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Basic Bookkeeping MCQ

1. Known as the ping service, icmp is a(n) and should be _.

Partially distributed

Common method for hacker reconnaissance, turned off to prevent snooping

Router passthru

All of the above

Answer

Correct Answer: Common method for hacker reconnaissance, turned off to prevent snooping

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2. Which of the following statements is true?

Answer

Correct Answer: Cash discounts normally apply to the invoice price of the merchandise, excluding freight charges.

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3. 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?

Understated, understated, no effect, no effect

Understated, understated, understated, understated

Understated, overstated, overstated, understated

Overstated, overstated, understated, overstated

Answer

Correct Answer: Understated, understated, no effect, no effect

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

Debit Accounts Receivable, Credit NSF

Debit Cash, Credit Accounts Receivable

Debit NSF Expense, Credit Cash

Debit Accounts Receivable, Credit Cash

Answer

Correct Answer: Debit Accounts Receivable, Credit Cash

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

only cash sales and purchases of merchandise.

only credit sales and credit purchases of merchandise.

both cash and credit sales and credit purchases of merchandise.

not only merchandise transactions, but also purchases and other assets used in the business.

Answer

Correct Answer: both cash and credit sales and credit purchases of merchandise.

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

Materiality

Timeliness

Matching

Magnitude

Answer

Correct Answer: Magnitude

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

When they record a sale, it should also debit inventory.

When they record a sale, it should also credit inventory.

When they record a sale, it should also credit cost of goods sold.

When they record a sale, it should also debit cost of goods available for sale.

Answer

Correct Answer: When they record a sale, it should also credit inventory.

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

To meet the legal requirements of the IRS

To reduce the Expense line on the profit & loss statement

To accurately apply costs to WIP so that the cost of the finished product reflects all the costs incurred to produce it

To hide costs from the auditors

Answer

Correct Answer: To accurately apply costs to WIP so that the cost of the finished product reflects all the costs incurred to produce it

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9. 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.

$6,000

$5,000

$5,485

None of the above

Answer

Correct Answer: $6,000

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10. The Sales Day Book is best described as:

a book containing customers' accounts

a book containing real accounts

a list of credit sales

a part of the double entry system

Answer

Correct Answer: a list of credit sales

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

an overstatement of assets.

an overstatement of liabilities.

an overstatement of equity.

an understatement of assets.

Answer

Correct Answer: an overstatement of equity.

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

allocate the amount to cost of goods sold.

allocate the amount to finished goods.

allocate the amount to work in process and finished goods.

allocate the amount among work in process, finished goods, and cost of goods sold.

Answer

Correct Answer: allocate the amount among work in process, finished goods, and cost of goods sold.

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13. 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:

an increase in the average collection period

a decrease in bad debt losses

an increase in sales

higher profits

Answer

Correct Answer: an increase in the average collection period

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

it is collecting credit sales more quickly than before

cash sales have decreased

it has initiated more liberal credit terms

it's inventories have increased

Answer

Correct Answer: it is collecting credit sales more quickly than before

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

Accounts receivable.

Accounts payable.

Sales

Cash.

Answer

Correct Answer: Sales

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16. What does Accounts Payable show?

Credit Balance

Debit Balance

None of the above

Answer

Correct Answer: Credit Balance

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

a bank statement

electronic funds transfer (EFT)

prenumbered checks

a signature card

Answer

Correct Answer: electronic funds transfer (EFT)

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18. 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?

$7,000

$43,000

$93,000

$143,000

Answer

Correct Answer: $43,000

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

Book the difference as an adjustment regardless of the magnitude

Let it remain unreconciled and hope it will clear up in the following month

Start from scratch to see if the discrepancy can be found

Answer

Correct Answer: Start from scratch to see if the discrepancy can be found

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20. 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?

The historical-cost principle

The objectivity principle.

Neither of the above.

Both "a" and "b".

Answer

Correct Answer: Both "a" and "b".

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21. 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?

$800

$1,600

$10,800

Answer

Correct Answer: $800

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

cash payments journal

purchases journal

revenue journal

cash receipts journals

Answer

Correct Answer: cash payments journal

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

To pay invoices immediately to avoid collection calls

To short pay invoices, knowing that some clients will not notice

To maintain an accurate AP record and pay invoices according to the company policy

To tell people who call that their check is in the mail, when it is not, in order to buy time

Answer

Correct Answer: To maintain an accurate AP record and pay invoices according to the company policy

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

(principal x rate)/time

(principal x rate x time)

(principal x time)/rate

(principal x time)/time

Answer

Correct Answer: (principal x rate x time)

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

will include charges for direct labor, direct materials, and applied overhead.

will include only charges for direct materials and applied overhead. The labor is charged to expense as incurred.

will include charges for direct labor, direct materials, and actual overhead.

will include only charges for direct labor and direct materials.

Answer

Correct Answer: will include charges for direct labor, direct materials, and applied overhead.

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

cross your checks 'Account Payee only, Not Negotiable'

not use the postal service in future

always pay by cash

always take the money in person

Answer

Correct Answer: cross your checks 'Account Payee only, Not Negotiable'

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27. Accounts payable refer to the current

Liability of a business or an organization

Asset of a business or an organization

Expense of a business or organization

Income of a business or organization

Answer

Correct Answer: Liability of a business or an organization

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28. Which of the following is a liability?

