Basic General Financial Accounting MCQ

1. Comparing actual performance to previously budgeted amounts is part of the ________.

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2.

Different balance sheet items employ different valuation methods. Which of the following valuation applications is NOT generally accepted?

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3.

The charge made to the current operations for the portion of cost of long-lived assets consumed during the current period is called _________________.

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4.

A ____________ is the right to use property owned by someone else.

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5.

A trial balance prepared at the end of the accounting period after adjusting entries are made is called a/an _________________.

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6.

At the beginning of the year, XYZ Company reported Accounts Receivable of $39,000. During the year, the company had credit sales totaling $288,000. At year end, the Accounts Receivable balance was $8,000 higher than the beginning balance. How much cash was collected on the accounts during the year?

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7.

Which of the following would cause the accounting equation to be out of balance?

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8.

A residual claim of owners having certain preferences relative to other owners' claims is called __________________.

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9.

The balance in the ________________ account is the amount owed to the company by its customers.

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10.

Ms. Brown is an attorney who collects a retainer fee from all of her new clients. At the beginning of the year, the Unearned Retainer Fee account had a balance of $24,000. Ms. Brown collected additional retainer fees totaling $94,000 from her clients during the year. Her year-end Balance Sheet reports a $16,000 balance in the Unearned Retainer Fee account. How much of the retainer fees were earned by Ms. Brown during the year?

 

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11.

Amounts paid for various fees incurred in organizing a corporation are called ____________.

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12.

On December 26 of Year 1, XYZ Company hired three sales associates to begin work immediately on an after-Christmas sale. The associates were paid on January 9 of Year 2. Disregarding amounts, what entry should have been made on December 31 of Year 1?

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13.

Which of the following is NOT an account title for liabilities?

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14.

Which of the following options would NOT be classified as a current liability account?

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15.

_____ is the financial obligation of a company in regards to a loan that accrues with the passage of time.

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16.

Which of the following is recorded only when another business enterprise is acquired?

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17.

Amounts borrowed by a business for a relatively long period of time under a formal written contract or indenture are called _________________.

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18.

XYZ Company has just completed its first year of operations in Year 1. The company distributed dividends of $50,000. If the ending balance of Retained Earnings on December 31 of Year 1 is $70,000, and the company had revenues of $400,000 from Year 1 sales, then what is the total of the company's Year 1 expenses?

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19.

The process of transferring entries in the general journal to the accounts in the general ledger is called ________________.

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20.

Which of the following accounts accumulate amounts for only a single accounting period?

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21.

Amounts owed for goods or services acquired under an informal credit agreement are called ___________________.

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22.

A trial balance that shows revenue and expense accounts with zero balances and balance sheet accounts at the end of the period is called a __________________.

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23.

The amount of income tax postponed for payments to future years is called ________________.

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24.

Which of the following transactions would NOT result in revenue being reported?

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25.

The amount subtracted from the cost of a fixed asset to get the Net Book Value is called the ___________________.

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26.

Insurance premiums paid for future coverage are called ______________.

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27.

Which of the following accounts represents distributions of earnings to shareholders of the firm?

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28.

The amount of proceeds from the sales of Preferred Stock in excess of par value is called _______________.

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29.

Goods on hand that have been purchased for resale are called ______________.

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30.

Which of the following accounts is NOT a temporary account that should be closed during the closing process?

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31.

In preparing its year-end adjusting entries, XYZ Company neglected to adjust prepaid insurance for the amount of insurance expired during Year 1. Which of the following reflects the result of this error?

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32.

Which of the following is NOT an example of a period expense?

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33.

Which of the following accounts would NOT appear on a corporation's Balance Sheet?

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34.

Which of the following operations is NOT considered part of the accounting process leading to financial statement preparation?

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35.

____ is/are a measure of the inflow of net assets from selling goods and providing services.

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36.

Unused materials for manufacturing products are called ______________.

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37.

In preparing its Year 1 adjusting entries, the XYZ Company neglected to adjust rental fees received in advance from the amount of rental fees earned during Year 1. Which of the following reflects the result of this error?

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38.

Firms may prepare reports of performance ___________________.

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39.

A debit balance is normal for all of the following accounts except _______________.

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40.

During the year, XYZ Company's inventory account balance increased from $26,000 to $31,500. During the year, the company made payments totaling $152,500 to creditors for inventory purchases and reported Cost of Goods Sold of $159,500 on its Income Statement. How much inventory was purchased during the year?
  

