General Bookkeeping MCQs

1. Which principle/guideline requires a company's balance sheet to report its land at the amount the company paid to acquire the land, even if the land could be sold today at a significantly higher amount?

2. True or False? An accrual occurs before a payment or receipt. A deferral occurs after a payment or receipt.

3. A business with available cash to use will have a ......?

4. Which of the following statement about the perpetual inventory system is TRUE?

5. What are the two main accounting methods used for record-keeping?

6. "A statement of assets and liabilities that is reconciled with the equity of the owner at the close of an accounting period" is a definition of which financial report?

7. If a company has $50,000 in Total Assets (including $10,000 in Current Assets + $40,000 in Fixed Assets) and $20,000 in Equity, what is their Total Liability?

8. When an owner invests more money into the business, which of the following bookkeeping entries is correct ?

9. Which principle/guideline requires the company's financial statements to have footnotes containing information that is important to users of the financial statements?

10. Which of the following would be reported in the financial statements as a current asset?

11. Which of the following does NOT form part of the bank reconciliation process?

12. The golden rule of accounting says that, for every debit entry, there must be...

13. Under what section is the Accounts Receivable account reported in the Balance Sheet?

14. Which of the following transactions is primarily identified in the bank reconciliation process?

15. Net profit is always greater than Gross Profit.

16. If Assets totaled $55,000 and Liabilities totaled $25,000, Equity would be ....?

17. All of the debt a company owes, such as bonds, loans and unpaid bills is called

18. For every financial transaction entered in the bookkeeping system, the total of the debits must equal the total of the credits?

19. True or False: Recording a business transaction always requires at least a debit to one account and a credit to a different account.

20. That part of the equity that the owner invests in the business is known as ...?

21. When an owner contributes additional money to a business, the equity ....?

22. For every debit there is a ----------------------------

23. Loan funds owed to a bank would belong to which account group?

24. A _______ entry is entered on the left side of an account.

25. What three sections make up the Balance Sheet?

26. Which of the following general ledger accounts would NOT generally have a subsidiary ledger?

27. Which term in accounting means that every transaction affects two or more accounts?

28. What is money owed by a business to its suppliers shown as a liability on a company's balance sheet?

29. An adjustment being made for an error relating to transactions posted to the wrong expense account would be recorded in which journal?

30. Which amounts appear on left side of T-account?

31. Which of the following is a capital expenditure?

32. What is a listing of account numbers with account titles but without amounts called?

33. Which of the following items would be accounted for as an expense?

34. Which account group does 'Accounts Receivable' belong to?

35. There are two accounting methods for recording financial transactions, the cash method and the:

36. Invoices from vendors (suppliers) which are due in 30 days should be credited to Accounts _______.

37. Assets that will be converted to cash within one year will be reported under what category in the Balance Sheet?

38. Interest paid by a business on a bank loan is ...?

39. Income that has been earned within a financial period but has not yet been received in cash, is known as ...?

40. "Amounts owed by the business and expected to be paid out within one year" is the description of which account group?

41. Inventories encompass all of the following, except:

42. An invoice being paid that relates to insurance cover for the next accounting period should be reported in the financial statements for this accounting period as .....?

43. Under which classification would 'Merchandise Inventory' be recorded?

44. An accounts payable ledger records which transactions?

45. Which of the following account groups does NOT appear on the Balance sheet of the business?

46. The calculation for gross profit is, Sales less ...?

47. 'Prepaid expenses' are classified and reported in the financial statements under which account group?

48. What is the typical balance of a liability account reported in the Balance Sheet?

49. On which part of a Balance Sheet do Prepaid Expenses appear?

50. Which account group does 'Drawings' belong to?

51. Which of the following transactions would have NO impact on stockholders' equity?

52. Which of the following is NOT a method of inventory valuation?

53. The owner of a small business writes himself a check for 5,000 for personal use. How is this check recorded in the journal?

