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GB 518 Unit 3 Midterm Quiz
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GB 518 Unit 3 Midterm Quiz

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GB 518 Quiz 3

 

 

 

GB518 Financial Accounting Principles and Analysis

1.         Question :        Which of the following elements are found on the income statement?

 

                                     Cash

 

                                     Accounts Receivable

 

                                     Common Stock

 

                                     Retained Earnings

 

                                     Salaries Expense

 

 

 

Question 2.      Question :        Fast-Forward had cash inflows from operations of $62,500; cash outflows from investing activities of $47,000; and cash inflows from financing of $25,000. The net change in cash was:

 

                                     $40,500 increase

 

                                     $40,500 decrease

 

                                     $134,500 decrease

 

                                     $134,000 increase

 

 

Question 3.      Question :        A debit is:

 

                                     An increase in an account

 

                                     The right-hand side of a T-account

 

                                     A decrease in an account

 

                                     The left-hand side of a T-account

 

                                     An increase to a liability account

 

 

Question 4.      Question :        Which of the following elements are found on the Balance Sheet?

 

                                     Service Revenue

 

                                     Net Income

 

                                     Operating Activities

 

                                     Utilities Expense

 

                                     Retained Earnings

 

 

Question 5.      Question :        A credit is used to record:

 

                                     An increase in an expense account

 

                                     An increase in an asset account

 

                                     An increase in an unearned revenue account

 

                                     A decrease in a revenue account

 

                                     A decrease to retained earnings

 

 

 

 

Question 6.      Question :        Apatha Company has assets of $600,000, liabilities of $250,000 and equity of $350,000. It buys office equipment on credit for $75,000. The effects of this transaction include:

 

                                     Assets increase by $75,000 and expenses increase by $75,000

 

                                     Assets increase by $75,000 and expenses decrease by $75,000

 

                                     Liabilities increase by $75,000 and expenses decrease by $75,000

                                     Assets decrease by $75,000 and expenses decrease by $75,000

 

                                     Assets increase by $75,000 and liabilities increase by $75,000

 

 

Question 7.      Question :        Of the following accounts, the one that normally has a credit balance is:

 

                                     Cash

 

                                     Office Equipment

 

                                     Sales Salaries Payable

 

                                     Dividends

 

                                     Sales Salaries Expense

 

 

 

Question 8.      Question :        The primary objective of financial accounting is:

 

                                     To serve the decision-making needs of internal users

 

                                     To provide financial statements to help external users analyze and interpret an organization's activities

                                     To monitor and control company activities

 

                                     To provide information on both the costs and benefits of managing products and services

                                     To know what, when and how much to produce

 

 

 

Question 9.      Question :        The debt ratio is used:

 

                                     To measure the amount of equity relative to the expenses

 

                                     To reflect the risk associated with a company's debts

 

                                     Only by banks when a business applies for a loan

 

                                     To determine how much debt a firm should pay off

 

 

Question 10.    Question :        The principle that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash and (3) measures the amount of revenue as the cash plus the cash equivalent value of any non-cash assets received from customers in exchange for goods or services is called the:

 

                                     Going-concern principle

 

                                     Cost principle

 

                                     Revenue recognition principle

 

                                     Objectivity principle

 

                                     Business entity principle

 

 

Question 11.    Question :        Creditors' claims on the assets of a company are called:

 

                                     Net losses

 

                                     Expenses

 

                                     Revenues

 

                                     Equity

 

                                     Liabilities

 

 

 

Question 12.    Question :        An example of a financing activity is:

 

                                     Buying office supplies

 

                                     Obtaining a long-term loan

 

                                     Buying office equipment

 

                                     Selling inventory

 

                                     Buying land

 

 

Question 13.    Question :        A parcel of land is: offered for sale at $150,000, assessed for tax purposes at $95,000, recognized by its purchasers as being worth $140,000 and purchased for $137,000. The land should be recorded in the purchaser's books at:

 

                                     $95,000

 

                                     $137,000

 

                                     $138,500

 

                                     $140,000

 

                                     $150,000

 

 

Question 14.    Question :        Prepaid expenses are:

 

                                     Payments made for products and services that do not ever expire

                                     Classified as liabilities on the balance sheet

 

                                     Decreases in retained earnings

 

                                     Assets that represent prepayments of future expenses

 

 

 

Question 15.    Question :        A company has twice as much owner's equity as it does liabilities. If total liabilities are $50,000, what amounts of assets are owned by the company?