Creditors for Goods

Machinery

Cash at Bank

Motor Vehicles

Answer

Correct Answer: Creditors for Goods

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

Recording transactions in the wrong account.

Duplication of a transaction in the accounting records.

Posting only the debit portion of a particular journal entry.

Recording wrong amount for a transaction to both the account debited and the account credited.

Answer

Correct Answer: Posting only the debit portion of a particular journal entry.

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

only cash sales and purchases of merchandise.

both cash and credit sales and credit purchases of merchandise.

not only merchandise transactions, but also purchases and other assets used in the business.

Answer

Correct Answer: only cash sales and purchases of merchandise.

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

Helicopter manufacturing.

Soft drink bottling operation.

Crude oil refining.

Plastic molding operation.

Answer

Correct Answer: Helicopter manufacturing.

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

debit Cash, credit Dividend Expense

debit Dividend Expense, credit Cash

debit Dividends, credit Dividend Payable

debit Retained Earnings, credit Dividend Payable

Answer

Correct Answer: debit Dividends, credit Dividend Payable

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33. Investments by stockholders.

Materiality

Timeliness

Matching

Magnitude

Answer

Correct Answer: Timeliness

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

Net loss.

Net income.

Dividends.

Investments by stockholders.

Answer

Correct Answer: Net income.

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

Transaction, journal entry, source document, ledger account, trial balance.

Source document, transaction, ledger account, journal entry, trial balance.

Transaction, source document, journal entry, trial balance, ledger account.

Transaction, source document, journal entry, ledger account, trial balance.

Answer

Correct Answer: Transaction, source document, journal entry, ledger account, trial balance.

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36. 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:

Debit supplies, $1,300; credit supplies expense, $1,300

Debit supplies, $950; credit supplies expense, $950

Debit supplies expense, $950; credit supplies, $950

Debit supplies expense, $1,300; credit supplies, $1,300

Answer

Correct Answer: Debit supplies expense, $1,300; credit supplies, $1,300

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

The general ledger is a chronological record of transactions.

The general ledger is posted from the transactions recorded in the general journal.

The trial balance provides the primary source document for recording transactions in the general journal.

Transposition is the transfer of information from the general journal to the general ledger.

Answer

Correct Answer: The general ledger is posted from the transactions recorded in the general journal.

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38. 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?

Gross profit

Net income

Income taxes

Total costs and expenses

Answer

Correct Answer: Total costs and expenses

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

that an error in the job cost system has occurred.

that the company lost money during the period.

the presence of under-applied overhead.

the presence of over-applied overhead.

Answer

Correct Answer: the presence of over-applied overhead.

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40. 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:

Cost of Goods Sold

Factory Overhead

Cash

Income Summary

Answer

Correct Answer: Factory Overhead

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

It assumes it to be correct if it has been received properly in the system

It holds the warehouse manager accountable

It counts every item daily

It uses some form of physical inventory count - either annual or cyclical

Answer

Correct Answer: It uses some form of physical inventory count - either annual or cyclical

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

Liabilities and expenses.

Assets and equity.

Assets and expenses.

Equity and revenues

Answer

Correct Answer: Assets and expenses.

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43. 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:

$28,500

$37,500

$46,500

$55,500

Answer

Correct Answer: $46,500

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

Current assets

Investments

Property, plant, and equipment

Intangible assets

Answer

Correct Answer: Current assets

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45. 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:

$128,000

$132,000

$136,000

$152,000

Answer

Correct Answer: $128,000

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

A job cost sheet would show the direct materials used on that specific job.

A job cost sheet would reveal the selling costs associated with a particular job.

The amount of overhead on a job cost sheet is the applied factory overhead rather than the actual factory overhead

Answer

Correct Answer: A job cost sheet would reveal the selling costs associated with a particular job.

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

Financial Accounting Standards Board

Federal Bureau of Investigation.

General Accounting Office.

Internal Revenue Service.

Answer

Correct Answer: Financial Accounting Standards Board

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

Repayment of a bank loan.

Dividends to stockholders.

Purchase of land.

Payment of the current period's rent.

Answer

Correct Answer: Payment of the current period's rent.

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49. 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?

$115,000

$150,000

$230,000

$300,000

Answer

Correct Answer: $230,000

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50. 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 _____.

financial accounting.

managerial accounting.

auditing

cost accounting.

Answer

Correct Answer: auditing

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

It results in accurate ongoing inventory

It lets the company incur adjustment costs on a monthly rather than annual basis

It allows the company to look for and correct ongoing discrepancies

All of the above

Answer

Correct Answer: All of the above

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52. 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:

Debit Work in Process, $3,500; credit Wages Payable, $3,500.

Debit Wage Expense, $3,500; credit Wages Payable, $3,500.

Debit Work in Process, $2,000; debit Factory Overhead, $1,500; credit Wages Payable, $3,500.

Debit Work in Process, $3,500; credit Factory Overhead, $1,500; credit Wage Expense, $2,000.

Answer

Correct Answer: Debit Work in Process, $2,000; debit Factory Overhead, $1,500; credit Wages Payable, $3,500.

