Basic Accounting Multiple Choice
Basic Accounting Multiple Choice
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QUESTION 1
- Which of the following is used to summarize and interpret all business transactions, resulting in useful financial data for the purposes of investment and business management?
Source documents | ||
Accounting systems | ||
Chart of Accounts | ||
General Ledger |
2.375 points
QUESTION 2
- The overall process that leads to the capture and communication of essential accounting information is called the ____________.
general journal. | ||
balance sheet. | ||
general ledger. | ||
accounting cycle. |
2.375 points
QUESTION 3
- Which type of account is carried forward into the new accounting period?
Revenue | ||
Expense | ||
Equity | ||
Dividend |
2.375 points
QUESTION 4
- True or false. Tye is conducting the closing process on the year for his floristry business, Sunflowers. To transfer the balances of Sunflowers’ expense accounts, Tye would debit to expense accounts and credit to retained earnings account.
FALSE | ||
TRUE |
2.375 points
QUESTION 5
- An accounting system is essential for recording the daily transactions of a business as part of the ____________.
balance sheet. | ||
general journal. | ||
accounting cycle. | ||
general ledger. |
2.375 points
QUESTION 6
- Which of the following is used to review transactions to ensure they are posted to the correct accounts?
General journal | ||
Journal account | ||
General ledger | ||
Account ledger |
2.375 points
QUESTION 7
- The capture and communication of essential accounting information occurs as a result of the __________ .
balance sheet | ||
general journal | ||
general ledger | ||
accounting cycle |
2.375 points
QUESTION 8
- The primary accounts impacted by a journal entry that records newly completed work for which you were previously paid are __________ .
unearned revenue and revenue. | ||
cash and accounts receivable. | ||
unearned revenue and cash. | ||
revenue and expense. |
2.375 points
QUESTION 9
- As you prepare payroll for the next pay period, the __________ are the primary accounts impacted.
cash and salaries expense | ||
cash and salaries payable | ||
salaries payable and salaries expense | ||
salaries payable and accounts receivable |
2.375 points
QUESTION 10
- Which of the following is interest that has been earned and is yet to be paid to the holder of the note?
Prepaid expense | ||
Accrued interest | ||
Periodicity assumption | ||
Systematic allocation |
2.375 points
QUESTION 11
- Which of the following is the process for recording the purchase of assets and then gradually transferring their cost to expense?
Depreciation | ||
Matching principle | ||
Prepaid expenses | ||
Immediate recognition |
2.375 points
QUESTION 12
- Analysis of each __________ is important to maintaining the accountability over a businesss affairs.
accounting cycle | ||
chart of accounts | ||
trial balance | ||
transaction |
2.375 points
QUESTION 13
- Which of the following is used for costs that are not seen as benefiting any future periods and are not linked to any revenue production?
Periodicity assumption | ||
Immediate recognition | ||
Systematic allocation | ||
The matching principle |
2.375 points
QUESTION 14
- When land is recorded at its purchase price and that original price is maintained in the balance sheet, even though market value may increase over time, which of the following principles is at work?
Historical cost principle | ||
Periodicity assumption | ||
Revenue recognition | ||
Depreciation |
2.375 points
QUESTION 15
- You have just purchased a new piece of office equipment for your business using cash. How would you record this entry?
Debit assets and credit cash. | ||
Credit assets and debit cash. | ||
Debit expenses and credit cash. |
2.375 points
QUESTION 16
- Which of the following is an expense that is recorded before it is paid for?
Prepaid expense | ||
Revenue | ||
Accrued expense | ||
Depreciation |
2.375 points
QUESTION 17
- ___________ produce financial data for purposes of investment and business management based on analyzing and interpreting business transactions.
Source documents | ||
An accounting system | ||
The chart of accounts | ||
The general ledger |
2.375 points
QUESTION 18
- The process of sorting data from the journal into the relevant general ledger accounts is called ___________.
transaction analysis. | ||
period closing. | ||
adjusting entries. | ||
posting. |
2.375 points
QUESTION 19
- What represents the shareholders’ equity value of the company?
Cash accounts | ||
Dividend accounts | ||
Net income | ||
Retained earnings balance |
2.375 points
QUESTION 20
- The retained earnings account balance __________ change throughout the accounting period.
is likely to | ||
does not | ||
will |
2.375 points
QUESTION 21
- Which of the following can quickly tell a user the association between an account type and account entry?
