1) The best definition of assets is the cash owned by the company.   collections of resources belonging to the company and the claims on these resources.   owners’ investment in the business.   resources belonging to a company that have future benefit to the company.   2) Which of the following is not a liability? Interest Payable   Accounts Payable   Unearned Service Revenue   Accounts Receivable   3)Which of the following financial statements is divided into major categories of operating, investing, and financing activities? The statement of cash flows.   The balance sheet.   The income statement.   The retained earnings statement.   4) Ending retained earnings for a period is equal to beginning Retained earnings + Net income – Dividends.   Retained earnings – Net income + Dividends.   Retained earnings + Net income + Dividends.   Retained earnings – Net income – Dividends.   5) Which of the following is not an advantage of the corporate form of business organization? Easy to raise funds   No personal liability   Easy to transfer ownership   Favorable tax treatment   6) An advantage of the corporate form of business is that its owner’s personal resources are at stake.   it has limited life.   its ownership is easily transferable via the sale of shares of stock.   it is simple to establish.     7) A small neighborhood barber shop that is operated by its owner would likely be organized as a proprietorship.   corporation.   partnership.   joint venture.   8) If services are rendered for cash, then stockholders’ equity will decrease.   liabilities will increase.   liabilities will decrease.   assets will increase.   9) A revenue generally leaves total assets unchanged.   increases assets and liabilities.   increases assets and stockholders’ equity.   increases assets and decreases stockholders’ equity.   10) A revenue account is increased by debits.   is decreased by credits.   is increased by credits.   has a normal balance of a debit.   11) Which accounts normally have debit balances? Assets, liabilities, and dividends   Assets, expenses, and dividends   Assets, expense, and retained earnings   Assets, expenses, and revenues   12) In recording an accounting transaction in a double-entry system there must always be entries made on both sides of the accounting equation.   the amount of the debits must equal the amount of the credits.   there must only be two accounts affected by any transaction.   the number of debit accounts must equal the number of credit accounts.       13) The usual sequence of steps in the transaction recording process is post to the ledger, journalize, analyze.   analyze, journalize, post to the ledger.   journalize, analyze, post to the ledger.   journalize, post to the ledger, analyze.   14) Under the expense recognition principle expenses are recognized when they contribute to the production of revenue.   they are paid.   they are billed by the supplier.   the invoice is received.   15) The revenue recognition principle dictates that revenue should be recognized in the accounting records: in the period that income taxes are paid.   at the end of the month.   when cash is received.   when the performance obligation is satisfied.   16) Merchandising companies that sell to retailers are known as corporations.   wholesalers.   service firms.   brokers.   17) Gross profit equals the difference between net income and operating expenses.   sales revenue and cost of goods sold plus operating expenses.   sales revenue and cost of goods sold.   sales revenue and operating expenses.   18) Net income will result if gross profit exceeds cost of goods sold plus operating expenses.   cost of goods sold.   operating expenses.   purchases.       19) Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account? Freight-Out   Freight Expense   Inventory   Freight-In   20) Financial information is presented below: Operating expenses $ 39000 Sales revenue 190000 Cost of goods sold 137000 The profit margin ratio would be 0.72.   0.07.   0.28.   0.93.   21) Financial information is presented below: Operating expenses $ 24000 Sales returns and allowances 6000 Sales discounts 3000 Sales revenue 186000 Cost of goods sold 93000 The gross profit rate would be 0.45.   0.51.   0.47.   0.53.   22) Financial information is presented below: Operating expenses $ 50000 Sales returns and allowances 4000 Sales discounts 7000 Sales revenue 160000 Cost of goods sold 94000 Gross Profit would be $55000.   $66000.   $70000.   $62000.   23) The LIFO inventory method assumes that the cost of the latest units purchased are the first to be allocated to ending inventory.   the last to be allocated to cost of goods sold.   the first to be allocated to cost of goods sold.   not allocated to cost of goods sold or ending inventory.   24) Which of the following statements is correct with respect to inventories? It is generally good business management to sell the most recently acquired goods first.   Under FIFO, the ending inventory is based on the latest units purchased.   FIFO seldom coincides with the actual physical flow of inventory.   The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold.   25) All of the following are examples of internal control procedures except customer satisfaction surveys.   reconciling the bank statement.   insistence that employees take vacations.   using prenumbered documents.   26) Each of the following is a feature of internal control except recording of all transactions.   bonding of employees.   an extensive marketing plan.   separation of duties.   27) For which of the following errors should the appropriate amount be subtracted from the balance per books on a bank reconciliation? Deposit of $200 recorded by the bank as $20.   A returned $1000 check recorded by the bank as $100.   Check written for $56, but recorded by the company as $65.   Check written for $53, but recorded by the company as $35.   28) A check written by the company for $128 is incorrectly recorded by a company as $182. On the bank reconciliation, the $54 error should be added to the balance per bank.   deducted from the balance per bank.   added to the balance per books.   deducted from the balance per books.   29) The following information was available for Windsor, Inc. at December 31, 2017: beginning inventory $70000; ending inventory $100000; cost of goods sold $600000; and sales $800000. Windsor inventory turnover ratio (rounded) in 2017 was 6.0 times.   9.4 times.   8.6 times.   7.1 times.   30) The following information was available for Ayayai Corp. at December 31, 2017: beginning inventory $76000; ending inventory $124000; cost of goods sold $628000; and sales $896000. Ayayai days in inventory (rounded) in 2017 was 57.9 days.   71.6 days.   40.6 days.   44.0 days.