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53. '2/10, net 30' is an example of:

Terms

Methods

Systems

None of the above.

Answer

Correct Answer: Terms

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

an outstanding check

a credit transfer

a dishonored check

a standing order

Answer

Correct Answer: an outstanding check

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

Aging Report

Pending Report

Payable Report

Other Report.

Answer

Correct Answer: Aging Report

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56. 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.

$24,800

$25,800

$25,000

None of the above.

Answer

Correct Answer: $24,800

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57. The purpose of Accrued Expenses is:

to accurately reflect expenses in the periods during which they are incurred

to keep account of the vendors who never send invoices

to reflect the amounts owed to the company

Answer

Correct Answer: to accurately reflect expenses in the periods during which they are incurred

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58. 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

Overstate Overstate

Overstate Understate

Understate Overstate

Understate Understate

Answer

Correct Answer: Overstate Understate

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

They forget to pay

They are managing their cash flow

They don't like taking discounts and saving money

They might decide not to pay if the vendor doesn't call

Answer

Correct Answer: They are managing their cash flow

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60. 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.

TheRitz should include the goods in its inventory calculated on December 31.

TheRitz should include the goods in its inventory calculated on December 31 but should not record the obligation to pay for them.

TheRitz should not include the goods in its inventory calculated on December 31 but should include the related payable on its balance sheet on December 31.

TheRitz should not include the goods in its inventory calculated on December 31 and should not include the related payable on its balance sheet on December 31.

Answer

Correct Answer: TheRitz should not include the goods in its inventory calculated on December 31 and should not include the related payable on its balance sheet on December 31.

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

Assets + liabilities = owner's equity.

Assets = owner's equity.

Cash = assets.

Assets - liabilities = owner's equity.

Answer

Correct Answer: Assets - liabilities = owner's equity.

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

debit Cash, credit Dividend Expense

debit Dividend Expense, credit Cash

debit Dividends, credit Dividend Payable

debit Dividend Payable, credit Cash

Answer

Correct Answer: debit Dividend Payable, credit Cash

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

Debit Cash, Credit Interest Revenue

Debit Cash, Credit Accounts Payable

Debit Cash, Credit Accounts Receivable

Debit Accounts Receivable, Credit Cash

Answer

Correct Answer: Debit Cash, Credit Interest Revenue

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

Apply the payment to a holding account and don't let the client know unless they ask

Apply the payment to their account and hold it back in case they decide not to pay future invoices

Receive the cash and immediately issue a check back to them

Call the customer and ask them what they would prefer

Answer

Correct Answer: Call the customer and ask them what they would prefer

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65. 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:

a debit memorandum.

a credit memorandum.

a receiving report.

an invoice.

Answer

Correct Answer: a debit memorandum.

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

check register before Bank Reconcilation

Bank Reconcilation

bank statement before Bank Reconcilation

None of the above

Answer

Correct Answer: Bank Reconcilation

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67. The overhead application rate is calculated by:

dividing the estimated factory overhead by the estimated application base.

dividing estimated per unit factory overhead by the sum of the per unit cost for direct labor and direct materials

multiplying the estimated factory overhead by the estimated application base.

dividing the estimated application base by the estimated factory overhead.

Answer

Correct Answer: dividing the estimated factory overhead by the estimated application base.

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68. What is accounts payable aging report?

a sorting of a company's accounts payable by bill date.

a sorting of a company's accounts payable by due date.

a sorting of a company's accounts payable by posted date.

None of above.

Answer

Correct Answer: a sorting of a company's accounts payable by due date.

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

Interest earned and bank fees

Bank errors

Unidentified transactions

Checks cleared but not in the accounting system

Answer

Correct Answer: Interest earned and bank fees

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

For any given journal entry, debits must exceed credits.

It is customary to record credits on the left and debits on the right.

The chart of accounts reveals the amount to debit and credit to the affected accounts.

Journalization is the process of converting transactions and events into the debit/credit format.

Answer

Correct Answer: Journalization is the process of converting transactions and events into the debit/credit format.

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

Send them to collections immediately

Write them a letter and threaten to cut off their line of credit

Begin charging interest on their open balance

Send a statement with copies of the open invoices

Answer

Correct Answer: Send a statement with copies of the open invoices

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

Purchase of land from the proceeds of a bank loan.

Dividends to stockholders.

Net loss.

Investments of cash by stockholders.

Answer

Correct Answer: Purchase of land from the proceeds of a bank loan.

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73.
Remington Inc. has provided the following information about its balance sheet:

Cash $ 100
Accounts receivable $ 500
Stockholders' equity $ 700
Accounts payable $ 200
Bank loans $ 1,000

Based on the information provided, how much do their liabilities amount to?

$200.

$900.

$1,200.

$1,700.

Answer

Correct Answer: $1,200.

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74. Trade accounts receivable:

arise from the sale of a company's products or services.

are reported in the non-current asset section of the balance sheet.

include deposits with utilities

generally comprise the minority of the total receivables balance.

Answer

Correct Answer: arise from the sale of a company's products or services.

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75. Which of the following is a personal account?

Building

Wages

Debtors

Rent

Answer

Correct Answer: Debtors

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

Rent

Insurance

Wages

Office Supplies

Answer

Correct Answer: Insurance

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77. Why is the Accounts Receivable function important?