54. Which specific expense group is deducted from revenue to calculate gross profit?

55. Which of the following would NOT be considered a “The Bottom Line” result in financial reporting?

56. Which type of balances do Expense and Asset accounts typically have?

57. Net Sales minus the Cost of Goods Sold equals ...?

58. The books of original entry are known as the ......?

59. An accounting principle that record asset such as land at original cost and ignoring increases in value is the:

60. Which is not a current asset?

61. What is the basic rule for debit account?

62. Which of the following is NOT a correct description of the 'Debit and Credit' concept in bookkeeping?

63. Cost of Good Sold is calculated by adding purchases to the beginning inventory and then subtracting ...?

64. Taking the information from the journals and recording it in the ledgers, is known in bookkeeping as ....?

65. In which journal do bookkeepers generally add memos or notes for individual transactions?

66. When a business uses cash to purchase inventory, which of the following bookkeeping entries is the correct one?

67. On December 15, XYZ Co. hired Jane Houston as a contractor to begin working on January 3 at a monthly salary of $5,000. ABC's balance sheet of December 31 will show a liability of...

68. Which of the following is NOT a liability of the business?

69. A company disposes of equipment that it no longer uses in its business. The amount received by the company is more than the amount the asset is carried at in the accounting records. The company will report a...

70. Which of the following is NOT generally used as an alternative name for 'Owners Equity'?

71. The accounting practice where general treatment of items does not differ from period to period, is known as ...?

72. Recording revenues as they are earned and expenses as they are incurred, regardless of when the money is exchanged, is known as ....?

73. The current period's profit will be reported in which section of the Balance Sheet?

74. What accounting concept is being applied when personal transaction must be separated from business transaction?

75. To credit an expense account means to decrease it.

76. The cost price of a box produced by the company "X" is $2. On December 31, 2014 they have 1.000 boxes on stock. On the same day net sales price for this box is $1.9. Which value of boxes has to be present in their balance sheet for 2014: 1. $ 100 2. $ 2,000 3. $ 2 4. $ 1,900

77. If a financial transaction increased an asset you would credit the asset account in the bookkeeping system?

78. Under the accrual basis of accounting, revenues are reported in the accounting period when the

79. In the double-entry bookkeeping system, financial transactions are first recorded in the:

80. When applying the accrual basis of accounting, how would you report expenses that covered a future period?

81. Working capital is calculated by the formula ...?

82. When an asset is sold for cash, into which journal is the transaction recorded?

83. When an invoice for a service covers more than one accounting period, the journal entry will show an Expense and a:

84. The accounting equation is ....?

85. What is the next step in the bookkeeping process after you have recorded the financial transaction details in the appropriate journal?

86. Transactions that include revenue that has been earned but not yet collected OR expenses that have been incurred but not yet evidenced or paid, are known as...

87. When a check received for a sale is returned by the bank, the two accounts to be adjusted are cash and ...?

88. Which of the following is more an accountant's role than a bookkeeper's role?

89. Which of the following transactions increases the balance of the Creditors control account in the general ledger?

90. Which of the following statements describes the accounting equation?

91. Which of the following is NOT found on an income statement?

92. The accounting convention that requires the assets of a business to be reported in the financial statement at the actual price that was paid to acquire them, is known as .....?

93. The original book of entry for financial transactions in the bookkeeping system is the .....?

94. As at the balance date, prepaid expenses will be represented in the financial statements as ....?

95. Which statement correctly completes the sentence? If Cost of Goods Sold increases, ........

96. Which one of the following is a Contra-Asset account?

97. Under which account group is 'Accumulated depreciation' reported in the financial statements?

98. In what type of journal would adjustments be generally recorded?

99. A credit balance in the bank statement would be normally reconciled with:

100. The process of writing off the value of intangible assets to acknowledge their loss of value is known as:

101. The ability of a firm to pay its current maturing obligations on time is known as ...?

102. The broad accounting principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is known as ...?

103. The account set up as an advance or float for petty cash is treated as ... ?

104. In a company's accounts, the shareholder's fund is equal to ...?

105. Cash sales are recorded in which subsidiary journal?

106. Which account is NOT part of the profit and loss account?

107. If a supplier's invoice is recorded on the last day of the year for future services, one side of the entry should be accounts payable, and the other entry should be to which account?

108. When recording financial transactions using the "T" account method, the 'Debit' value is recorded on the right and the 'Credit' value is recorded on the left.