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41.

The concept of present value ____________________.

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42.

Which of the following assets is a monetary asset?

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43.

Which of the following does NOT represent an acceptable presentation of the Balance Sheet equation?

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44.

At the beginning of the year, XYZ Company owed $14,500 to its creditors for inventory purchases. At year end, the company owed $9,150. During the year, the company made payments totaling $48,500 to its creditors for inventory purchases. What was the cost of the additional inventory that was purchased during the year?

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45.

On December 31 of Year 1, XYZ Company reported total shareholders' equity of $225,000, of which $180,000 represented contributed capital. If revenues, expenses, and dividends during Year 2 were $500,000, $420,000, and $30,000 respectively - and the total shareholders' equity is $290,000 on December 31 of Year 2 - how much additional capital was contributed by shareholders?

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46.

From the following list of accounts and account balances, determine the amount that would be properly classified as Property, Plant, & Equipment.

$100,000 - Land Used in Business 
$60,000 - Machinery Leased from Others 
($80,000) - Accumulated Depreciation 
$140,000 - Inventories 
$40,000 - Land Held for Future Plant Site 
$200,000 - Building 
$50,000 - Investment in Stock of Construction Company

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47.

The cumulative amount of net income in excess of dividends declared that has been earned by a business since its inception is called ___________________.

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48.

The estimated and unpaid liability for current income taxes is called ______________.

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49.

_____ refers to shares originally issued and outstanding that have been reacquired from the owners.
  

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50.

Which of the following accounts is NOT an expense?

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51.

The balance in the ______ account reflects the cumulative depreciation of an asset since its acquisition.

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52.

Stocks and bonds that can be readily converted into cash are called _____________.
  

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53.

XYZ Company has assets and liabilities of $15,000 and $12,000, respectively. If the company issues an additional $1,500 of stock for cash, what will be the balance in shareholders' equity following the transaction?

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54.

The Balance Sheet reflects the application of various valuation methods. Which of the following methods may be used on a Balance Sheet that follows generally accepted accounting principles?

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55.

A manufacturing firm's cost of producing its product is called ______________.

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56.

The Accumulated Depreciation account reflects _____________________.
  

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57.

Which of the following statements about the rules of debit and credit is incorrect?

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58.

XYZ Company is interested in disposing of one of its subsidiaries and is trying to decide on the maximum price it might be able to charge. Which valuation method below would the company be most likely to use?
 

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59.

XYZ Company purchased some equipment for $120,000 on July 1 of Year 1. The equipment has an estimated useful life of 10 years and an estimated salvage value of $7,500. XYZ Company computes depreciation on a straight-line basis. How much depreciation should be recorded for Year 1?

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60.

Amounts received for the par value of a firm's voting stock are called ___________.

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61.

Amounts received for the par value of a firm's voting stock are called 

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62.

Which of the journal entries below is incorrectly recorded?  

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63.

The balance in all asset accounts combined is $100,000 on December 1. During December, the following transactions took place:  

- Purchase of $10,000 of inventory for cash
- Purchase of $15,000 of machinery on account
- Retirement of $20,000 in bonds with cash

Given this information, what is the combined balance in the asset accounts on December 31?

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64.

Which of the following accounts is not closed during the closing process?

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65.

XYZ Company purchased a 1-year insurance policy for $3,000 on April 1 of Year 1. The amount of prepaid insurance reported on the Balance Sheet and the amount of insurance expense reported on the Income Statement on December 31 of Year 1 are, respectively:
  

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66.

Deduction or valuation accounts that accumulate amounts subtracted from other accounts are called _____________________.

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67.

Payments made in advance for goods or services a firm will receive at a later date are called ______________.

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68.

Temporary revenue and expense accounts may be closed _________________.

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69.

XYZ Company failed to record the purchase of inventory on account at the end of 2008. In which of the following ways is the Balance Sheet misstated?

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70.

The following entry was made on March 12 for XYZ Company:

Dr: Machinery
Cr: ACCounts Payable

For which of the following transactions was this entry made?

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71.

From the following list of selected account balances, determine the total for the shareholders' equity section of the Balance Sheet for XYZ Company.

$2,500   - Investment in Stock of ABC Company
$5,000   - Retained Earnings
$3,000   - Cash 
$2,000   - Note Payable to Suppliers
$10,000 - Common Stock
$7,500   - 8% Preferred Stock 

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72.

Which of the following is a permanent account?

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73.