All companies have it; so it must be important

It is good to have someone people can call with invoice questions

It turns the receivables into cash

Sales would go down without an AR department

Answer

Correct Answer: It turns the receivables into cash

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

excess of applied overhead over actual overhead.

actual overhead.

applied overhead.

indirect materials and indirect labor.

Answer

Correct Answer: applied overhead.

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79. The trial balance __________.

is a formal financial statement.

is used to prove that there are no errors in the journal or ledger.

provides a listing of every account in the chart of accounts.

provides a listing of the balance of each account in active use.

Answer

Correct Answer: provides a listing of the balance of each account in active use.

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

FIFO

LIFO

Average

All of these

Answer

Correct Answer: FIFO

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

FIFO

LIFO

Average Cost

Specific Cost

Answer

Correct Answer: Average Cost

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

Cost drivers are those items which cause actual overhead to exceed applied overhead.

Job costing systems are appropriate to both manufacturing and service businesses.

Traditionally, direct labor has been a very popular overhead application base.

In a service business, indirect costs of providing a service are treated as overhead and applied in a manner similar to that for factory overhead.

Answer

Correct Answer: Cost drivers are those items which cause actual overhead to exceed applied overhead.

Note: This Question is unanswered, help us to find answer for this one

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

Statement of Financial Performance

Earnings statement

Net Profit Statement

Profit and Loss Statement

Statement of operations

Answer

Correct Answer: Net Profit Statement

Note: This Question is unanswered, help us to find answer for this one

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

True

False

Answer

Correct Answer: False

Note: This Question is unanswered, help us to find answer for this one

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

a management control device

a means of communication to stakeholders

a means for calculating the current market value of a business

an aid to decision making

a means of establishing accountability

Answer

Correct Answer: a means for calculating the current market value of a business

Note: This Question is unanswered, help us to find answer for this one

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

Freight outward

Purchases

Duty and excise

Freight inward

Import clearance charges

Answer

Correct Answer: Freight outward

Note: This Question is unanswered, help us to find answer for this one

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

Discount given by suppliers

Discount given to creditors

Discount on purchases

Discount on sales

Discount given to debtors

Answer

Correct Answer: Discount given to debtors

Note: This Question is unanswered, help us to find answer for this one

88. 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?

always on the debit side

on the opposite side

on the same side

always on the credit side

Answer

Correct Answer: on the same side

Note: This Question is unanswered, help us to find answer for this one

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

Purchase

Purchase and issuance from inventory

Issuance from inventory

Month-end

Answer

Correct Answer: Purchase

Note: This Question is unanswered, help us to find answer for this one

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

Fair Value

Depreciated value

Liquidation value

Market value

Cost price

Answer

Correct Answer: Fair Value

Note: This Question is unanswered, help us to find answer for this one

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

Loan repayments payable

Trading stock bought on credit

Expenses recorded but not yet paid for

Trading stock purchased for cash

Assets bought on credit

Answer

Correct Answer: Trading stock bought on credit

Note: This Question is unanswered, help us to find answer for this one

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

a Direct expense

a Non operating expense

a Depreciation and Amortization

an Operating expense

an Extraordinary expense

Answer

Correct Answer: a Non operating expense

Note: This Question is unanswered, help us to find answer for this one

93. 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 ....?

Increased by $4,000

Decreased by $1,000

Increased by $5,000

Decreased by $5,000

Unchanged

Answer

Correct Answer: Unchanged

Note: This Question is unanswered, help us to find answer for this one

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

gross profit calculations cannot be done without a physical stocktake

typically includes maximum and minimum stock levels

typically includes a re-order point

stock losses can be determined

separate inventory records are kept for each stock item

Answer

Correct Answer: gross profit calculations cannot be done without a physical stocktake

Note: This Question is unanswered, help us to find answer for this one

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

Current liabilities

Equity

Expenses

Current assets

Non-current liabilities

Answer

Correct Answer: Current assets

Note: This Question is unanswered, help us to find answer for this one

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

Cash payments

General

Purchases

Cash receipts

Sales

Answer

Correct Answer: General

Note: This Question is unanswered, help us to find answer for this one

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

Variance reporting

Journalizing

Posting

An audit trail

a trial balance

Answer

Correct Answer: An audit trail

Note: This Question is unanswered, help us to find answer for this one

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

liabilities

revenue

assets

expenses

equity

Answer

Correct Answer: assets

Note: This Question is unanswered, help us to find answer for this one

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

it remains unchanged

it is ignored

it is credited

it is debited

Answer

Correct Answer: it is debited

Note: This Question is unanswered, help us to find answer for this one

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

Statement of Financial Position

Equity Statement

Statement of Net Assets

Statement of Financial condition

Answer

Correct Answer: Equity Statement

Note: This Question is unanswered, help us to find answer for this one

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

Purchases

Sales

Freight inwards

Sales commissions

Closing inventory

Answer

Correct Answer: Sales commissions

Note: This Question is unanswered, help us to find answer for this one

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

Memoranda

Adjustment note

Sales invoice

Purchase invoice

Check

Answer

Correct Answer: Adjustment note

Note: This Question is unanswered, help us to find answer for this one

103. 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?

