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Basic Accounting MCQ

1. Elements of tone include _____.

Details

Dialogue

Imagery

Setting

Answer

Correct Answer: Dialogue
Imagery

Note: This question has more than 1 correct answers

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2. Other variable costs per unit subtracted from total cogs per unit equals ________.

Contribution margin per unit

Survive five or more years

Public employee credit union

Utilities and rent

Answer

Correct Answer: Contribution margin per unit

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3. Stockbrokers loan money to clients who have ____ accounts.

Services

Goods

Money

Margin

Answer

Correct Answer: Margin

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4. A credit card would be an example of a(n) ____________________ loan.

Installment loan

Secured loan

Open-end

Teaser rate

Answer

Correct Answer: Open-end

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5. Under bush 43, the u.s. budget deficit neared __________ trillion dollars a year.

Answer

Correct Answer: 1

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6. The goal of working capital management is to ________.

Achieve a balance between short-term and long-term liabilities so that they add to the achievement of a firm's overall goals

Achieve a balance between a firm's non-current assets and non-current liabilities

Achieve a balance between profitability and risk that contributes positively to a firm's value

Achieve a balance between short-term and long-term assets so that they add to the achievement of a firm's overall goals

Answer

Correct Answer: Achieve a balance between profitability and risk that contributes positively to a firm's value

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7. Generally, debt consolidation loans monthly payments and the interest rate on the debt.

Increase; increase

Decrease; decrease

Decrease; increase

Increase; decrease

Answer

Correct Answer: Decrease; increase

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8. After john garcia became sick after eating licorice; the licorice then became a(n) __________.

Chocolate

Licorice

Both a and b

None of the above

Answer

Correct Answer: Chocolate

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9. Explicit costs of an ipo tend to be around ______ of the funds raised.

15%

25%

Answer

Correct Answer: 7%

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10. Evaluated receipts settlement is ________.

A streamlined process that bypasses paper documents altogether

A process that eliminates the need for separation of duties

A procedure that compresses the payment approval process into a single step by comparing the receiving report to the purchase order

None of above

Answer

Correct Answer: A procedure that compresses the payment approval process into a single step by comparing the receiving report to the purchase order

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11. A ____ deals with the preparation for and recovery from a disaster, whether natural or man-made.

Incident Response Planning

Business Continuity Plan

Types of Security Policies

Disaster Recovery Planning

Answer

Correct Answer: Disaster Recovery Planning

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12. This purchase of paper part of gdp because the paper is good.

Is not; an intermediate

The fraction of a change in disposable income that is saved

Aggregate Demand; recessionary gap

Only the value of the bread sold in a store;

Answer

Correct Answer: Is not; an intermediate

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13. A__________________ communicates general rules that cut across the entire organization.

Build, Acquire, and Implement

Audits

Policy principles document.

Evaluate, Assess, and Perform

Answer

Correct Answer: Policy principles document.

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14. Agency costs are likely to arise when _____.

Principals and agents have same goals

Principals and agents have different goals

Both a and b

None of the above

Answer

Correct Answer: Principals and agents have different goals

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15. The ultimate control of the corporation rests with the ________.

Board of directors

Stockholders

Chairperson

Chief operating officer

Answer

Correct Answer: Board of directors

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16. When a note receivable is honored, cash is debited for the note's ________ value.

Maturity value

Face value

Cash realizable value

Net realizable value

Answer

Correct Answer: Maturity value

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17. Long-term investments are made by the investment center manager for the purpose of ________.

Increasing profits

Decreasing profits

Increasing interest expense

Decreasing plant assets

Answer

Correct Answer: Increasing profits

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18. _____ precisely indicates how much of a firm's sales is converted into profits.

Break-even price

Working capital turnover

Return on revenue

Inventory turnover

Answer

Correct Answer: Return on revenue

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19. Under the perpetual inventory system, discounts taken on an invoice by the buyer would be ________.

Cost of goods sold

Credited to cost of goods sold

Net sales revenue

Credited to merchandise inventory

Answer

Correct Answer: Credited to merchandise inventory

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20. The sales discounts forfeited account ________.

Is a contra Sales Revenue account

Represents additional sales revenue

Is a balance sheet account

Represents the discount lost when a customer does not pay within the discount period

Answer

Correct Answer: Represents the discount lost when a customer does not pay within the discount period

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21. The revenue recognition principle guides accountants in ________.

Ensuring only revenues received in cash are recorded

Determining when to record expenses

Determining when to record revenues

Ensuring expenses are deducted from revenues

Answer

Correct Answer: Determining when to record revenues

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22. The cash basis of accounting ignores ________.

Payables

Liabilities

Unearned revenue

Receivables

Answer

Correct Answer: Payables

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23. The highminuslow method basically fits a line through the highest and lowest ________ points.

