Archives: Quiz

Which of the following statements regarding periodic and perpetual inventory systems is correct? A) Perpetual inventory systems are inferior for determining optimal times to reorder inventory. B) Periodic inventory systems require a greater investment in technology. C) Perpetual inventory systems […]

Use the information above to answer the following question. Which of the following would be shown on B. Darin’s horizontal analysis when calculating percentage changes from the prior year to the current year? A) An increase in sales revenue of […]

On December 31, 2015, Hoosier Inc. paid $10,000 to rent a storage facility from July 1, 2016 to July 1, 2017. Which of the following statements about the effect of this transaction on Hoosier’ financial statements is correct? A) Prepaid […]

Suppose a company generally records revenues and expenses before receiving or making cash payments. Which of the following statements is not correct? A) If revenues are falling, a net loss could result even though the company reports a net cash […]

A company makes a deferral adjustment that decreased a liability. This must mean that a(n): A) expense account was decreased by the same amount. B) expense account was increased by the same amount. C) revenue account was increased by the […]

Flynn Company purchased a building for $400,000. At the end of the current year, the book value of the building is $220,000 and its fair value is $180,000. Assuming the building is rented to a tenant, the sum of future […]

Which of the following is calculated by dividing net sales revenue by average net receivables? A) Days to sell ratio B) Current ratio C) Profit margin D) Receivables turnover ratio A deposit in transit on last month’s bank reconciliation is […]

On June 12, because management knew with near certainty that it had no chance of collection, Sheave Company wrote off a customer’s account balance in the amount of $350. On November 3, the customer mailed a payment for $350 to […]

Use the information above to answer the following question. Which line items would be classified as noncurrent on a classified balance sheet? A) Cash; Supplies; Accounts Payable B) Equipment; Other Assets; Notes Payable C) Supplies; Equipment; Notes Payable D) Accounts […]

When preparing this month’s bank reconciliation, you find that you failed to record a $95 deposit for a payment you received from a customer. You immediately prepare a journal entry to record the deposit. Which of the following describes the […]

Which of the following are used to determine cash flows from financing activities? A) Short-term debt, Accrued Liabilities, Common Stock, and Notes Payable B) Long-term debt, Common Stock, and Retained Earnings C) Short-term debt, Accrued Liabilities, Retained Earnings, and Bonds […]

Which of the following statements about transaction analysis is correct? A) Transactions are analyzed from the standpoint of the owners. B) All business activities are considered to be accounting transactions. C) The transaction amount is determined for each exchange based […]

An increase in revenue always: A) increases stockholders’ equity. B) increases assets. C) decreases stockholders’ equity. D) decreases assets. Transactions include which two types of events? A) Direct events, indirect events B) Monetary events, production events C) External exchanges, internal […]

Which of the following statements about the income statement of a company that was formed 10 years ago is correct? A) Reports a Net Loss for the year if expenses are more than revenues. B) Reports the financial effects of […]

A creditor might look at a company’s financial statements to determine if the: A) company is likely to have the resources to repay its debts. B) company’s stock price is likely to fall, signaling a good time to sell. C) […]

A toy store with a calendar year-end is likely to have: A) unpredictable fluctuations in cash flow from quarter to quarter. B) the largest cash inflow from operating activities in the second and third quarters (April – September). C) a […]

Company A uses an accelerated depreciation method while Company B uses the straight-line method for an asset of the same cost and useful life. Which of the following statements is correct? A) Company A will have higher depreciation expense in […]

Which of the following is the equation for cost of goods sold? A) Beginning inventory + Purchases – Ending inventory B) Beginning inventory + Purchases + Ending inventory C) Net purchases – Ending inventory D) Ending inventory + Purchases – […]

The following information was summarized from the adjusted trial balance of Reliance Yacht Repair, Inc. as of September 30, 2015, the end of the company’s fiscal year. Required: Part a. Prepare the closing entry for the company for the year […]

To determine whether generally accepted accounting principles (GAAP) were followed in the preparation of financial statements, an examination of: A) tax documents would be performed by the IRS. B) the company’s accounting records would be performed by the SEC. C) […]

In the U.S., Generally Accepted Accounting Principles (GAAP) are established by the: A) International Accounting Standards Board (IASB). B) Public Company Accounting Oversight Board (PCAOB). C) Financial Accounting Standards Board (FASB). D) American Institute of Certified Public Accountants (AICPA). A […]

Use the information above to answer the following question. What journal entry will Brickyard make when paying the note at maturity? A) Debit Cash and credit Notes Payable for $200,000 B) Debit Cash and credit Notes Payable for $206,000 C) […]

A dance studio accepts $1,500 to provide a series of dance lessons to a youth group during the month of July. The studio decides to record the revenue in July. The studio incurs rent, utilities, and salaries expenses in July. […]

Stockholders’ equity is: A) a liability of the business. B) an economic resource controlled by the business. C) the owners’ claims on the business. D) the profit generated by the business. On December 31, 2016, Ditka Inc. had Retained Earnings […]