Historical cost

Dual Aspect of financial transactions

Separate accounting entity

Matching principle

Prudence/Conservatism

Answer

Correct Answer: Prudence/Conservatism

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104. 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?

LIFO

FIFO

Specific identification

Weighted average

Moving average

Answer

Correct Answer: Specific identification

Note: This Question is unanswered, help us to find answer for this one

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

False

True

Answer

Correct Answer: True

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

Purchase order

Consignment note

Supplier's invoice

Delivery docket

Purchase requisition

Answer

Correct Answer: Supplier's invoice

Note: This Question is unanswered, help us to find answer for this one

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

Standard Pricing

Weighted Average Cost

LIFO

Average Cost

FIFO

Answer

Correct Answer: LIFO

Note: This Question is unanswered, help us to find answer for this one

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

Recording an uncollected sale

Recording a future obligation towards a vendor

Canceling an open Receivable

Recording a cash receipt from a sale

Answer

Correct Answer: Recording an uncollected sale

Note: This Question is unanswered, help us to find answer for this one

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

an error of commission

an error of reversal

a compensating error

an error of omission

a transposition error

Answer

Correct Answer: a transposition error

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110. 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

;Debit.inventory; Credit note payable

Debit.inventory ;Credit account receivable

Debit.inventory ; Credit cash

No entry

Debit.inventory ; Credit account payable

Answer

Correct Answer: No entry

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

Materiality

Going Concern

Consistency

Monetary measurement

Objectivity

Answer

Correct Answer: Objectivity

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

Selling and administration expenses

Other operating expenses

Depreciation and amortization

Finance expenses

Accrued expenses

Answer

Correct Answer: Accrued expenses

Note: This Question is unanswered, help us to find answer for this one

113. The trial balance lists which type of accounts?

Only the 'nominal' accounts

Only the 'real' accounts

Debtor and Creditor accounts only

General ledger accounts plus the individual Debtor and Creditor accounts

Only the General ledger accounts

Answer

Correct Answer: Only the General ledger accounts

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

the bank account has available funds

it must be a mistake

the bank owes you money

the bank account is overdrawn

Answer

Correct Answer: the bank account is overdrawn

Note: This Question is unanswered, help us to find answer for this one

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

Trial Balance

General Journal

Vendors listing

Customer list

General Ledger

Answer

Correct Answer: General Ledger

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116. 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

I only

Neither I or II

II only

Both I and II

Answer

Correct Answer: Both I and II

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

Materiality

Comparability

Consistency

Conservatism

Answer

Correct Answer: Conservatism

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118. 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?

$70,000

$80,000

$60,000

$90,000

$120,000

Answer

Correct Answer: $70,000

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

the revenue the business has achieved

the profit the business has made

items of economic value

the source of finance to the business

the costs of running the business

Answer

Correct Answer: the source of finance to the business

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

accounts receivable

a fixed asset account

accounts payable

the petty cash float account

an expense account

Answer

Correct Answer: an expense account

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121. Which of the following is a current liability?

Prepaid expenses

Accrued revenue

Mortgage loan

Drawings

Accrued expenses

Answer

Correct Answer: Accrued expenses

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

No entry

debit entry

credit entry

Answer

Correct Answer: credit entry

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

True

False

Answer

Correct Answer: False

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

True

False

Answer

Correct Answer: False

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

All of these

Accumulated Depreciation

Retained Earnings

Wages Payable

Answer

Correct Answer: All of these

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126. 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?

Account receivable

Service Revenue

Account Payable

Accrued expenses

Unearned Revenue

Answer

Correct Answer: Account receivable

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

'Full Disclosure' principle

Matching principle

Historical cost principle

'Going concern' principle

'Substance Over Form' principle

Answer

Correct Answer: Matching principle

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

For the month ended 30 June

For the month of June

For the 6 months ended 30 June

For the period 1 January to 30 June

As at the 30 June

Answer

Correct Answer: As at the 30 June

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

Average of beginning and ending inventory

Oldest

Newest received

Depend on whether costs are rising or falling

Answer

Correct Answer: Newest received

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

Yes

Answer

Correct Answer: Yes

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

Materiality

Historical cost

Conservatism

Full discloser

Answer

Correct Answer: Materiality

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

prepaid expenses

revenue in advance

accrued expenses

bad and doubtful debts

accrued revenue

Answer

Correct Answer: bad and doubtful debts

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

Bank fees charged to the account

Electronic banking - payments out

Monies received

Checks issued for payment to suppliers

Answer

Correct Answer: Monies received

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

Cash sales

Deferred Revenue

Accrued expenses

Deferred Expense

Depreciation

Answer

Correct Answer: Cash sales

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

$23,400

$24,000

$14,000

$14,400

$16,000

Answer

Correct Answer: $24,000

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

Revenue in advance

Accounts payable

Bank overdraft

Term Loans secured by a mortgage

Accrued expenses

Answer

Correct Answer: Term Loans secured by a mortgage

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

Sales allowances

Sales discounts

Bank charges

Accumulated depreciation

Sales returns

Answer

Correct Answer: Bank charges

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138. Which of the following is the summary of accounts

Income Statement

Balance Sheet

General Ledger

Trial Balance

Answer

Correct Answer: Trial Balance

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

Sales invoices

Cash register receipts

Electronic transfers

Adjustment/credit notes

Delivery dockets

Answer

Correct Answer: Delivery dockets

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140. 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.

