Multiple choice question on fundamentals of accounting.
1. All of the following are intangible assets except
a. patents.
b. land improvements.
c. goodwill.
d. franchises.
2. A daily cash count of register receipts made by a cashier department supervisor demonstrates an application of which of the following internal control principles?
a. Documentation procedures
b. Segregation of duties
c. Establishment of responsibility
d. Independent internal verification
3. Felix Company has a $140,000 balance in Accounts Receivable and a $1,000 debit balance in Allowance for Doubtful Accounts. Credit sales for the period totaled $900,000. What is the amount of the bad debt adjusting entry if Felix uses a percentage of receivables basis (at 10%)?
a. $15,000
b. $14,000
c. $16,000
d. $15,200
4. The constraint of conservatism is best expressed as
a. the cost of applying an accounting principle should not exceed its benefit.
b. only material items should be recorded and reported.
c. when in doubt, choose the method that will least likely overstate assets and net income.
d. the lower of cost or market method should be used for inventories.
5. If merchandise is sold for $2,000 subject to credit terms of 2/10, n/30, the entry to record collection in full within the discount period would include a
a. debit to Sales Discounts for $40.
b. credit to Cash for $1,960.
c. credit to Accounts Receivable for $40.
d. none of the above.
6. Larken Company's records show the following for the month of January:
|
Total Retained Earnings at January 1
|
$400,000
|
|
Total Retained Earnings at January
|
500,000
|
|
Total
|
670,000
|
|
Total Dividends Declared
|
40,000
|
Total expenses for January were
a. $740,000.
b. $770,000.
c. $570,000.
d. $530,000.
7. Petson Company's financial information is presented below.
|
Sales
|
$ ????
|
Purchase Returns and Allowances
|
$15,000
|
|
Sales Returns and Allowances
|
30,000
|
Ending Merchandise Inventory
|
35,000
|
|
Net Sales
|
250,000
|
Cost of Goods Sold
|
180,000
|
|
Beginning Merchandise Inventory
|
????
|
Gross Profit
|
????
|
|
Purchases
|
170,000
|
|
|
The missing amounts above are:
|
|
Sales
|
Beginning Inventory
|
Gross Profit
|
|
a.
|
$280,000
|
$45,000
|
$70,000
|
|
b.
|
$220,000
|
$45,000
|
$100,000
|
|
c.
|
$280,000
|
$60,000
|
$70,000
|
|
d.
|
$220,000
|
$60,000
|
$100,000
|
8. The preparation of closing entries
a. is an optional step in the accounting cycle.
b. results in zero balances in all accounts at the end of the period so that they are ready for the following period's transactions.
c. is necessary before financial statements can be prepared.
d. results in transferring the balances in all temporary accounts to Retained Earnings.
9. Current liabilities are obligations that are reasonably expected to be paid from Existing Creation of Other
|
|
Current Assets
|
Current Liabilities
|
|
a.
|
No
|
No
|
|
b.
|
Yes
|
Yes
|
|
c.
|
Yes
|
No
|
|
d.
|
No
|
Yes
|
10. Which of the following errors will cause a trial balance to be out of balance? The entry to record a payment on account was
a. not posted at all.
b. posted as a debit to Cash and a credit to Accounts Payable.
c. posted as a debit to Cash and a debit to Accounts Payable.
d. posted as a debit to Accounts Receivable and a credit to Cash.