Credit | ||
Chart of accounts | ||
Accounting equation | ||
Debit |
2.375 points
QUESTION 22
- Retrievable documentation for every transaction and the basis for preparing financial statements are the two basic elements of a proper _____________.
accounting system. | ||
database structure. | ||
accounting equation. | ||
contra account. |
2.375 points
QUESTION 23
- If you sell $250.00 worth of smoothies at your juice bar, you would post this amount to __________ in order to reflect the transaction.
revenues | ||
expenses | ||
liabilities | ||
equity |
2.375 points
QUESTION 24
- The two basic elements of a proper __________ are retrievable documentation for every transaction and the basis for preparing financial statements.
contra account | ||
database structure | ||
accounting equation | ||
accounting system |
2.375 points
QUESTION 25
- The account used to record revenue received for work that has not yet been completed is called:
unearned revenue. | ||
revenue. | ||
accrued interest. | ||
prepaid expense. |
2.375 points
QUESTION 26
- If the accrued dollar amount for an account is different than the actuals usage for that account in a given period, you could align these amounts using a(n) ___________.
financial statement. | ||
general journal. | ||
transaction analysis. | ||
adjusting entry. |
2.375 points
QUESTION 27
- Preparing the __________ is the next task after posting the adjusting entries.
recorded transactions | ||
source documents | ||
adjusted trial balance | ||
general ledger |
2.375 points
QUESTION 28
- Which accounts do not appear in the post-closing trial balance?
Accounts receivable | ||
Cash | ||
Expenses | ||
Retained earnings |
2.375 points
QUESTION 29
- __________ normally occurs at the time when services are rendered or when goods are sold and delivered to a customer.
Depreciation | ||
Revenue recognition | ||
Periodicity assumption | ||
Historical cost principle |
2.375 points
QUESTION 30
- A __________ is simply the action of recording an increase to an asset, expense, or dividend account.
accounting equation | ||
general ledger | ||
debit | ||
financial statement |
2.375 points
QUESTION 31
- Permanent accounts are also known as accounts.
retained earnings | ||
real | ||
dividend | ||
liability |
2.375 points
QUESTION 32
- The process that involves reviewing transactions to determine the impacted account, and in what way it is impacted, is called ___________.
transaction analysis. | ||
trial balance. | ||
adjusting entry. | ||
journal entry. |
2.375 points
QUESTION 33
- When asset, expense, and dividend accounts have more debits than credits, they are said to have a debit balance.
normal | ||
credit | ||
general ledger | ||
contra account |
2.375 points
QUESTION 34
- Which of the following types of accounting looks at and recognizes the events that lead to transactions, not just the cash transactions?
Accrual accounting | ||
Managerial accounting | ||
Tax accounting | ||
Cash basis accounting |
2.375 points
QUESTION 35
- Computerized accounting information systems are typically built around a ____________, which means that data is stored in an electronic array, including a variety of descriptive codes and indices.
database structure | ||
source document | ||
general ledger | ||
general journal |
2.375 points
QUESTION 36
- What is Step 1 of the accounting cycle?
examining source documents. | ||
determining and posting adjusting entries. | ||
recording transactions in the journal. | ||
constructing a trial balance. |
2.375 points
QUESTION 37
- _____________ is Step 4 of the accounting cycle.
Constructing a trial balance | ||
Preparing financial statements | ||
Posting journal entries to the indicated ledger accounts | ||
Preparing an adjusted trial balance |
2.375 points
QUESTION 38
- Which of the following is the prevailing income measurement model that is primarily driven by transactions and events, and uses past data that is viewed as objective and verifiable?
Revenue recognition | ||
Periodicity assumption | ||
Depreciation | ||
Historical cost principle |
2.375 points
QUESTION 39
- A __________ is a cost you pay in advance.
accrued interest | ||
prepaid expense | ||
systematic allocation | ||
exchange transaction |
2.375 points
QUESTION 40
- Interest that has been earned and is yet to be paid to the holder of the note is called _____________.
prepaid expense. | ||
accrued interest. | ||
systematic allocation. | ||
periodicity assumption. |
2.375 points
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Part 2
QUESTION 1
- On a notes payable, which term refers to the party to whom the payment will be made?
Principal | ||
Customer | ||
Maker | ||
Payee |
4.75 points
QUESTION 2
- Mark has $20,000 to invest for years at an interest rate of 4%, compounded annually. After calculating the future value of this sum, what will Mark’s investment be at the end of the three year period?
$20,880.08 | ||
$23,200.00 | ||
$22,497.28 | ||
$22,400.00 |
4.75 points
QUESTION 3
- When faced with uncollectible accounts receivable, accountants use the to record estimates for bad debt expenses in the same period as the related credit sales.
allowance methods | ||
the direct write-off method |
4.75 points
QUESTION 4
- A customer for Dailey Enterprises has a $1,000 balance in his account. The Dailey Enterprises accountant makes the following journal entry to write off the $1,000. Which method did the accountant use?