False

True

Answer

Correct Answer: False

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141. 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?

Prepaid Expense

Owners equity

Services expense

Cash at bank

Equity

Answer

Correct Answer: Prepaid Expense

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

Doubtful debts

Repairs and Maintenance

Insurance

Advertising

Accumulated depreciation

Answer

Correct Answer: Accumulated depreciation

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143. Cash sales are recorded in which subsidiary journal?

Purchases journal

Cash payments journal

Sales returns and allowances journal

Cash receipts journal

Sales journal

Answer

Correct Answer: Cash receipts journal

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

Current assets - Current liabilities

Working capital + Fixed assets

Total assets + Current earnings

Total assets - Total liabilities

Working capital - Fixed liabilities

Answer

Correct Answer: Total assets - Total liabilities

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

a revenue account

an equity account

a liability account

an expense account

an asset account

Answer

Correct Answer: an asset account

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

Solvency

Saleability

Profitability

Maturity

Sustainability

Answer

Correct Answer: Solvency

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

Asset appreciation

Posting

Amortization

Accruals

Depreciation

Answer

Correct Answer: Amortization

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

a debit balance in the Cash at Bank account

a debit balance in the Accounts Receivable account

a nil balance in the Cash at Bank account

a credit balance in the Cash at Bank account

a debit balance in the Bank Fees and Charges account

Answer

Correct Answer: a debit balance in the Cash at Bank account

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

General Ledger

Cash Receipts Journal

Purchase Journal

General Journal

Sales Journal

Answer

Correct Answer: General Journal

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

Revenue

Liabilities

Owners Equity

Assets

Expenses

Answer

Correct Answer: Assets

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

closing stock decreases

gross profit increases

gross profit decreases

net profit increases

sales revenue decreases

Answer

Correct Answer: gross profit decreases

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

a debit balance non-current asset

a credit balance expense

a credit balance non-current asset

a credit balance current asset

a debit balance current asset

Answer

Correct Answer: a debit balance current asset

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

General Ledger

Journal

Cash at Bank account

Subsidiary Ledger

Answer

Correct Answer: Journal

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154. 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 .....?

Materiality

Monetary measurement

Going Concern

Historical cost

Realization of income

Answer

Correct Answer: Historical cost

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

Purchases

Postage and shipping

Bad debts

Depreciation expense

Cash at bank

Answer

Correct Answer: Cash at bank

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

Assets + Liabilities = Equity/Capital

Assets = Equity/Capital - Liabilities

Assets = Liabilities + Equity/Capital

Assets = Liabilities - Equity/Capital

Assets = Liabilities = Equity/Capital

Answer

Correct Answer: Assets = Liabilities + Equity/Capital

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

Discount allowed

Purchases on credit

Discount revenue

Cash received

Answer

Correct Answer: Purchases on credit

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

ensuring a balanced 'trial balance'

classifing transactions into the correct ledger accounts

recording the organisation’s day-to-day financial transaction

ensuring that financial transactions are recorded correctly

reporting to governments and meeting statutory requirements

Answer

Correct Answer: reporting to governments and meeting statutory requirements

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

Discount on Sales

Accounts payable

Accounts receivable

Purchases

Bank Charges

Answer

Correct Answer: Accounts receivable

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160. 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...

Accruals

Cash payments and receipts

Prepaid expenses

Credit Purchases

Unearned revenues

Answer

Correct Answer: Accruals

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

Prepare a trial balance

Post the details to the general ledger

Prepare financial statements

Calculate and record the end of period adjusting entries

Analyse and classify the financial transactions

Answer

Correct Answer: Post the details to the general ledger

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162. The accounting equation is ....?

Assets = Liabilities - Owners equity

Assets + Liabilities = Owners equity

Owners Equity = Liabilities - Assets

Assets = Liabilities + Owners equity

Liabilities = Assets + Owners Equity

Answer

Correct Answer: Assets = Liabilities + Owners equity

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

Cash Entry

Prepaid Expense

Liability

Non-current asset entry

Answer

Correct Answer: Prepaid Expense

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

Sales journal

Cash receipts journal

Sales returns journal

Cash payments journal

Purchases journal

Answer

Correct Answer: Cash receipts journal

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

Equity - Total liabilities

Total assets - Current liabilities

Current assets - Inventory

Current asset - Current liabilities

Current assets + Current earnings

Answer

Correct Answer: Current asset - Current liabilities

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

As an asset - prepaid expenses

As drawings against equity in a future period

As a liability in the current period

As an expense in the current period

Answer

Correct Answer: As an asset - prepaid expenses

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

cash received

Delivery of goods or services

Answer

Correct Answer: Delivery of goods or services

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

True

False

Answer

Correct Answer: False

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169. 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

1, 2, 3

Answer

Correct Answer: 4

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

False

True

Answer

Correct Answer: True

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

Going concern concept

Objectivity Principle

Accrual method

Cost Principle

Business entity concept

Answer

Correct Answer: Business entity concept

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

Equity

Current assets

Current liabilities

Non-current assets

Non-current liabilities

Answer

Correct Answer: Equity

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

Single entry accounting

Accrual accounting

Cash accounting

Cost accounting

Answer

Correct Answer: Accrual accounting

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

Consistency

Reliability

Substance over form

Accruals

Relevance

Answer

Correct Answer: Consistency

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

Capital

Net Worth

Shareholder's equity

Investments and loans

Answer

Correct Answer: Investments and loans

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176. 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...