XYZ Company publishes a monthly sports magazine. The company has fiscal year of Jan-Dec. On July 1 of Year 1, the company sold 1000 two-year subscriptions for $200 each. On December 31 of Year 1, the amount reported as a liability on the Balance Sheet and the amount reported as revenue on the Income Statement are, respectively:

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74.

The normal balances in Depreciation Expense and its related Accumulated Depreciation accounts are ______________________.

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75.

XYZ Company completed its second year of operations in Year 2. On January 1 of Year 2, the balance in Retained Earnings was $84,000. During the year, the company declared and paid a dividend of $65,000 to shareholders. The company reported net earnings of $105,000 in its Year 2 Income Statement. What was the balance in Retained Earnings on December 31 of Year 2?

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76.

A right granted to an individual or company that excludes others from manufacturing, using, or selling a certain process or device is called a _____________.

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77.

Amounts due from customers, for which the claim is in the form of a written promise to pay, are called ________________.

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78.

Which of the following is a type of liquid asset, such as a demand deposit?

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79.

Which of the following liabilities would be accounted for at the present value of future cash payments?

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80.

The process of recording transactions in the general journal or in a special journal is called ________________.
  

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81.

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82.

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83. It is given that while performing the year end review of inventory, the Inventory had been overstated by 15000 dollars.

In order to perform the appropriate adjustments, a certain account was credited. Which of the following accounts could it be?

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84. You are an owner of an education startup. Your startup provides various kinds of services through the use of the single platform. While defining the master budget which of the following are taken into consideration?

A. Budgeted income statement
B. Budgeted balance sheet
C. Budgeted cash flow statement

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85. While adjusting the depreciation of assets in the end of a year you come across a asset worth 10000$ that was bought in june .The asset has a  depreciation of 500$  and the less accumulated depreciation of 3100$.What will the book value for the asset mentioned be after year end adjustments are made to it?

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86. For a company, you need to calculate the  working capital cycle while using the provided information.

A. Receivable days -180 days
B. Accounts payable days- 20days
C. Inventory days-100 days

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87. You have recently acquired a company for 8000$  .If you debit the amount from account receivables for 8000$ which of these corresponding accounts should be credited in the given scenario ?

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88. A company reported its annual balance sheet.

Total current liabilities =  A units
Total long-term liabilities = B units.
Total common stock = C units
Retained earnings = D units
Other stockholder equity of E units

What is the total assets of the company from the given data?

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89. A good of Rs. 8000 was sold for Rs. 9200. Depreciation provision to date was Rs. 400; and commission paid to selling agent was Rs. 300. There were two workers that were paid wages for removing the machine which was Rs. 45 per worker. What is the net profit from the sale of good?

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90. Cost of the printing press: 60000 dollars
Cumulated depreciation of the printing press 15000 dollars

Assume that the printing press depreciates at 10% per annum

What could be the total year end adjustment that would need to be done due to depreciation? (in dollars)

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91. J is a service based company . J Bought a piece of real estate for 2000$ to set up their offices, the asset has an appreciation of 4% per annum .If the company pays 1%  extra as tax every year for the piece of real estate,What will be the value recorded for the asset on its financial statement after a period of two years?

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92. You are a seller selling some kind of product. At the end of the accounting year, you are left with some closing stock. What will you do to show it in the final accounts?

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93. A company's balance sheet shows the following data.

Cash = 60 units
Stock's = 50 units
Fixed Assets = 150 units
Loan amount = 80 units
Wages to the employees = 10 units
Insurance Premiums = 1 unit
Accounts payable = 1 unit

Which of the following is the Shareholder's Equity of the company?

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94. You have an asset account A worth 4000$  attached to a liability account B that is also worth 4000$. You perform a debit operation on the asset account for 500$ and repeat the same operation for the liability account what are the likely balances of both accounts ?

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95. K is a product based company whose current ratio is very low . The company's board of directors assigns the task of improving the ratio to the accounting department . Which of these can be a probable measure taken by the accounts team to improve the current ratio?

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96. You are a seller and you purchased 20000 bats for selling for one accounting year. But you failed to sell all of them at the end of the accounting year. If you want to determine the gross profit or gross loss your selling has produced, what will you brought into the final accounts?

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97. You have a contra account for making allowances for doubtful Accounts. If the  balance in the Allowances account is 1000$ and the Account receivables account has a debit balance of 10000$. what is the net realizable value if the allowances account is further credited with 1000$?

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