Question
Asked Mar 5, 2020
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1) The best definition of assets is the

cash owned by the company.

 

collections of resources belonging to the company and the claims on these resources.

 

owners’ investment in the business.

 

resources belonging to a company that have future benefit to the company.

 

2) Which of the following is not a liability?

Interest Payable

 

Accounts Payable

 

Unearned Service Revenue

 

Accounts Receivable

 

3)Which of the following financial statements is divided into major categories of operating, investing, and financing activities?

The statement of cash flows.

 

The balance sheet.

 

The income statement.

 

The retained earnings statement.

 

4) Ending retained earnings for a period is equal to beginning

Retained earnings + Net income – Dividends.

 

Retained earnings – Net income + Dividends.

 

Retained earnings + Net income + Dividends.

 

Retained earnings – Net income – Dividends.

 

5) Which of the following is not an advantage of the corporate form of business organization?

Easy to raise funds

 

No personal liability

 

Easy to transfer ownership

 

Favorable tax treatment

 

6) An advantage of the corporate form of business is that

its owner’s personal resources are at stake.

 

it has limited life.

 

its ownership is easily transferable via the sale of shares of stock.

 

it is simple to establish.

 

 

7) A small neighborhood barber shop that is operated by its owner would likely be organized as a

proprietorship.

 

corporation.

 

partnership.

 

joint venture.

 

8) If services are rendered for cash, then

stockholders’ equity will decrease.

 

liabilities will increase.

 

liabilities will decrease.

 

assets will increase.

 

9) A revenue generally

leaves total assets unchanged.

 

increases assets and liabilities.

 

increases assets and stockholders’ equity.

 

increases assets and decreases stockholders’ equity.

 

10) A revenue account

is increased by debits.

 

is decreased by credits.

 

is increased by credits.

 

has a normal balance of a debit.

 

11) Which accounts normally have debit balances?

Assets, liabilities, and dividends

 

Assets, expenses, and dividends

 

Assets, expense, and retained earnings

 

Assets, expenses, and revenues

 

12) In recording an accounting transaction in a double-entry system

there must always be entries made on both sides of the accounting equation.

 

the amount of the debits must equal the amount of the credits.

 

there must only be two accounts affected by any transaction.

 

the number of debit accounts must equal the number of credit accounts.

 

 

 

13) The usual sequence of steps in the transaction recording process is

post to the ledger, journalize, analyze.