None of these

Revenue

Profit

Gain

Loss

Answer

Correct Answer: Gain

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

Interest Payable

Customer Advances

Unearned revenue

Accounts Payable

Accounts Receivable

Answer

Correct Answer: Accounts Receivable

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178. 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...

5000

3000

1000

4000

No liability

Answer

Correct Answer: No liability

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

Credit - Inventory account, Debit - Cash account

Debit - Inventory account, Debit - Cash account

Debit - Inventory account, Credit - Cash account

Credit - Cash account, Credit - Inventory account

Answer

Correct Answer: Debit - Inventory account, Credit - Cash account

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

General

Purchases

Cash payments

Sales

Cash receipts

Answer

Correct Answer: General

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

reconciling

transferring

posting

journalizing

crediting

Answer

Correct Answer: posting

Note: This Question is unanswered, help us to find answer for this one

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

Ending Inventory

Accounts Payable balance owed to inventory vendors

Gross profit

Any Accounts Payable discounts taken

Selling expenses

Answer

Correct Answer: Ending Inventory

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

it is a classification and recording process that keeps the accounting equation in balance

'Debit' is always good for the business and 'Credit' is always bad for the business.

it is a method for classifying financial transactions

it is a method for recording the changing values in the financial accounts of a business caused by monetary transactions

it records the flow of economic resources from a source to a destination

Answer

Correct Answer: 'Debit' is always good for the business and 'Credit' is always bad for the business.

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184. What is the basic rule for debit account?

Value parted with

Value received

Answer

Correct Answer: Value received

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185. Which is not a current asset?

Petty Cash

Furniture

Accounts Receivable

Prepaid Insurance

Answer

Correct Answer: Furniture

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

Conservative Rule

Historical Cost Rule

Consistency Rule

Materiality Rule

Answer

Correct Answer: Historical Cost Rule

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

Ledgers

Financial statements

Bank deposit books

Source documents

Journals

Answer

Correct Answer: Journals

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

credit

negative

debit

nil

Answer

Correct Answer: debit

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

Sales

Net Income

Net profit

Earnings

Answer

Correct Answer: Sales

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

Cost of sales

Overhead expenses

Finance & Funding expenses

Selling & Administration expenses

Depreciation & Amortization expenses

Answer

Correct Answer: Cost of sales

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

credit Cash at bank account, debit Drawings

debit Bank Loan, credit Drawings

credit Accounts Receivable, debit Drawings

credit Drawings, debit Cash at bank account

Answer

Correct Answer: credit Cash at bank account, debit Drawings

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

ISO

LCM - Lower of cost or market

Weighted average

LIFO

FIFO

Answer

Correct Answer: ISO

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

Investment of cash by stockholders

Dividends paid to stockholders

Purchase of land from the proceeds of a bank loan

Net loss in the current period

Answer

Correct Answer: Purchase of land from the proceeds of a bank loan

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

Revenue

Liabilities

Owners equity

Expenses

Assets

Answer

Correct Answer: Owners equity

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

credit balance

debit balance

Answer

Correct Answer: credit balance

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

Expenses

Assets

Liabilities

Revenue

Owners equity

Answer

Correct Answer: Assets

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

Purchases

Opening stock

Expenses

Cost of goods sold

Closing stock

Answer

Correct Answer: Cost of goods sold

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

Current Liabilities

Current Assets

Owners equity

Fixed Assets

Expenses

Answer

Correct Answer: Expenses

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199. An accounts payable ledger records which transactions?

Cash payments

Cash purchases

Purchases made on credit

Cash sales

Sales made on credit

Answer

Correct Answer: Purchases made on credit

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

Non-current asset

Current asset

Intangible asset

Fixed asset

Inventments

Answer

Correct Answer: Current asset

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201. 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 .....?

accrued revenue

Insurance expense in the current accounting period

Revenue in advance

accrued expense

a prepaid expense

Answer

Correct Answer: a prepaid expense

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

Current assets

Current liabilities

Expenses

Non-current liabilities

Debtors

Answer

Correct Answer: Current liabilities

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

revenue in advance

accrued revenue

accounts payable

extraordinary income

accrued expenses

Answer

Correct Answer: accrued revenue

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

an asset

owner's drawings

revenue

a liability

an expense

Answer

Correct Answer: an expense

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

Current Assets

Fixed Assets

Long term Liabilities

Current Liabilities

Capital

Answer

Correct Answer: Current Assets

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

Cash Flow

Balance Sheet

Credit

Payable

Receivable

Answer

Correct Answer: Payable

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

receivable method

adjustment method

accrual method

payable method

prepaid method

Answer

Correct Answer: accrual method

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

Assets

Equity

Revenue

Expenses

Liabilities

Answer

Correct Answer: Assets

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

Payment of the current period's rent

The purchase of land

Repayment of a bank loan

Dividends to stockholders

Answer

Correct Answer: Payment of the current period's rent

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

Balance Sheet

Income Statement

Ledgers

Trial Balance

Chart of Accounts

Answer

Correct Answer: Chart of Accounts

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211. Which of the following is a capital expenditure?