10-1-15 | Allowance for Uncollectible Accounts | 1,000 | |
Accounts Receivable | 1,000 |
Reversal method | ||
Direct write-off method | ||
Allowance method | ||
Percentage of liabilities method |
4.75 points
QUESTION 5
- The term “cash” includes currency, coins, bank demand deposits, and __________ .
undeposited checks | ||
travel expenses | ||
certificates of deposit | ||
IOUs |
4.75 points
QUESTION 6
- Maria purchases new living room furniture for $5,000 on credit at Wilson Furniture. Maria’s account is categorized by the store’s accountant as a note receivable, which means that Maria agrees to _______________.
make monthly interest-free payments. | ||
repay the $5,000 within 30 days. | ||
repay the $5,000 plus interest. | ||
pay a service fee for the loan. |
4.75 points
QUESTION 7
- Mandy is conducting the monthly bank reconciliation for Closet World, Inc. The information provided to her is as follows: Bank’s ending balance = $11,130 Closet World’s ending balance = $11,700 Service charges = $80 Deposits in transit = $1,170 Interest paid = $30 Outstanding checks = $650 What is an example of something that Mandy will add to the company’s ending balance in the bank reconciliation process?
Interest paid | ||
Deposits in transit | ||
Outstanding checks | ||
Service charges |
4.75 points
QUESTION 8
- The accountant for Elias Enterprises wants to ensure that bad debt expenses are recorded in the same period as related credit sales. Which of the following would fulfill the accountant’s objective?
Contra asset method | ||
Direct write-off method | ||
Allowance method | ||
Net realizable value method |
4.75 points
QUESTION 9
- A customer purchases an $80,000 boat from Aqua Boating in July. The customer signs a contract with Aqua Boating and agrees to repay the $80,000 debt within 18 months plus 5% interest. Given this information, which of the following statements is true?
The note will mature in July. | ||
The customer is the maker of the note. | ||
The customer has a nontrade receivable with Aqua Boating. | ||
Aqua Boating is the principal in the note. |
4.75 points
QUESTION 10
- To calculate present value of an annuity, what is the interest subtracted from?
Future value | ||
Amount paid out each future period | ||
Present value |
4.75 points
QUESTION 11
- Mandy is conducting the monthly bank reconciliation for Closet World, Inc. The information provided to her is as follows:
Bank’s ending balance = $11,130
Closet World’s ending balance = $11,700
Service charges = $80
Deposits in transit = $1,170
Interest paid = $30
Outstanding checks = $650
What is an example of something that Mandy will add to the bank’s ending balance in the bank reconciliation process?
Deposits in transit | ||
Service charges | ||
Outstanding checks | ||
Interest paid |
4.75 points
QUESTION 12
- The process of a bank reconciliation helps to identify errors, irregularities, and needed to be made to the __________ash accounts in the company records.
deposits in transit | ||
additional statements | ||
adjustments |
4.75 points
QUESTION 13
- On a note, a payee is the ____________.
party to whom payment will be made. | ||
stated value of the note. | ||
party promising to make payments. | ||
amount charged to use the money. |
4.75 points
QUESTION 14
- Marlena has decided to open an annuity. Because of the nature of her business’s peak earning times, her financial consultant suggests an annuity in which Marlena makes the payment at the beginning of each interest period. This is called an __________.
annuity due | ||
ordinary annuity |
4.75 points
QUESTION 15
- Which term refers to a company’s uncollectible accounts receivable?
Nontrade receivable | ||
Operating expense | ||
Bad debts expense | ||
Accounts payable |
4.75 points
QUESTION 16
- The amount that a customer owes a company for purchasing goods from the company on credit is categorized by the company as a(n)
nontrade receivable. | ||
accounts receivable. | ||
accounts payable. | ||
operating expense. |
4.75 points
QUESTION 17
- Kip’s company has $25,000 of profits to invest. A financial advisor informs him that it can be increased to $30,000 after four years of investment. In this case, $25,000 is the __________ of the investment.
future value | ||
present value |
4.75 points
QUESTION 18
- A customer of Dixon Enterprises has an uncollectible accounts receivable (A/R) balance of $1,000 on a purchase made in February. The Dixon accountant records the $1,000 as a bad debts expense in December. The accountant most likely used the
income statement approach. | ||
direct write-off method. | ||
balance sheet approach. | ||
allowance method. |
4.75 points
QUESTION 19
- Aspen Appliances sells Kylie a refrigerator and an oven on October 1, 2015 for $6,000. Aspen issues a 6-month note to Kylie at an interest rate of 2%. Which of the following belongs in the blank of the following journal entry?
———- | 6,000 | ||
Sales | 6,000 |
Notes Receivable | ||
Cash | ||
Interest Receivable | ||
Accounts Receivable |
4.75 points
QUESTION 20
- A cash planning system will all cash inflows and outflows for a business.
generate and invest | ||
make equivalent | ||
anticipate and track |