 

                                     $50,000

 

                                     $100,000

 

                                     $150,000

 

                                     $200,000

 

 

 

Question 16.    Question :        The main purpose of adjusting entries is to:

 

                                     Record external transactions and events

 

                                     Record internal transactions and events

 

                                     Recognize assets purchased during the period

 

                                     Recognize debts paid during the period

 

                                     Correct errors

 

 

 

Question 17.    Question :        Which of the following statements is incorrect?

 

                                     An income statement reports revenues earned less expenses incurred

                                     An unadjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments

                                     Interim financial reports can be based on one-month or three-month accounting periods

                                     Property, plant and equipment are referred to as plant assets

 

 

Question 18.    Question :        On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:

 

                                     Debit Prepaid Insurance, $1,800; credit Cash, $1,800

 

                                     Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440

                                     Debit Prepaid Insurance, $360; credit Insurance Expense, $360

 

                                     Debit Insurance Expense, $360; credit Prepaid Insurance, $360

 

                                     Debit Insurance Expense, $360; credit Prepaid Insurance, $1,440

 

 

Question 19.    Question :        A company pays each of its two office employees each Friday at the rate of $100 per day each for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is:

 

                                     Debit Unpaid Salaries $600 and credit Salaries Payable $600

 

                                     Debit Salaries Expense $400 and credit Salaries Payable $400

 

                                     Debit Salaries Expense $600 and credit Salaries Payable $600

 

                                     Debit Salaries Payable $400 and credit Salaries Expense $400

 

 

 

Question 20.    Question :        Based on the following information, what would be the beginning balance in the Retained Earnings Account, assuming all accounts have a normal balance?

Cash    $ 6,754            Dividends       $ 2,000

Accounts receivable    $ 13,733          Consulting fees earned           $ 13,718

Office supplies            $ 2,625            Rent expense   $ 3,673

Land    $ 37,153          Salaries expense          $ 6,642

Office equipment        $ 14,535          Telephone expense      $ 560

Accounts payable        $ 6,463            Miscellaneous expense            $ 280

Common stock            $ 54,490          Retained Earnings       ?

 

 

                                     $0

 

                                     $13,718

 

                                     $13,155

 

                                     $13,284

 

 

           

Question 21.    Question :        Unearned revenue is reported on the financial statements as:

 

                                     A revenue on the balance sheet

 

                                     A liability on the balance sheet

 

                                     An unearned revenue on the income statement

 

                                     An asset on the balance sheet

 

                                     An operating activity on the statement of cash flows

 

 

Question 22.    Question :        Which of the following identifies the proper order of the accounting cycle?

 

                                     Analyze, Journalize, Unadjusted Trial Balance

 

                                     Analyze, Post, Unadjusted Trial Balance

 

                                     Journalize, Post, Adjusted Trial Balance

 

                                     Unadjusted Trial Balance, Adjusted Trial Balance, Close

 

                                     Adjusted Trial Balance, Adjustments, Financial Statements

 

 

 

Question 23.    Question :        The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

 

                                     Cash basis accounting

 

                                     The matching principle

 

                                     The time period principle

 

                                     Accrual basis accounting

 

                                     Revenue basis accounting

 

 

 

Question 24.    Question :        A balance sheet that places the assets above the liabilities and equity is called a(n):

 

                                     Report form balance sheet

 

                                     Account form balance sheet

 

                                     Classified balance sheet

 

                                     Unadjusted balance sheet

 

 

 

Question 25.    Question :        A classified balance sheet:

 

                                     Measures a company's ability to pay its bills on time

 

                                     Organizes assets and liabilities into important subgroups

 

                                     Presents revenues, expenses and net income

 

                                     Reports operating, investing and financing activities

 

 

Question 26.    Question :        A company purchased a new truck at a cost of $42,000 on July 1, 2011. The truck is estimated to have a useful life of 6 years and a salvage value of $3,000. How much depreciation expense will be recorded for the truck for the year ended December 31, 2011?

 

                                     $3,250

 

                                     $3,500

 

                                     $4,000

 

                                     $6,500

 

             &

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