Accounting

1.

1 point

The correct order of presentation in a classified balance sheet for the following current assets is:

a. accounts receivable, cash, prepaid insurance, inventory.

c. cash, accounts receivable, inventory, prepaid insurance.

b. cash, inventory, accounts receivable, prepaid insurance.

d. inventory, cash, accounts receivable, prepaid insurance.

2.

1 point

Malone Co. recorded a payment of cash on account to a creditor by debiting Accounts Receivable and crediting Cash. The correcting entry is...

debit accounts payable and credit accounts receivable

debit Accounts Payable and credit Cash.

debit Cash and credit Account Receivable

some other correcting entry necessary

3.

1 point

Which of the following is not a long-term liability?

a. Bonds payable

d. Mortgages payable

c. Long-term notes payable

b. Current maturities of long-term obligations

4.

1 point

IFRS is considered to be more:

b) rules-based and less principles-based than GAAP.

a) principles-based and less rules-based than GAAP.

d) None of the above.

c) detailed than GAAP.

5.

1 point

The time period assumption states that:

a. revenue should be recognized in the accounting period in which it is earned.

d. the fiscal year should correspond with the calendar year.

b. expenses should be matched with revenues.

c. the economic life of a business can be divided into artificial time periods.

6.

1 point

The multiple-step income statement for a merchandiser shows each of the following features except:

d. investing activities section.

a. gross profit.

b. cost of goods sold.

c. a sales revenue section.

7.

1 point

The cost of goods sold is determined and recorded each time a sale occurs in:

c. both a periodic and perpetual inventory system.

d. neither a periodic nor perpetual inventory system.

a. periodic inventory system only.

b. a perpetual inventory system only.

8.

1 point

Patents and copyrights are

c. Long-term investments.

d. Property, plant, and equipment.

a. Current assets.

b. Intangible assets.

9.

1 point

Which of the following statements is incorrect concerning the adjusted trial balance?

c. The adjusted trial balance lists the account balances segregated by assets and liabilities.

b. The adjusted trial balance provides the primary basis for the preparation of financial statements.

a. An adjusted trial balance proves the equality of the total debit balances and the total credit balances in the ledger after all adjustments are made.

d. The adjusted trial balance is prepared after the adjusting entries have been journalized and posted.

10.

1 point

In a perpetual inventory system, a return of defective merchandise by a purchaser is recorded by crediting:

d. Inventory

b. Purchase Returns

a. Purchases

c. Purchase Allowance

11.

1 point

As a result of the revenue recognition project being undertaken by the FASB and IASB:

c. revenue recognition places more emphasis on when expenses are incurred.

a. revenue recognition places more emphasis on when the performance obligation is satisfied.

d. revenue is no longer recorded unless cash has been received.

b. revenue recognition places more emphasis on when revenue is realized.

12.

1 point

In a period of inflation, the cost flow method that results in the lowest income taxes is the:

b. LIFO method.

a. FIFO method.

d. gross profit method.

c. average cost method.

13.

1 point

A trial balance:

d. will not balance if a correct journal entry is posted twice.

a. is the same under IFRS and GAAP.

c. proves that all transactions have been recorded.

b. proves that transactions are recorded correctly.

14.

1 point

The average time that is required to go from cash to cash in producing rvenues is referred to as the

Operating cycle

Business cycle

Fiscal year cycle

Accounting cycle

15.

1 point

The primary accounting standard-setting body in the United States is the Financial Accounting Standards Board (FASB).

True

False

16.

1 point

Adjusting entries are made to ensure that:

a. expenses are recognized in the period in which they are incurred.

c. balance sheet and income statement accounts have correct balances at the end of an accounting period.

b. revenues are recorded in the period in which services are performed.

d. all of the above.

17.

1 point

Which of the following would not be a line item of a company reporting costs by function?

c) Utilities expense.

d) Distribution.

a) Administration

b) Manufacturing.

18.

1 point

1. The three steps in the accounting process are identification, recording, and communication

True

False

19.