109. Which of the following documents would you NOT rely on to originate accounting entries?

110. Which of the following is the summary of accounts

111. Which of the following is NOT a contra account?

112. Which of the following accounts is NOT a current liability?

113. If Assets totaled $40,000 and Owners Equity is 40% of the total Assets, what is the value of the Liabilities?

114. End-of-period adjustments do NOT include which transactions?

115. The deposit book issued by the bank is used to evidence the banking of .....?

116. Which of the following balance-day entries do not need reversing entries at the start of the new period?

117. Which principle/guideline minimizes the detail of reporting based on the insignificant size of the amount?

118. Is it acceptable in accounting that some of the expenses reported on the income statement are estimates?

119. If you are valuing inventory by the FIFO method, the inventory on hand, according to the books of the business, will be the ...?

120. In regards to time, which of the following headings would you NOT find on an income statement?

121. The accounting principle that is the primary support for the accrual method of bookkeeping is the .....?

122. TUV Co. performed services for Client Asim and billed them in December. TUV follows the accrual basis of accounting. In January TUV received the $5,000 from Asim and debited the Cash account: What account should it credit?

123. A Debit balance is usually not normal for which account?

124. Only legal entities can be accounting entities under accounting conventions. True or False?

125. A cash receipts journal is a special journal used to record all cash disbursement.

126. A bank service charge on the bank statement will require a _____________ to the general ledger account 'Cash at Bank' of the business.

127. Which of the following is a current liability?

128. A petty cash expenditure would be recorded and debited to which account?

129. If the asset side of the accounting equation represents the 'things of value in the business', what does the other side represent?

130. Treasury stock is classified under which account group?

131. XYZ Co. has current assets of $50,000 and total assets of $150,000. XYZ has current liabilities of $30,000 and total liabilities of $80,000. What is the amount of XYZ's owner's equity?

132. Accounting for inventory by applying the lower of cost or net realizable value is an example of the application of:

133. Which of the following statements in relation to materiality is true? I. Materiality of item depends on their individual or collective influence on the economic decisions of users. II.Materiality of an item depends on its absolute size and nature

134. A chart of accounts is an index of the accounts contained in the ... ?

135. What does a debit balance on a bank statement indicate?

136. The trial balance lists which type of accounts?

137. Which of the following is NOT generally listed as one of the key expense group classifications of an income statement?

138. Which of the following accounting principles supports the need to ensure that recorded information is based on fact and not just on personal opinion?

139. 1/5/2014. Sameh decided to buy inventory . he signed a contract to pay the price which they agreed on next week .knowing that inventory will not be shipped until cash is paid so what is the entry should be recorded in 1/5/2014

140. In a reconciliation process, if the discrepancy amount when divided by 9 results in a whole integer, then it is ...?

141. In the Accounts Receivable ledger, a Debit entry is most likely for:

142. In times of rising costs for inventory, the Cost of Goods Sold will be highest under which inventory valuation method?

143. When trading stock is received from a supplier, the source document for bookkeeping purposes will be the ...?

144. 'Nominal accounts' in bookkeeping are also known as 'Temporary accounts'.

145. Which of the following inventory costing methods is appropriate for a business with a relatively small number of unique inventory items with a high unit cost?

146. The directive to recognize revenue only when it is reasonably certain of happening and to recognize expenses as soon as they are incurred is known by which principle?

147. Which source document would be used when inventories are returned to a supplier?

148. Which account would NOT form part of the Trading Account?

149. Which of the following is NOT generally used as an alternative name for a 'Balance sheet'?

150. A check that was received from a debtor was dishonored. How does this transaction affect the debtors control account in the general ledger?

151. Unexpired costs are represented in the accounts of an accounting entity as...

152. The chronological record of a transaction’s process through the accounting system, from the source document to the financial statements, is known as ....?

153. The purchase of motor vehicles on credit should be entered into which journal?

154. Under what account group heading would 'Provision for Doubtful Debts' be reported in the financial statements?

155. Which of the following is NOT a feature of a perpetual inventory system?

156. If a 4 year old asset (equipment) was sold on credit for the book value of $5,000, the total value of assets in the firm's accounting equation is ....?

157. Interest Expense on a term loan for a large retailer is a ....?

158. On December 1 a company borrowed $100,000 at 12% per year. The interest will be paid quarterly, with the first payment due on March 1. What interest expense amount should the company report on its income statement for the month of December?

159. Which of the following transactions are recorded in the purchases journal?

160. Under the IFRS, the value of land is recorded at ________ on the balance sheet.

161. When using the moving average method of inventory valuation, a new unit cost must be computed after each:

162. Assuming a "T account" setup in the general ledger, on which side of the subsidiary account must an entry in the control account be posted?