Purchase of stationery

Purchase of merchandise

Salaries paid

Payment for services rendered

Purchase of equipment

Answer

Correct Answer: Purchase of equipment

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

debit

credit

Answer

Correct Answer: debit

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

purchases

sales

cash receipts

cash payments

general

Answer

Correct Answer: general

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

Retained Earnings

Accounts payable

Unearned Revenue

Accounts Receivable

Inventory

Answer

Correct Answer: Accounts payable

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

triple entry

double entry

single entry

multiple entry

Answer

Correct Answer: double entry

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

Accounts receivable

Inventory

Fixed assets

Accounts payable

Goodwill

Answer

Correct Answer: Goodwill

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217. What three sections make up the Balance Sheet?

income, liabilities and equity

revenue, liabilities and equity

revenue, expenses and equity

assets, liabilities and equity

assets, liabilities and revenue

Answer

Correct Answer: assets, liabilities and equity

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

decreased

list

increased

credit

debit

Answer

Correct Answer: debit

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

Assets

Liabilities

Expenses

Revenue

Equity

Answer

Correct Answer: Liabilities

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

debit

credit

Answer

Correct Answer: credit

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

Increases

Decreases

Is unaffected

Answer

Correct Answer: Increases

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

Current earnings

Loans

Retained earnings

Drawings

Capital

Answer

Correct Answer: Capital

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

True

False

Answer

Correct Answer: True

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

False

True

Answer

Correct Answer: True

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

Liabilities

Assets

Balance Sheet

Equity

Answer

Correct Answer: Liabilities

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

impossible to calculate

$25,000

$80,000

$55,000

$30,000

Answer

Correct Answer: $30,000

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227. Net profit is always greater than Gross Profit.

False

True

Answer

Correct Answer: False

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

advertising expenses

cash sales

sales commission fees

bank charges

accounting fees

Answer

Correct Answer: bank charges

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

Non current assets

Non current liabilities

Liabilities

Equity

Current assets

Answer

Correct Answer: Current assets

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

Outstanding deposits

Aged debtors

Bank charges

Direct deposits from customers

Outstanding checks

Answer

Correct Answer: Aged debtors

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

Shares held in other companies

Office furniture

Plant and equipment

Accounts receivable

Patents

Answer

Correct Answer: Accounts receivable

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

Conservatism

Matching Principle

Full disclosure

Materiality

Going Concern

Answer

Correct Answer: Full disclosure

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

Credit Owners equity, Credit Cash account

Credit Cash account, Debit Owners equity

Debit Cash account, Debit Owners equity

Debit Cash account, Credit Owners equity

Answer

Correct Answer: Debit Cash account, Credit Owners equity

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234. 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?

$20,000

$30,000

$10,000

$40,000

Answer

Correct Answer: $30,000

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235. "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?

Income statement

Bank reconciliation

Balance sheet

Equity statement

Cashflow statement

Answer

Correct Answer: Balance sheet

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

debit & accrual basis

debit and cash basis

prepaid and accrual basis

credit and debit basis

cash and accrual basis

Answer

Correct Answer: cash and accrual basis

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

Debit closing balance on the Bank Statement

Debit balance in its Cash At Bank account

Credit balance in its Cash at Bank account

Answer

Correct Answer: Debit balance in its Cash At Bank account

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

False

True

Answer

Correct Answer: True

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239. 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?

Economic entity

All of the above

Cost Principle

Business

Monetary Unit

Answer

Correct Answer: Cost Principle

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Basic Bookkeeping MCQ

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

2. Which of the following statements is true?

3. 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?

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

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

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

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

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

9. 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.

10. The Sales Day Book is best described as:

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

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

13. 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:

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

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

16. What does Accounts Payable show?

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

18. 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?

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

20. 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?

21. 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?

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

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

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

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

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

27. Accounts payable refer to the current

28. Which of the following is a liability?

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

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

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

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

33. Investments by stockholders.

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

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

36. 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:

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

38. 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?

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

40. 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:

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

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

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

45. 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:

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

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

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

50. 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 _____.

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

53. '2/10, net 30' is an example of:

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

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

56. 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.

57. The purpose of Accrued Expenses is:

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

60. 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.

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

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

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

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

65. 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:

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

67. The overhead application rate is calculated by:

68. What is accounts payable aging report?

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

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

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

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

73. Remington Inc. has provided the following information about its balance sheet:Cash $ 100Accounts receivable $ 500Stockholders' equity $ 700Accounts payable $ 200Bank loans $ 1,000Based on the information provided, how much do their liabilities amount to?

74. Trade accounts receivable:

75. Which of the following is a personal account?

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

77. Why is the Accounts Receivable function important?

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

79. The trial balance __________.

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

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

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

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

1. Known as the ping service, icmp is a(n) and should be _.

73.
Remington Inc. has provided the following information about its balance sheet:

Cash $ 100
Accounts receivable $ 500
Stockholders' equity $ 700
Accounts payable $ 200
Bank loans $ 1,000

Based on the information provided, how much do their liabilities amount to?