1 point

ON February 2, Gerry Printing Services received a payment of $9.000 for contracted printing work that will be completed over the next three months. As of the end of February, the company had completed 1/3 of the work. The adjusting journal entry at the end of February for unearned revenue will include...

A credit to Unearned Service revenue for $6.000

A credit to Service Revenue for $3.000

A debit to Cash for $3.000

A debit to Unearned service Revenue for $9.000

20.

1 point

Current assets under IFRS are listed generally:

c) by longevity.

b) in the reverse order of their expected conversion to cash.

d) Alphabetically.

a) by importance.

21.

1 point

One of the following statements about the accrual basis of accounting is false? That statement is:

c. The accrual basis of accounting is in accordance with generally accepted accounting principles.

a. Events that change a company’s financial statements are recorded in the periods in which the events occur.

b. Revenue is recognized in the period in which the performance obligation is satisfied.

d. Revenue is recorded only when cash is received, and expenses are recorded only when cash is paid.

22.

1 point

The accumulated Depreciation account is a (n)

contra asset account

liability account

asset account

operating expense account

23.

1 point

On January 1, Boswell borrowed $20,000 at 6°/o interest for 1 year. Boswell accrues interest on the ·note monthly. If no adjusting entry is made at the end of January, what will be the impact on the financial statements for January?

b. Expenses will be understated by $1,200 ·

a. Revenues will be overstated by $100

c. Liabilities will be ·understated by $2,000

d. Net Income will be overstated by $100

24.

1 point

Which of the following is false with regard to a worksheet

When a worksheet is used, the preparation of financial statements is still required.

Before the adjusting entries are recorded in the general journal, they are recorded in the adjustments columns of the worksheet

If a credit is needed to balance the income statement columns on the worksheet, a debit will be needed to balance the balance sheet columns

A worksheet is a required step in the accounting cycle.

25.

1 point

Which method of inventory costing is prohibited under IFRS?

c) LIFO.

a) Specific identification.

b) FIFO.

d) Average-cost.

26.

1 point

Which of the following financial statements is prepared as of a specific date?

d. Statement of cash flows.

a. Balance sheet.

c. Retained earnings statement.

b. Income statement.

27.

1 point

Which of the following should not be included in the inventory of a company using IFRS?

b) Goods shipped on consignment to another company.

c) Goods in transit from another company shipped FOB shipping point.

a) Goods held on consignment from another company.

d) None of the above.

28.

1 point

On February 1, Andrews Company purchased printing supplies of $2,500. A month end inventory shows that the company has supplies of $600 on hand. The adjusting entry for this prepaid expense will include

a debrit to supplies for $600 and a credit to supplies expense for $600

a debit to supplies expense and a credit to supplies for $1900

a debit to Supplies and a credit to Cash for $600

a debit to supplies expense and a credit to cash for $1900

29.

1 point

Which of the following statements is false?

a. IFRS employs the periodicity assumption.

d. IFRS uses the cash basis of accounting.

c. IFRS requires that revenues and costs must be capable of being measured reliably.

b. IFRS employs accrual accounting.

30.

1 point

Posting:

a. normally occurs before journalizing.

b. transfers ledger transaction data to the journal.

d. transfers journal entries to ledger accounts.

c. is an optional step in the recording process.

31.

1 point

Goods in transit should be included in the inventory of the buyer when the:

c. terms of sale are FOB destination.

a. public carrier accepts the goods from the seller.

d. terms of sale are FOB shipping point.

b. goods reach the buyer.

32.

1 point

A post-closing trial balance contains

real and nominal accounts

balance sheet and revenue accounts

balance sheet or permanent accounts

permanent and temporary accounts

33.

1 point

Net income is shown on a worksheet in the:

a. income statement debit column only.

b. balance sheet debit column only.

d. income statement debit column and balance sheet credit column.

c. income statement credit column and balance sheet debit column.

34.

