Accounting knowledge Quiz # 3

Due to the time value of money, it is safe to assume that costs will rise over time, because of this which inventory cost flow assumption produces the most profit on paper?

FIFO

LIFO

Specific Identification Method

Weighted Average

None of the above

What inventory cost flow assumption do companies that sell nonperishable goods usually use?

FIFO

LIFO

Specific Identification Method

Weighted Average

None of the above

Which of the following is true about comparing LIFO and FIFO methods? (check all that apply)

There is only a one-way conversion from LIFO to FIFO.

Companies must disclose their inventory costs under FIFO when comparing LIFO and FIFO methods.

The FIFO reserve is the difference between the projected ending inventory under LIFO versus FIFO.

To calculate the tax savings under FIFO you multiply the tax rate and the change in the FIFO reserve.

BYX is a manufacturing facility who just completed a production cycle of their circuit boards. By the end of the cycle they paid $500 for manufacturing labor, $400 for utilities and other overhead, and calculated $100 for plant equipment depreciation. Which set of journal entries accurately reflects the above transaction series?

a. DR: Work in Process, CR: Cash; DR: Work in Process, CR: Finished Goods; DR: Work in Process, CR: Sales.

DR: Labor, CR: Cash; DR: Work in Process, CR: Finished Goods; DR: Work in Process, CR: Accumulated Depreciation.

DR: Finished Goods, CR: Cash; DR: Finished Goods, CR: Cost of Goods Sold; DR: Work in Process, CR: Sales.

DR: Work in Process, CR: Cash; DR: Work in Process, CR: Cash; DR: Work in Process, CR: Accumulated Depreciation.

What inventory cost flow assumption is it where the oldest purchased goods are linked to the most recent revenue recognized?

FIFO

LIFO

Specific Identification Method

Weighted Average

None of the above

Which accounts are considered income statement accounts? (check all that apply)

Sales

Notes payable

Salary expense

Rent expense

All of the above

Many not for profit organizations can gain tax exempt status, what tax/taxes does that make them exempt from?

Medicare

Income

Social security

All of the above

None of the above

How is the general ledger accounting information organized?

Date order

Transaction amount order (from highest to lowest)

Alphabetical order

Account order

If a customer makes a return that was purchased on credit, what account would be debited?

Accounts Receivable

Cash

Sales return

Inventory

None of the above

What account would be debited in a payroll journal entry?

FICA tax payable

Payroll payable

Payroll expense

None of the above

How does the recording for bad debt expenses differ between the method required for GAAP versus the IRS requirement?

GAAP requires the use of the direct write-off method.

The IRS requires that companies use the direct-write off method.

The IRS requires the allowance method to be used for bad debt expense recording.

There is no difference between the methods required for recording bad debt expenses.

What type of account is a wage expense account?

Cash flows

Income Statement

Balance Sheet

Changes in Equity

In which type of account are payroll deductions recorded?

Asset

Expense

Liability

Revenue

Find and correct the error(s) in the following general journal entry which recorded a company’s payroll liability: DR Office Salaries Expense, $1,000; CR Social Security Tax Expense, $200. DR Health Insurance Premium Expense, $50. DR Cash, $750. (check all that apply)

DR Social Security Tax Expense

CR Social Security Tax Payable

CR Health Insurance Premium Payable

CR Salaries and Wages Payable

Which of the following are examples of payroll liabilities? (check all that apply)

FICA tax payable

Federal withholding payable

Payroll expense

State withholding payable

What are the three primary payroll deductions that federal law requires? (check all that apply)

FUTA

401(k) contributions

Medicare Tax

Disability Insurance (DI)

Social Security

What is the difference between gross pay and net pay?

Hourly rate paid

Number of hours worked

Withholdings

None of the above

What kind of account is accounts payable?

Current asset

Noncurrent asset

Current liability

Long term liability

None of the above

The main difference between for profit and not for profit entities is that not for profit entities do not have _____.

Statement of activities accounts

Commercial owners

Investment income

Grants

One of your customers purchased $1,000 on account during the fiscal year. In June of that year they filed for bankruptcy and were unable to remit the balance owed to your company. What is the adjusting entry for this scenario?

DR: Allowance for Doubtful Accounts, CR: Refunds

DR: Accounts Receivable, CR: Allowance for Doubtful Accounts

DR: Allowance for Doubtful Accounts, CR: Accounts Receivable

DR: Allowance for Doubtful Accounts, CR: Cash

What are the general asset classes for non-profit organizations? (check all that apply)

Unrestricted

Temporarily restricted

Permanently restricted

Revenue

Select the correct institution that establishes the financial reporting requirements for the non-profit accounting process.

SEC

CARS

FASB

AICPA

What is the purpose of the schedule of accounts payable?

To record purchases.

It lists all of the creditors.

To record Purchases Returns and Allowance.

It lists all of the liability accounts.

What amount would be paid for an invoice for $8,500 that states “2/10, net 30” if you paid within 6 days?

$8,200

$8,330

$8,500

None of the above

The accounts shown in the chart of accounts can be classified into what two categories? (check all that apply)

Cash flows

Income Statement

Balance Sheet

Changes in Equity

Balance sheet accounts are described as what kind of accounts?

Temporary

Permanent

Real

Both A & B

Both B & C

The difference in payroll accounting for nonprofit versus for profit institutions is best explained by which of the following? (check all that apply)

Most nonprofits are exempt from FUTA.

Most states require that for-profit institutions must pay state unemployment whereas nonprofits are exempt.

Payroll taxes aren’t considered to be liabilities for nonprofit institutions.

The IRS requires nonprofits to classify their payroll expenses according to the functional expense allocation method.

Expenses for a not for profit entity are reported as what functions? (check all that apply)

Management and general

Society

Program

Fundraising

All of the above

What source of income can for profit's obtain that not for profit's cannot?

Contributions

Borrowing from lenders

Issuing stock

None of the above

Ideally, what can sales analysis improve for a company ?

Revenues

Expenses

Owner's equity

None of the above

Quiz:	Accounting knowledge Quiz # 3
Subject:	Basic Accounting Test
Total Questions:	94 MCQs
Time:	94 Minutes