163. The 'Discount allowed' account records the ....?

164. Which account is NOT part of the trading account?

165. Which of the following is NOT considered a function of accounting?

166. Investments securities held for the purpose of retiring bonds payable shall be classified as:

167. When using the FIFO inventory costing method, the most recent costs are assigned to the cost of goods sold. True or False?

168. Which of the following is NOT generally used as an alternative name for an 'Income Statement'?

169. If merchandise purchased on account is returned, the buyer may inform the seller of the details by issuing:

170. How often can a company change its inventory valuation methodology and still be compliant with GAAP?

171. The correct journal entry to reconcile an EFT payment of insurance expense is:

172. Which of the following statements concerning job costing systems is incorrect?

173. The best inventory method to adopt for a company that sells a product in large quantities, for example nails, would be:

174. Which of the following inventory methods will always produce the same results under both a periodic and a perpetual system?

175. The trial balance __________.

176. The Factory Overhead account in a job costing system is credited for the:

177. Why is the Accounts Receivable function important?

178. Gerald's had opening total stockholders' equity of $160,000. During the year, total assets increased by $240,000 and total liabilities increased by $120,000. Their net income was $180,000. No additional investments were made. However, some amount was paid as dividend during the year. What was the amount of the dividend paid?

179. Which of the following is a typical prepaid expense?

180. Which of the following is a personal account?

181. Trade accounts receivable:

183. Which of the following transactions would have no impact on the stockholders' equity?

184. If a customer is not paying their invoices, the best first step to encourage them to pay is:

185. The following comments relate to the recording of journal entries. Which statement is true?

186. What are the adjustments most common to bank reconciliation?

187. What is accounts payable aging report?

188. The overhead application rate is calculated by:

189. The amount of cash reported in the financial statements is the closing balance of cash reported in the ______________.

190. Purchasers of merchandise may be dissatisfied with the quality of goods purchased on account, and return the goods to the seller with an indication that payment will not be forthcoming. In such a case, the document prepared by the purchaser is called:

191. If a customer pays an invoice twice, the best way to handle the error is:

192. The correct journal entry to reconcile the interest earned on a bank balance is:

193. Which of the following best describes the meaning of 'Purchases'?

194. The entry to record the payment of dividends is:

195. Which of the following equations properly represents a derivation of the fundamental accounting equation?

196. Ritz & Co. agreed to purchase certain inventory items from Hostess Corporation. The Hostess shipped the goods F.O.B. destination. On December 31, the Ritz's accounting year-end, they were aware that the goods had been shipped and would be received any day.

197. Why do companies hold back paying invoices until due?

198. Lundstrom & Co. began making sales on credit during 20X1. The Co. used the direct write-off method for uncollectible accounts. A material amount of uncollectible accounts resulting from the sales made during 20X1 were written off during 20X2. What was the effect of this write-off on the net income for 20X1 and 20X2? 20X1 20X2

199. The purpose of Accrued Expenses is:

200. Using the following information, determine the adjusted book balance: cash account balance on the books $27,000, bank service charges $200, NSF check $2,000, checks outstanding $3,000, deposits in transit $1,000.

201. Sorting the accounts Payable into current, 1-30 days past due, 31-60 days past due, and so on, is known as

202. A check issued by you, but not yet passed through the banking system, is:

203. '2/10, net 30' is an example of:

204. Johnson Manufacturing Ltd. use the job order cost system. Overhead is applied at the rate of $20 per direct labor hour. Job #777 includes $2,000 of direct labor cost and 150 direct labor hours. $1,500 of indirect labor cost was actually incurred. The proper journal entry to record the wage related cost is:

205. Why is cyclical counting a better method of inventory taking than the annual count?

206. The accounting profession can be divided into three major categories; specifically, the public accounting, private accounting, and governmental accounting. A somewhat unique and important service of public accountants is _____.

207. Gerber Departmental Store uses the retail inventory method. Their opening inventory had cost $140,000 and its retail price was fixed at $280,000. Purchases for the period amounted to $390,000 and were priced to sell at twice that amount. Sales for the period, all at the normal retail price, were $600,000. How much is the estimated cost of their closing inventory?

