1) The Balance Sheet reports the Retained Earnings at the end of a fiscal year. Where
does the amount of Retained Earnings as reported on the Balance Sheet come from?
A) Trial Balance Worksheet
B) Adjusted Trial Balance
C) Unadjusted Trial Balance
D) Statement of Retained Earnings
2) Which of the following is a CORRECT statement regarding the bank reconciliation?
A) The bank reconciliation is part of the general ledger
B) Journal entries need to be made for all transactions on the bank side to get the
accounts up-to-date
C) Journal entries need to be made for all transactions on the book side to get the
accounts up-to-date
D) The bank reconciliation is part of the journal
3) The beginning Retained Earnings balance is found on the:
A) statement of retained earnings
B) income statement
C) balance sheet
D) both the statement of retained earnings and the balance sheet
4) Company A has inventory out on consignment and held for sale by Company B.
Which Company will include the goods in their inventory?
A) Company A
B) Company B
C) Either Company A or Company B
D) Cannot be determined from the facts
5) Which of the following would be reported on a statement of cash flows as a
financing activity?
A) Sale of equipment
B) Amortization expense
C) Collection of notes receivable
D) Purchase of treasury stock
6) Which financial statement is dated at the moment in time when the accounting period
ends?
A) Balance sheet
B) Income statement
C) Statement of retained earnings and income statement
D) Statement of cash flows
7) Olde Shoppe has the following information at August 31:
Two deposits made on August 31 were not on the bank statement, totaling $5,300.
The bank collected an EFT payment on a note receivable for $2,750. Of this amount,
$150 represented interest on the note.
August 31 balance in Cash was $11,677.
The bookkeeper forgot to record check #1578 for $843 which was cashed by the bank
on August 15th.
The balance on the bank statement as of August 31 was $10,500.
A check printing fee of $40 was shown on the bank statement. NSF check $100.
Checks #1572, 1606, and 1548, totaling $2,356, were not shown on the bank statement,
even though the company had sent the checks.
What is the adjusted book balance at August 31?
A) $11,667
B) $13,444
C) $13,584
D) $14,427
8) Opportunity in the fraud triangle arises from:
A) weak control environment
B) improper segregation of duties
C) improper access to assets
D) all of the above
9) In 2014, the Zenon Company reported that property, plant and equipment were equal
to 17% of total assets. In 2014, current assets were equal to 83% of total assets. In 2015
the company reported that property, plant and equipment were equal to 27% of total
assets. In 2015, current assets were equal to 73% of total assets. What conclusion can be
reached from this information?
A) In 2015, the company is downsizing
B) In 2015, property, plant and equipment as a proportion of total assets increased
C) In 2015, the company is investing in the future
D) B and C
10) Which intangible asset is NOT amortized?
A) patents
B) trademarks
C) copyrights
D) goodwill
11) Potter Company reports the following line items:
What is net income?
A) $22,000
B) $42,000
C) $62,500
D) $99,000
12) ABC Company purchased land with an old building that they plan on demolishing
so that they can construct a new, modern building. The cost of demolishing the building
will be part of the cost of the:
A) new building
B) old building
C) land
D) land improvements
13) Costs that maintain a plant asset in its present condition should be ________. Costs
that restore a plant asset to working order or its prior condition should be ________.
A) capitalized; capitalized
B) capitalized; expensed
C) expensed; capitalized
D) expensed; expensed
14) To determine the cost of ending inventory under the LIFO method:
A) the latest purchase costs are used
B) the specific unit cost of the inventory is used
C) the average cost of the inventory is used
D) the beginning inventory and earliest purchase costs are used
15) Reimer Company reports the following data:
When evaluating the results of operations, what can be said about Reimer Company?
A) Using vertical analysis, the company’s profitability declined in 2014
B) Using horizontal analysis, the company’s profitability declined in 2014
C) Using vertical analysis, the company’s profitability declined in 2015
D) Using horizontal analysis, the company’s profitability declined in 2015
16) Notes payable, accounts payable, taxes payable and salaries payable are all
examples of:
A) liabilities
B) revenues
C) expenses
D) assets
17) The depreciable cost of a plant asset equals the:
A) historical cost of the asset plus the estimated residual value
B) historical cost of the asset minus the estimated residual value
C) historical cost of the asset minus accumulated depreciation
D) current replacement cost minus accumulated depreciation
18) The due date of a 120 day, 10% note for $30,000, dated May 12 is:
A) September 9
B) September 10
C) September 11
D) September 12
19) Montana Company sold merchandise with a retail price of $30,000 for cash. They
only accept cash. Montana Company is required to collect 6% state sales tax. The total
cash received from customers was:
A) $1,800
B) $28,200
C) $30,000
D) $31,800
20) Miscellaneous costs associated with the purchase of new equipment follow:
What is the amount assigned to the new equipment?
A) $1,200
B) $2,200
C) $2,700
D) $4,000
21) The percentage change in any individual item shown on comparative financial
statements is calculated by dividing the dollar amount of the change from the base
period to the current period by:
A) the amount shown for the current period
B) the base-period amount
C) the average of the amounts shown for the base and the current periods
D) the amount estimated for the future period
22) The portion of net income that the company has kept over a period of years and not
used for dividends is called:
A) common stock
B) retained earnings
C) revenue
D) gross profit
23) The income tax saved by using LIFO instead of FIFO is equal to the ________
times the income tax rate.
A) cost of the ending inventory
B) retail price of the ending inventory
C) cost of the beginning inventory
D) LIFO Reserve
24) The ratio that provides an estimate of the number of days, on average, that it takes
for customers to pay their accounts is the:
A) days’ sales in receivables
B) current ratio
C) accounts receivable turnover
D) acid-test ratio
25) The following account balances were extracted from the accounting records of
Thomas Corporation at the end of the year:
What is the net realizable value of the accounts receivable?
A) $1,065,000
B) $1,100,000
C) $1,135,000
D) $1,160,000
26) When goods are shipped FOB destination:
A) revenue is recognized when the goods leave the shipping dock
B) revenue is recognized after any returns are received by the seller
C) revenue is recognized only after cash payment is received
D) revenue is recognized when the goods are received by the customer