Variable cost

Volume

Fixed cost

None of the above ..

Answer

Correct Answer: Variable cost

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24. Creating the conceptual design and selecting dbms software are part of the ____ phase of the dblc.

Planning

Implementation

Database design

Verification

Operation

Answer

Correct Answer: Database design

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25. In the table above at an output of four units the amount of normal profit is _________ .

Positive Figure

Negative Figure

Zero

Answer

Correct Answer: Positive Figure

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26. A favorable efficiency variance for direct manufacturing labor indicates that ________.

A lower wage rate than planned was paid for direct labor

A higher wage rate than planned was paid for direct labor

Less direct manufacturing labor-hours were used during production than planned for actual output

More direct manufacturing labor-hours were used during production than planned for actual output

Answer

Correct Answer: Less direct manufacturing labor-hours were used during production than planned for actual output

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27. Which section of a financial annual report describes the corporation's accounting methods?

Notes to the financial statements

An auditor's report

Listing of the stockholders

Management discussion and analysis

Answer

Correct Answer: Notes to the financial statements

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28. Who does an audit committee report to?

External auditors

Senior management

Board of directors

Union of employee representatives

Answer

Correct Answer: External auditors

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29. A company budgeted 1,200 washers, but only 1,000 are produced. It costs $10 to produce a widget. What is the materials variance?

200

2000

350

Answer

Correct Answer: 200

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30. What is the difference between the cost of an asset and the accumulated depreciation for that asset?

Depreciation value

Prepaid asset

Depreciation expense

Book value

Answer

Correct Answer: Book value

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31. Which choice is not a component of internal control?

Information and communication

Risk mitigation

Monitoring

Control environment

Answer

Correct Answer: Risk mitigation

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32. What is the purpose of an operational audit?

Assessing the company's compliance with environmental laws and regulations

Evaluating whether the organization is meeting the metrics set by management in order to achieve the goals and objectives set forth by the board of directors

Assessing the organization's control mechanisms for overall efficiency and reliability

Evaluating compliance with applicable laws, regulations, policies, and procedures

Answer

Correct Answer: Evaluating whether the organization is meeting the metrics set by management in order to achieve the goals and objectives set forth by the board of directors

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33. A firm has $1,000 in debt and $3,000 in assets. What is the firm's debt-to-equity ratio?

0.5

0.33

Answer

Correct Answer: 0.33

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34. What would be deducted from the balance per books when doing a bank reconciliation?

Deposits in transit

Bank service fees

Outstating checks

Electronic fund transfers/payments

Answer

Correct Answer: Outstating checks

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35. Which is not one of the four perspectives of the balanced scorecard?

Internal business

Learning and growth

Quantitative

Customer

Answer

Correct Answer: Quantitative

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36. How are the three financial statements (income, statement, balance sheet, and cash flow statement) linked?

Only the assets are reflected in the cash flow statement, and the net income expenses correlate with the liabilities.

The net income goes to retained earnings, but the cash flow remains independent.

The gross profit goes to retained earning, and the shareholder equity total is added to the cash flow statement

The net income goes to the retained earning and to the cash flow statement

Answer

Correct Answer: The net income goes to retained earnings, but the cash flow remains independent.

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37. What does the discontinued operations section of the income statement refer to?

Disposal of a major product line or major geographical area of operations

Sale of unused or obsolete equipment and discontinued inventory

A plant shutdown or decommissioning of a facility

Net income or loss for products completed and sold

Answer

Correct Answer: Disposal of a major product line or major geographical area of operations

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38. Which budgeting approach request justification of all expenditures?

Zero-based budgeting

Master budgeting

Rolling budgets

Bottom-up budgeting

Answer

Correct Answer: Zero-based budgeting

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39. Which is not an example of an internal control activity?

Review of manufacturing plan

Segregation of duties

Bank reconciliations

Approval process

Answer

Correct Answer: Bank reconciliations

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40. What do you call a situation where more than one person collaborates to circumvent existing internal controls?

Assigned responsibility

Segregation of duties

Fraud prevention

Collusion

Answer

Correct Answer: Collusion

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41. Which answer best describes accruals and deferrals?

Accruals are past cash receipts and payments, while deferrals are expected future cash receipts and payments.

Both accruals and deferrals are both expected future cash receipts and payments.

Accruals are expected future cash receipts and payments, while deferrals are past cash receipts and payments.

Both accruals and deferrals are not expected past cash receipts and payments.

Answer

Correct Answer: Accruals are expected future cash receipts and payments, while deferrals are past cash receipts and payments.

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42. What does the cost of a unit of product under absorption costing method consist of?