208. Which of these items would be accounted for as an expense?

209. The primary private sector agency that oversees external financial reporting standards is the______.

210. Which of the following statements concerning job cost sheets is incorrect?

211. Office Mart's financial statements revealed an uncollectible accounts expense of $8,000, accounts receivable of $140,000, and allowance for uncollectible accounts of $12,000. The net realizable value of Office Mart's accounts receivable is:

212. In which section of the balance sheet should inventory accounts be classified?

213. Lindy & Co. use an allowance method to account for bad debts. They estimate that 5% of the outstanding accounts receivable will be uncollectible. At the end of the year, they have outstanding accounts receivable of $750,000, and a debit balance in the Allowance for Uncollectible Accounts of $9,000. They should record an uncollectible accounts expense of:

214. Of the following account types, which would be increased by a debit?

215. How does a company ensure that their physical inventory matches what is there in the account books?

216. The appropriate journal entry to record the application of overhead in a job costing system involves a debit to Work in Process and a credit to:

217. With the job order cost system, a credit balance in the Factory Overhead account at the end of an accounting period would indicate:

218. A multiple-step income statement is thought to be more beneficial to financial users because of the revelation of important relationships. Which of the following is not separately identified in a multiple-step income statement?

219. Which of the following comments relating to the recording process is correct?

220. If the supplies account (assets), before adjustment on May 31, indicated a balance of $2,250, and the supplies on hand on May 31 totaled $950, the adjusting entry would be:

221. The basic sequence in the accounting process can best be described as:

222. Retained earnings will change over time because of several factors. Which of the following factors would explain an increase in them (Retained Earnings)?

223. Investments by stockholders.

224. The entry to record the declaration of dividends is:

225. Of the following manufacturing operations, which is best suited to the utilization of a job order system?

226. The following statements are true regarding the Cash short and Over account except

227. "Honest errors can result in an entry to this account."

228. Which of the following errors will be disclosed in the preparation of a trial balance?

229. Which of the following is a liability?

230. Accounts payable refer to the current

231. If you want to make sure that your money should remain safe when checks sent are lost in the post, you should:

232. Under normal circumstances, the Work in Process account used in a job costing system:

233. Why would a company choose to invoice customers weekly rather than monthly?

234. By which of the following formulas should interest on a loan be computed?

235. What is the primary goal of an Accounts Payable department?

236. A payment of cash for the purchases of services should be recorded in the:

237. Mike is the payee of a $20,000, 180-day, 8% note. On maturity, the note maker fails to pay. How much interest income should Mike receive on the dishonored note?

238. Wilson & Co. owns land which has cost it $100,000. If a "quick sale" of the land were necessary to generate cash, the Co. feels it would receive only $80,000. The Co. continues to report the asset on the balance sheet at $100,000. Under which of the following concepts is it justified?

239. If a bank account does not reconcile, what's the best thing to do?

240. Home Depot. Inc. had net purchases of $50,000, closing inventory of $25,000, net sales of $100,000, and gross profit of $32,000. How much was their opening inventory?

241. Documents used to control a bank account include the following except

242. What does Accounts Payable show?

243. Which of the following would not be included in a balance sheet?

244. An increase in a firm's receivable turnover ratio means that:

245. Increasing the credit period from 30 to 60 days, in response to a similar action taken by all of our competitors, is likely to result in:

246. An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the final inventory valuation is:

247. The theoretically correct method of allocating under or over applied overhead is to:

248. Failure to record the receipt of a utility bill for services already received will result in _____.

249. The Sales Day Book is best described as:

250. Using the following information, determine the adjusted bank balance: bank statement balance $5,000, bank service charges $15, NSF check $500, checks outstanding $1,000, deposits in transit $2,000.

251. What is the purpose of applying overhead costs to work in process?

252. Russell Merchandising Ltd. uses the perpetual inventory system. Which of the following statements would be correct?

253. Which of the following is NOT a fundamental of accounting?

254. The sales account and the purchase account should include:

255. The correct journal entry to reconcile an NSF check returned by the bank is:

256. Wonder Corporation Ltd. failed to record the purchase of merchandise in their account books. The merchandise and related accounts payable should have been recorded but were not. What would be the effect of these errors on assets, liabilities, retained earnings, and net income respectively?

257. Which of the following statements is true?

258. Known as the ping service, icmp is a(n) __________ and should be ___________.