1 point

A trial balance will not balance if:

a. A correct journal entry is posted twice.

c. A $100 cash drawing by the owner is debited to Owner’s Drawing for $1,000 and credited to Cash for $100.

d. A $450 payment on account is debited to Accounts Payable for $45 and credited to Cash for $45.

b. The purchase of supplies on account is debited to Supplies and credited to Cash.

35.

1 point

Understating ending inventory will overstate:

d. stockholders’ equity

c. net income.

a. assets.

b. cost of goods sold.

36.

1 point

Specific identification:

c) cannot be used under GAAP.

a) must be used under IFRS if the inventory items are not interchangeable.

d) must be used under IFRS if it would result in the most conservative net income.

b) cannot be used under IFRS.

37.

1 point

On October 1, 2015, Greer Company signed a $20.000 six-month note payable that bears interest at a rate of 6%. Since no interest has benn previously accrued on the note, the total interest to be accrued on this note at December 31, 2015 is...

100

600

300

1200

38.

1 point

IFRS:

c. allows revenue to be recognized when a customer makes an order.

b. uses cash-basis accounting.

a. uses accrual accounting.

d. requires that revenue not be recognized until cash is received.

39.

1 point

Which of the following would not be a line item of a company reporting costs by nature?

a) Depreciation expense.

c) Interest expense.

b) Salaries expense.

d) Manufacturing expense.

40.

1 point

Which of the following would not be included in the definition of inventory under IFRS?

a) Photocopy paper held for sale by an office-supply store.

c) Used office equipment held for sale by the human relations department of a plastics company.

d) All of the above would meet the definition.

b) Stereo equipment held for sale by an electronics store.

41.

1 point

The two most common types of external users are investors and company officers.

True

False

42.

1 point

Hillman Company purchased printing equipment at cost of $24,000. The monthly depreciation on the equipment is $400. As of Decemmber 31, 2015, the balance in Accumulated Depreciation is $9,600. The book value of the equipment reported on the December 31, 2015 balance sheet will be...

9.600

24.000

23.600

14.400

43.

1 point

Which of the following statements is false?

c) The FASB and IASB are working on a joint conceptual framework project.

d) Under IFRS, the statement of financial position is usually referred to as the statement of assets and equity.

b) Under IFRS, companies sometimes net liabilities against assets to report “net assets.”

a) Assets equals liabilities plus equity.

44.

1 point

Which of the following is not a reason why a single set of high-quality international accounting standards would be beneficial?

a) Mergers and acquisition activity.

b) Financial markets.

c) Multinational corporations.

d) GAAP is widely considered to be a superior reporting system.

45.

1 point

Which statement is correct regarding IFRS?

b. IFRS uses the same process for recording transactions as GAAP.

c. The chart of accounts under IFRS is different because revenues follow assets.

a. IFRS reverses the rules of debits and credits, that is, debits are on the right and credits are on the left.

d. None of the above statements are correct.

46.

1 point

The cost flow method that often parallels the actual physical flow of merchandise is the:

a. FIFO method.

c. average cost method.

d. gross profit method.

b. LIFO method.

47.

1 point

One difference between IFRS and GAAP is that:

b) IFRS uses a different posting process than GAAP.

d) the limitations of a trial balance are different between IFRS and GAAP.

c) IFRS uses more fair value measurements than GAAP.

a) GAAP uses accrual-accounting concepts and IFRS uses primarily the cash basis of accounting.

48.

1 point

A company has purchased a tract of land and expects to build a production plant on the land in approximately 5 years. During the 5 years before construction, the land will be idle. Under IFRS, the land should be reported as:

a) land expense.

c) an intangible asset.

b) property, plant, and equipment.

d) a long-term investment.

49.

1 point

The Sarbanes-Oxley Act determines:

b) internal control standards as enforced by the IASB.

a) international tax regulations.

d) U.S. Tax regulations

c) internal control standards of U.S. publicly traded companies.

50.

1 point

What is the purpose of a post-closing trial balance?

d. Prove the equality of permanent account balances.

c. Prove the equality of all account balances.

b. Prove the equality of income statement account balances.

Prove that all income statement accounts have been properly posted.