Direct materials, direct and indirect labor, and fixed overhead

Direct materials, indirect labor, and variable and fixed overhead

Direct materials, direct labor, and both variable and fixed overhead

Direct materials, direct and indirect labor, and variable overhead

Answer

Correct Answer: Direct materials, direct labor, and both variable and fixed overhead

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43. Which choice is a general guideline for adequate separation of duties to prevent both fraud and error?

A person who has control over an asset should not safeguard that asset.

A person who has temporary or permanent custody of an asset should not account for that asset.

A person who has record-keeping responsibility should not make journal entries.

A person who has operational responsibility should not authorize transactions for the area.

Answer

Correct Answer: A person who has record-keeping responsibility should not make journal entries.

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44. On March 15, a business receives an invoice from the power company for utilities used in February. The retailer pays the invoice on April 1. The business uses accrual-based accounting. Which month should the business recognize the expense?

April

March

No record required

February

Answer

Correct Answer: February

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45. Internal controls may be preventative, detective, corrective, or directive. Which is a detective control?

Data backups

Physical inventory check

Employee background checks

Physical locks on inventory warehouse

Answer

Correct Answer: Physical inventory check

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46. What effect does a contra asset account have on a balance sheet?

A contra asset is not an accounting term

A contra asset has a credit balance and therefore a negative effect on total assets

A contra asset with a positive balance will increase overall liabilities

A contra asset has a debit balance and therefore a positive effect on total assets

Answer

Correct Answer: A contra asset has a credit balance and therefore a negative effect on total assets

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Basic Accounting MCQ

1. Elements of tone include _____.

2. Other variable costs per unit subtracted from total cogs per unit equals ________.

3. Stockbrokers loan money to clients who have ____ accounts.

4. A credit card would be an example of a(n) ____________________ loan.

5. Under bush 43, the u.s. budget deficit neared __________ trillion dollars a year.

6. The goal of working capital management is to ________.

7. Generally, debt consolidation loans ____ monthly payments and ____ the interest rate on the debt.

8. After john garcia became sick after eating licorice; the licorice then became a(n) __________.

9. Explicit costs of an ipo tend to be around ______ of the funds raised.

10. Evaluated receipts settlement is ________.

11. A ____ deals with the preparation for and recovery from a disaster, whether natural or man-made.

12. This purchase of paper ______ part of gdp because the paper is ______ good.

13. A__________________ communicates general rules that cut across the entire organization.

14. Agency costs are likely to arise when _____.

15. The ultimate control of the corporation rests with the ________.

16. When a note receivable is honored, cash is debited for the note's ________ value.

17. Long-term investments are made by the investment center manager for the purpose of ________.

18. _____ precisely indicates how much of a firm's sales is converted into profits.

19. Under the perpetual inventory system, discounts taken on an invoice by the buyer would be ________.

20. The sales discounts forfeited account ________.

21. The revenue recognition principle guides accountants in ________.

22. The cash basis of accounting ignores ________.

23. The highminuslow method basically fits a line through the highest and lowest ________ points.

24. Creating the conceptual design and selecting dbms software are part of the ____ phase of the dblc.

25. In the table above at an output of four units the amount of normal profit is _________ .

26. A favorable efficiency variance for direct manufacturing labor indicates that ________.

27. Which section of a financial annual report describes the corporation's accounting methods?

28. Who does an audit committee report to?

29. A company budgeted 1,200 washers, but only 1,000 are produced. It costs $10 to produce a widget. What is the materials variance?

30. What is the difference between the cost of an asset and the accumulated depreciation for that asset?

31. Which choice is not a component of internal control?

32. What is the purpose of an operational audit?

33. A firm has $1,000 in debt and $3,000 in assets. What is the firm's debt-to-equity ratio?

34. What would be deducted from the balance per books when doing a bank reconciliation?

35. Which is not one of the four perspectives of the balanced scorecard?

36. How are the three financial statements (income, statement, balance sheet, and cash flow statement) linked?

37. What does the discontinued operations section of the income statement refer to?

38. Which budgeting approach request justification of all expenditures?

39. Which is not an example of an internal control activity?

40. What do you call a situation where more than one person collaborates to circumvent existing internal controls?

41. Which answer best describes accruals and deferrals?

42. What does the cost of a unit of product under absorption costing method consist of?

43. Which choice is a general guideline for adequate separation of duties to prevent both fraud and error?

44. On March 15, a business receives an invoice from the power company for utilities used in February. The retailer pays the invoice on April 1. The business uses accrual-based accounting. Which month should the business recognize the expense?

45. Internal controls may be preventative, detective, corrective, or directive. Which is a detective control?

46. What effect does a contra asset account have on a balance sheet?

7. Generally, debt consolidation loans monthly payments and the interest rate on the debt.

12. This purchase of paper part of gdp because the paper is good.