|1. The resources a business owns are called (Points : 3)|
Assets + liabilities = stockholders’ equity
|2. Which of the following is an appropriate representation of the accounting equation? (Points : 3)|
Assets = liabilities + stockholders’ equity
Assets = liabilities
Assets = liabilities + retained earnings
income tax regulations.
|3. The “rules” of accounting are called (Points : 3)|
Generally Accepted Accounting Principles.
|4. Gilbert, Inc. had the following account balances at September 30, 2010. What is Gilbert’s net income for the month of September?|
- (Points : 3)
|5. Which of the following accounts is a stockholders' equity account? (Points : 3)|
|6. Hodges, Inc. had the following assets and liabilities as of September 30, 2011:|
What is the stockholders’ equity of Hodges as of September 30, 2011? (Points : 3)
Cannot be determined with this information
Increase in Cash and decrease in Land
|7. Johnson, Inc. purchased land for cash. What effect does this transaction have on the following accounts: (Points : 3)|
Decrease in Cash and decrease in Land
Increase in Cash and increase in Land
Decrease in Cash and increase in Land
decreases assets and stockholders' equity.
|8. The payment of a liability (Points : 3)|
increases assets and decreases liabilities.
decreases assets and increases liabilities.
decreases assets and decreases liabilities.
|9. Fees receivable would appear on the balance sheet as a(n) (Points : 3)|
|10. Deferred expenses (prepaid expenses) are items initially recorded as assets but are expected to become __________ over time. (Points : 3)|
|11. Unearned rent, representing rent paid for the next six months’ occupancy, would be reported on the landlord’s balance sheet as a(n) (Points : 3)|
Increase insurance expense and decrease cash by $3,600 each
|12. On April 1, Tule, Inc. paid $3,600 for an insurance premium on a three-year insurance policy. How does this transaction affect Tule’s accounts? (Points : 3)|
Increase prepaid insurance and decrease cash by $3,600 each
Increase unearned insurance and decrease cash by $3,600 each
No effect at this time
|13. The difference between sales and cost of merchandise sold for a merchandising business is (Points : 3)|
FOB shipping point.
|14. If the seller is to pay the delivery expense of delivering merchandise, the delivery terms are stated as (Points : 3)|
As a revenue
|15. Since merchandise inventory is normally sold within a year, how is it reported on the balance sheet? (Points : 3)|
As the cost of merchandise sold
It does not appear on the Balance Sheet
As a current asset
|16. Which of the following would be subtracted from gross profit to reach operating income? (Points : 3)|
All of these
|17. Which of the following would be added to the balance per books on a bank reconciliation? (Points : 3)|
Deposits in transit
Notes collected by the bank
control the internal organization of the accounting department personnel and equipment.
|18. The objectives of internal control are to (Points : 3)|
provide reasonable assurance that assets are safeguarded, information is processed accurately, and laws and regulations are complied with.
prevent fraud and promote the social interest of the company.
provide control over “internal-use only” reports and employee internal conduct.
report on the financial activities of the company.
|19. The Sarbanes-Oxley Act of 2002 requires companies and their independent accountants to (Points : 3)|
report on any fraud and theft detected in the company.
report on the state of the economy and likelihood of fraud.
report on the effectiveness of the company’s internal controls.
The control environment
|20. Which of the following elements of internal control focuses upon locating weaknesses and improving control effectiveness? (Points : 3)|
|21. The two methods of accounting for uncollectible receivables are the allowance method and the (Points : 3)|
direct write-off method.
FIFO and LIFO.
|22. The two most widely used methods for determining the cost of inventory are (Points : 3)|
FIFO and average cost.
LIFO and average cost.
gross profit and average cost.
|23. In reference to a promissory note, the person who is to receive payment is called the (Points : 3)|
|24. A 60-day, 12% note for $15,000 dated May 1 is received from a customer on account. |
The maturity value of the note is (Points : 3)
removed from the books.
|25. A fully depreciated asset must be (Points : 3)|
kept on the books until sold or discarded.
disclosed only in the notes to the financial statements.
recognized on the income statement as a loss.
|26. All amounts paid to get an asset in place and ready for use are referred to as (Points : 3)|
cost of an asset.
income statement under operating expenses.
|27. A capital expenditure would appear on the (Points : 3)|
balance sheet under fixed assets.
balance sheet under current assets.
income statement under other expenses.
recognize a loss on the income statement under other expenses.
|28. If a fixed asset is sold and the book value is less than cash received, the company must (Points : 3)|
recognize a loss on the income statement under operating expenses.
recognize a gain on the income statement under other revenues.
Gains and losses are not to be recognized upon the sell of fixed assets.
|29. If a corporation issues only one class of stock, it is called (Points : 3)|
|30. The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding? (Points : 3)|
is usually equal to cash on hand.
|31. Stockholders' equity (Points : 3)|
includes paid-in capital and liabilities.
includes retained earnings and paid-in capital.
is shown on the income statement.
Resale to employees
|32. Which statement below is NOT a reason for a corporation to buy back its own stock? (Points : 3)|
Bonus to employees
For supporting the market price of the stock
To increase the shares outstanding
a contract between the corporation issuing the bonds and the underwriters selling
|33. A bond indenture is (Points : 3)|
the amount due at the maturity date of the bonds.
a contract between the corporation issuing the bonds and the bondholders.
the amount for which the corporation can buy back the bonds prior to the maturity date.
|34. The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding? (Points : 3)|
|35. A corporation has 50,000 shares of $100 par value stock outstanding. If the corporation issues a 4-for-1 stock split, the number of shares outstanding after the split will be (Points : 3)|