 

analyze, journalize, post to the ledger.

 

journalize, analyze, post to the ledger.

 

journalize, post to the ledger, analyze.

 

14) Under the expense recognition principle expenses are recognized when

they contribute to the production of revenue.

 

they are paid.

 

they are billed by the supplier.

 

the invoice is received.

 

15) The revenue recognition principle dictates that revenue should be recognized in the accounting records:

in the period that income taxes are paid.

 

at the end of the month.

 

when cash is received.

 

when the performance obligation is satisfied.

 

16) Merchandising companies that sell to retailers are known as

corporations.

 

wholesalers.

 

service firms.

 

brokers.

 

17) Gross profit equals the difference between

net income and operating expenses.

 

sales revenue and cost of goods sold plus operating expenses.

 

sales revenue and cost of goods sold.

 

sales revenue and operating expenses.

 

18) Net income will result if gross profit exceeds

cost of goods sold plus operating expenses.

 

cost of goods sold.

 

operating expenses.

 

purchases.

 

 

 

19) Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account?

Freight-Out

 

Freight Expense

 

Inventory

 

Freight-In

 

20) Financial information is presented below:

Operating expenses

$ 39000

Sales revenue

190000

Cost of goods sold

137000

The profit margin ratio would be

0.72.

 

0.07.

 

0.28.

 

0.93.

 

21) Financial information is presented below:

Operating expenses

$ 24000

Sales returns and allowances

6000

Sales discounts

3000

Sales revenue

186000

Cost of goods sold

93000

The gross profit rate would be

0.45.

 

0.51.

 

0.47.

 

0.53.

 

22) Financial information is presented below:

Operating expenses

$ 50000

Sales returns and allowances

4000

Sales discounts

7000

Sales revenue

160000

Cost of goods sold

94000

Gross Profit would be

$55000.

 

$66000.

 

$70000.

 

$62000.

 

23) The LIFO inventory method assumes that the cost of the latest units purchased are

the first to be allocated to ending inventory.

 

the last to be allocated to cost of goods sold.

 

the first to be allocated to cost of goods sold.

 

not allocated to cost of goods sold or ending inventory.

 

24) Which of the following statements is correct with respect to inventories?

It is generally good business management to sell the most recently acquired goods first.

 

Under FIFO, the ending inventory is based on the latest units purchased.

 

FIFO seldom coincides with the actual physical flow of inventory.

 

The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold.

 

25) All of the following are examples of internal control procedures except

customer satisfaction surveys.

 

reconciling the bank statement.

 

insistence that employees take vacations.

 

using prenumbered documents.

 

26) Each of the following is a feature of internal control except

recording of all transactions.

 

bonding of employees.

 

an extensive marketing plan.

 

separation of duties.

 

27) For which of the following errors should the appropriate amount be subtracted from the balance per books on a bank reconciliation?

Deposit of $200 recorded by the bank as $20.

 

A returned $1000 check recorded by the bank as $100.

 

Check written for $56, but recorded by the company as $65.

 

Check written for $53, but recorded by the company as $35.

 

28) A check written by the company for $128 is incorrectly recorded by a company as $182. On the bank reconciliation, the $54 error should be

added to the balance per bank.

 

deducted from the balance per bank.

 

added to the balance per books.

 

deducted from the balance per books.

 

29) The following information was available for Windsor, Inc. at December 31, 2017: beginning inventory $70000; ending inventory $100000; cost of goods sold $600000; and sales $800000. Windsor inventory turnover ratio (rounded) in 2017 was

6.0 times.

 

9.4 times.

 

8.6 times.

 

7.1 times.

 

30) The following information was available for Ayayai Corp. at December 31, 2017: beginning inventory $76000; ending inventory $124000; cost of goods sold $628000; and sales $896000. Ayayai days in inventory (rounded) in 2017 was

57.9 days.

 

71.6 days.

 

40.6 days.

 

44.0 days.

 

 

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