

b.Hybrid cash.

c.Cash.

d.Accrual.

 

12.  The Cost of Goods Sold account appears on the:

a.Balance sheet.

b.Statement of retained earnings.

c.Income statement.

d.Post-closing trial balance.

 

13.  The Inventory account appears on the:

a.Balance sheet.

b.Statement of retained earnings.

c.Income statement.

d.List of liabilities.

 

14.  Alpha Company received an invoice from Beta Company for $5,550 with terms of 3/10, n/45 on March 8. If Alpha pays the bill on March 15, they will credit inventory under a perpetual inventory system for:

a.$ 0.

b.$ 555.00

c.$ 166.50

d.$5550.00

 

15.  Under the specific-identification method, the flow of goods through the accounting records will:

a.Be the opposite of the physical flow of goods through the business.

b.Closely match the physical flow of goods through the business.

c.Exactly match the physical flow of goods through the business.

d.Have no relationship to the physical flow of goods through the business.

 

16.  Under the LIFO method, the flow of goods through the accounting records will:

a.Be nearly the opposite of the physical flow of goods through the business.

b.Closely match the physical flow of goods through the business.

c.Exactly match the physical flow of goods through the business.

d.Have no relationship to the physical flow of goods through the business.

 

17.  Under the FIFO method, the flow of goods through the accounting records will:

a.Be the opposite of the physical flow of goods through the business.

b.Closely match the physical flow of goods through the business.

c.Exactly match the physical flow of goods through the business.

d.Have no relationship to the physical flow of goods through the business.

 

18.  If shrinkage is found for $500, an adjusting entry would be made by:

a.Debiting inventory for $500; credit cost of goods sold for $500.

b.Debiting inventory for $500; credit sales returns and allowances for $500.

c.Debiting cost of goods sold for $500; credit inventory for $500.

d.Debiting sales returns and allowances for $500; credit inventory for $500.

 

19.  Honesty, fairness, and integrity are all a part of:

a.Ethical law.

b.Ethical behavior.

c.Accounting law.

d.GAAP principles.

 

20.  Embezzlement usually involves the misappropriation of business:

a.Equity by an employee.

b.Liabilities by an employee.

c.Assets by an employee.

d.Information by an employee.

 

21.  A good internal control system does which of the following?

a.Guarantees the efficiency and effectiveness of operations

b.Reduces the risk of undetected errors

c.Provides absolute assurance that no errors will occur

d.Guarantees that fraud will be prevented

 

22.  Details that support business transactions make up what is called:

a.Internal control.

b.Monitoring.

c.Risk assessment.

d.An audit trail.

 

23.  A bank statement shows the:

a.Ending book balance as of a specific date.

b.Ending bank balance as of a specific date.

c.Reconciled balance as of a specific date.

d.Book errors as of a specific date.

 

24.  Deposits in transit are:

a.Subtracted from the book balance.

b.Added to the book balance.

c.Subtracted from the bank balance.

d.Added to the bank balance.

 

25.  Outstanding checks are:

a.Added to the book balance.

b.Added to the bank balance.

c.Subtracted from the book balance.

d.Subtracted from the bank balance.

 

26.  NSF check amounts are:

a.Added to the bank balance.

b.Subtracted from the bank balance.

c.Added to the book balance.

d.Subtracted from the book balance.

 

27.  Patents, goodwill, and trademarks are

a.Amortized.

b.Depleted.

c.Depreciated.

d.Expensed.

 

28.  Buildings, vehicles, and desks are:

a.Amortized.

b.Depleted.

c.Depreciated.

d.Expensed.

 

29.  Coal, oil, and timber are:

a.Amortized.

b.Depleted.

c.Depreciated.

d.Expensed.

 

30.  Research and development costs (R&D) are generally:

a.Expensed and become part of the income statement.

b.Listed as “other intangibles” on the balance sheet.

c.Listed as “current assets” on the balance sheet.

d.Listed as “long-term assets” on the balance sheet.

 

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