Please review and answer.practice_questions.pdfQuestion 1
Which of the following is not a function performed by an accountant?
a.
Measure economic events in
financial terms.
b.
Report economic events in
financial statements.
c.
Records economic activities of a
business.
d.
Observe events.
Question 2
Which financial statement explains the changes in retained earnings between
two dates?
a.
b.
c.
d.
Balance sheet.
Statement of retained earnings.
Income statement.
Statement of cash flows.
Question 3
Which of these is the basic accounting equation?
a.
b.
c.
d.
Liabilities + assets = equities.
Revenues – expenses = net
income.
Assets – revenues = equities.
Assets = liabilities + equities.
Question 4
Which underlying concept assumes that a business entity will continue
operations indefinitely?
a.
b.
c.
d.
Periodicity concept.
Going concern concept.
Business entity concept.
Money measurement concept.
Question 5
Which statement is true regarding the rules of debit and credit for accounts?
a.
b.
c.
d.
Assets are credited for
decreases.
Liabilities are credited for
decreases.
Revenues are debited for
increases.
Expenses are credited for
increases.
Question 6
When stockholders invest cash in the business:
a.
b.
c.
d.
Capital stock is debited and
cash is credited.
Cash is debited and dividends is
credited.
Cash is debited and capital stock
is credited.
Capital stock is debited and
dividends is credited.
Question 7
Which of the following is the final step in the accounting cycle?
a.
b.
c.
d.
Prepare financial statements.
Post journal entries to the
ledger.
Prepare a trial balance of the
accounts.
Prepare a post-closing trial
balance.
Question 8
When a business earns revenue and receives cash, which of the following is
true?
a.
b.
c.
Cash is debited and revenue is
credited.
Revenue is debited and cash is
credited.
Accounts receivable is debited
d.
and revenue is credited.
Revenue is debited and a
liability is credited.
Question 9
Which of the following cash payments would involve the immediate recording
of an expense?
a.
b.
c.
d.
Paid vendors for office supplies
previously purchased on
account.
Paid an automobile dealer for a
new company auto.
Paid the current month’s rent.
Paid salaries for the last half of
the current month.
Question 10
Under which business ownership type do the owners not directly manage the
business?
a.
b.
c.
d.
Single proprietorship.
Corporation.
Partnership.
Limited partnership.
Question 11
Which of the following is true regarding the accrual basis of accounting?
a.
b.
c.
d.
Revenues are recognized as
cash is received.
Expenses are recognized as cash
is paid.
The purchase of a building
would be debited to an
expense.
Revenue is recorded at the time
the company performs the
service.
Question 12
Which of the underlying principles most applies to the need for adjusting
entries?
a.
b.
c.
d.
Business entity.
Going concern.
Full disclosure.
Matching.
Question 13
Which of the following is an example of an adjustment for deferred items?
a.
b.
c.
d.
A prepaid expense.
An accrued revenue.
An accrued liability.
Unbilled training fees.
Question 14
Of the following steps in the closing process, which represents closing the
dividends account?
a.
b.
c.
d.
Transferring its balance to
income summary.
Transferring its balance to
retained earnings.
Transferring its balance to a
revenue account.
Transferring its balance to an
expense account.
Question 15
After the closing process is complete, which of the following accounts will
most likely have a balance remaining?
a.
b.
c.
d.
Dividends.
A revenue account.
A liability account.
An expense account.
Question 16
Which of the following is a category of accounts on a classified balance sheet?
a.
b.
c.
d.
Cash.
Accounts payable.
Long-term assets.
Retained earnings.
Question 17
Which of the following basic accounting concepts generally requires a
company to use the same accounting principles and reporting practices
through time?
a.
b.
c.
d.
Periodicity.
Consistency.
Stable dollar.
Going concern.
Question 18
Of the following principles, which one allows companies to prepare only one
set of financial statements?
a.
b.
c.
d.
Consistency.
Double entry.
General-purpose financial
statements.
Business entity.
Question 19
The assumption that each business has an existence separate from its
owners, creditors, employees, customers, and other interested parties, and
other businesses is the:
a.
b.
c.
d.
Going concern assumption.
Business entity concept.
Separate entity concept.
Corporation concept.
Question 20
Which of the following accounts would be found in a merchandising business
accounting system?
a.
b.
c.
Sales returns and allowances.
Transportation-in.
Purchase discounts.
d.
All of the accounts would be
found.
Question 21
When a sale of merchandise is on account, which entry should be made?
a.
b.
c.
d.
Debit cash and credit sales..
Debit accounts receivable and
credit sales.
Debit accounts payable and
credit income.
Debit retained earnings and
credit sales.
Question 22
The formula for calculating cost of goods sold is which of the following?
a.
b.
c.
d.
Beginning inventory – net
purchases + ending inventory.
Purchases – purchase discounts
+ transportation-in.
Net sales – operating expenses.
Beginning inventory + net
purchases – ending inventory.
Question 23
Which inventory valuation method is a more precise matching of historical
cost with revenue?
a.
b.
c.
d.
FIFO.
LIFO.
Weighted average.
Net realizable value.
Question 24
The inventory turnover ratio compares which two figures?
a.
b.
c.
Net sales and average
inventory.
Net income and average
inventory.
Cost of goods sold and average
inventory.
d.
Cost of goods sold and net
sales.
Question 25
During a period of rising prices, which inventory method could provide a
business with the greatest net come?
a.
b.
c.
d.
Weighted-average.
Specific identification.
LIFO.
FIFO.
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