On December 16, 2015, B. Darin Company received $3,600 from S. Dee Company for rent of an office owned by B. Darin Company. The payment covers the period from December 16, 2015 through February 15, 2016. B. Darin Company recorded […]

Langston Company updates its inventory periodically. The company’s cost of goods sold was $2,700 and purchases were $5,600 during the year. The company’s ending inventory count was $5,000. What was the amount of beginning inventory? A) $3,300 B) $13,300 C) […]

A company’s trial balance included the following account balances at year-end: The amount of net sales reported on the income statement would be: A) $114,400. B) $128,400. C) $112,000. D) $111,400. Which of the following will happen if the accrual […]

A company had been selling its product for $20 per unit, but recently lowered the selling price to $15 per unit. The company’s current inventory consists of 200 units purchased at $16 per unit. The market value of this inventory […]

Goods placed in inventory are initially recorded at: A) market value. B) the amount paid to acquire the asset. C) the amount paid to prepare the asset for sale to customers. D) the amount paid to acquire the asset and […]

Use the information above to answer the following question. What adjusting entry should Brickyard make on June 30 before preparing its annual financial statements? A) Debit Interest Expense and credit Interest Payable for $4,000 B) Debit Interest Expense and credit […]

If total liabilities decreased by $25,000 and stockholders’ equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during the same time period? A) $20,000 increase B) $20,000 decrease C) $30,000 […]

Current liabilities could include all of the following except: A) an accounts payable due in 30 days. B) a notes payable due in 9 months. C) a bank loan due in 18 months. D) any part of long-term debt due […]

Which of the following statements about the par value of common stock is not correct? A) The par value is not the same as the market value of the stock. B) The par value is a nominal amount identified in […]

Which of the following statements best describes a contingent liability? A) The amount of a contingent liability is known and will definitely have to be paid in the future. B) A contingent liability is a potential liability that has arisen […]

When originally purchased, a vehicle had an estimated useful life of 8 years. The vehicle cost $25,000 and its estimated residual value is $3,000. After 3 years of straight-line depreciation, the asset’s total estimated useful life was revised from 8 […]

On December 31, 2015, a company had assets of $16 billion and stockholders’ equity of $8 billion. That same company had assets of $20 billion and stockholders’ equity of $9 billion as of December 31, 2016. During 2016, the company […]

Which of the following statements about stock dividends is correct? A) Stock dividends are reported on the income statement. B) Stock dividends are reported on the Statement of Stockholders’ Equity. C) Stock dividends increase total stockholders’ equity. D) Stock dividends […]

Investors are often interested in the amount of net income distributed as dividends. Where would investors look for this information in the company’s annual report? A) Statement of retained earnings B) Balance sheet C) Notes to the financial statements D) […]

Which of the following statements about an auto manufacturer’s inventory is not correct? A) Tires, batteries, glass, paint, headlamp bulbs, and electric wiring would be included in raw materials inventory. B) Incomplete cars that are still being processed would be […]

Match the term with its definition. (There are more definitions than terms.) TERM _____ (1) Duality Of Effects _____ (2) Journal Entry _____ (3) Posting _____ (4) Debit _____ (5) Chart Of Accounts _____ (6) T-Account _____ (7) Credit _____ […]

Cary Inc. reported net credit sales of $300,000 for the current year. The unadjusted credit balance in its Allowance for Doubtful Accounts is $500. The company has experienced bad debt losses of 1% of credit sales in prior periods. Using […]

A one-time error in the application of the lower of cost or market (LCM) rule in the current period distorts financial results for the current accounting period: A) only. B) and the period before. C) and the period after. D) […]

Which of the following would be included in cash flows from operating activities? A) Cash received from customers B) Cash received from an issuance of bonds C) Cash dividends paid to stockholders D) Cash used for purchases of equipment Use […]

Which is the first financial statement that should prepared after the adjusted trial balance has been prepared? A) Balance Sheet B) Income Statement C) Statement of Cash Flows D) Statement of Retained Earnings Choose the appropriate letter to match the […]

On July 1, Darin Company sold inventory costing $4,500 to Dee Company for $6,000, terms 2/10, n/30. Both companies use a perpetual inventory system. What journal entry will be recorded by Dee Company on July 1? A) Debit Purchases and […]

Assume that accrual basis accounting is used. Which of the following errors would most likely lead to an overstatement of net income in the current year? A) Recording revenue when the cash is collected next year although it is earned […]

Which of the following will occur when inventory costs are decreasing? A) FIFO will result in a lower net income but a higher ending inventory than will LIFO. B) FIFO will result in a higher net income but a lower […]

On October 1, Angelica Inc. signs a note for $200,000 to provide the funds needed to build a new facility. The note is due in 10 years, includes an annual interest rate at 7%, and requires semiannual interest payments each […]

Wiggly Pet Store had $6,000 of supplies at the end of October. During November, the company bought $2,000 of supplies. At the end of November, the company had $1,000 of supplies remaining. Which of the following statements is not correct? […]

Segregation of duties means that a company assigns responsibilities so that: A) sufficient workers are available to cover all necessary jobs. B) responsibilities for related activities are assigned to two or more people. C) employees are restricted to jobs for […]