Question 1

Cost of goods sold should be matched up with the revenue generated on each year's income statement because of the:

Accepted Answer

A) Revenue recognition criteria 
B) Cash basis of accounting 
C) Actual basis of accounting 
D) Accrual basis of accounting 
A) Revenue recognition criteria 
B) Cash basis of accounting 
C) Actual basis of accounting 
D) Accrual basis of accounting D

Question 2

Use the following information for questions: $$\begin{array} { l r l r } 
\text { Revenues } & \$ 50,000 & \text { Beginning liabilities } & \$ 245,000 \
\text { Cost of goods sold } & 35,000 & \text { Ending assets } & 450,000 \
\text { Operating expenses } & 5,500 & \text { Ending liabilities } & 255,000 \
\text { Beginning assets } & 350,000 & &
\end{array}$$
-The return on assets is closest to:

Accepted Answer

A) 2.1% 
B) 2.4% 
C) 3.75% 
D) 11.13% 
A) 2.1% 
B) 2.4% 
C) 3.75% 
D) 11.13% B

Question 3

On July 1, 2011 Albert Company paid $5,200 for a 1-year insurance policy.To record this transaction Albert Company should:

Accepted Answer

A) decrease cash and increase insurance expense 
B) decrease cash and increase prepaid insurance 
C) increase accounts payable and increase insurance expense 
D) increase cash and increase prepaid insurance 
A) decrease cash and increase insurance expense 
B) decrease cash and increase prepaid insurance 
C) increase accounts payable and increase insurance expense 
D) increase cash and increase prepaid insurance B

Question 4

Which of the following is a revenue recognition criterion?

Accepted Answer

A) All amounts have been collected. 
B) All expenses have been paid. 
C) There is reasonable assurance that recorded revenues and expenses will ultimately be received or paid. 
D) There is a high probability that company will perform the major things associated with the sale. 
A) All amounts have been collected. 
B) All expenses have been paid. 
C) There is reasonable assurance that recorded revenues and expenses will ultimately be received or paid. 
D) There is a high probability that company will perform the major things associated with the sale.

Question 5

How are goods purchased for sale at a later date recorded in the financial statements?

Accepted Answer

A) As inventory. 
B) As prepaid expenses. 
C) As cost of goods sold. 
D) As operating expenses. 
A) As inventory. 
B) As prepaid expenses. 
C) As cost of goods sold. 
D) As operating expenses.

Question 6

Beginning inventory - purchases + ending inventory = COGS.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following will not appear on the income statement?

Accepted Answer

A) Amortization 
B) Interest 
C) Cost of goods sold 
D) Dividends 
A) Amortization 
B) Interest 
C) Cost of goods sold 
D) Dividends

Question 8

The issuance of common shares with a value of $5,000 to purchase land will increase the common share account.

Accepted Answer

A) True 
 B)False

Question 9

Dividends are an expense of doing business.

Accepted Answer

A) True 
 B)False

Question 10

On Oct.1, 2011 Bonita, Inc.signed a 1-year $75,000 note payable from First National Bank.The loan plus 6% interest is to be repaid on Sept.30, 2012.Bonita's year-end is December 31.In its 2011 financial statements Bonita will record interest expense of:

Accepted Answer

A) $375 
B) $1,125 
C) $4,500 
D) $75,000 
A) $375 
B) $1,125 
C) $4,500 
D) $75,000

Question 11

How is cash invested by shareholders in exchange for shares initially recorded in the accounting records?

Accepted Answer

A) As an increase in retained earnings, and an increase in cash. 
B) As an increase in long-term investments, and a decrease in cash. 
C) As an increase in common shares, and a decrease in cash. 
D) As an increase in common shares, and an increase in cash. 
A) As an increase in retained earnings, and an increase in cash. 
B) As an increase in long-term investments, and a decrease in cash. 
C) As an increase in common shares, and a decrease in cash. 
D) As an increase in common shares, and an increase in cash.

Question 12

Which of the following assets is never expensed on the income statement?

Accepted Answer

A) Land 
B) Building 
C) Inventory 
D) Equipment 
A) Land 
B) Building 
C) Inventory 
D) Equipment

Question 13

Which of the following expenses has NO effect on the cash flow of a firm?

Accepted Answer

A) Salaries expense 
B) Interest expense 
C) Amortization expense 
D) Cost of goods sold 
A) Salaries expense 
B) Interest expense 
C) Amortization expense 
D) Cost of goods sold

Question 14

Use the following information for questions 
During a recent week, Cairns Consulting received $15,000 cash from clients for services performed with a total value of $50,000.The balance is to be received within 30 days.
-The effect on the balance sheet equation for this transaction would be:

Accepted Answer

A) + $15,000 cash = - $35,000 accounts payable + $50,000 retained earnings 
B) + $15,000 cash - $35,000 accounts receivable = $50,000 retained earnings 
C) + $15,000 cash + $35,000 accounts receivable = + $50,000 retained earnings 
D) + $15,000 cash = + $15,000 retained earnings 
A) + $15,000 cash = - $35,000 accounts payable + $50,000 retained earnings 
B) + $15,000 cash - $35,000 accounts receivable = $50,000 retained earnings 
C) + $15,000 cash + $35,000 accounts receivable = + $50,000 retained earnings 
D) + $15,000 cash = + $15,000 retained earnings

Question 15

Which of the following is an example of a non-monetary transaction?

Accepted Answer

A) The purchase of inventory on account. 
B) The recording of amortization expense. 
C) The expiry of prepaid insurance. 
D) The purchase of land by issuing shares. 
A) The purchase of inventory on account. 
B) The recording of amortization expense. 
C) The expiry of prepaid insurance. 
D) The purchase of land by issuing shares.

Question 16

Which of the following represents the cost of goods sold calculation?

Accepted Answer

A) Beginning inventory + ending inventory - purchases 
B) Beginning inventory + purchases - ending inventory 
C) Purchases + ending inventory - beginning inventory 
D) Purchases - beginning inventory - ending inventory 
A) Beginning inventory + ending inventory - purchases 
B) Beginning inventory + purchases - ending inventory 
C) Purchases + ending inventory - beginning inventory 
D) Purchases - beginning inventory - ending inventory

Question 17

The purchase of a three-year insurance policy should be reflected on the balance sheet under current assets.

Accepted Answer

A) True 
 B)False

Question 18

The purchase of equipment costing $8,500 for $1,500 down and the balance on account will increase both sides of the balance sheet equation by $7,000.

Accepted Answer

A) True 
 B)False

Question 19

When the board of directors declares a $500 dividend, which of the following would be included in recording the transaction?

Accepted Answer

A) Increase in retained earnings, increase in dividends declared 
B) Decrease in cash, decrease in dividends payable 
C) Increase in dividends declared, increase in dividends payable 
D) Decrease in dividends payable, increase in cash 
A) Increase in retained earnings, increase in dividends declared 
B) Decrease in cash, decrease in dividends payable 
C) Increase in dividends declared, increase in dividends payable 
D) Decrease in dividends payable, increase in cash

Question 20

The profit margin ratio = sales ÷ net income.

Accepted Answer

A) True 
 B)False

Cost of goods sold should be matched up with the revenue generated on each year's income statement because of the:

Use the following information for questions: Revenues \ 50,000 Beginning liabilities \ 245,000 Cost of goods sold 35,000 Ending assets 450,000 Operating expenses 5,500 Ending liabilities 255,000 Beginning assets 350,000 -The return on assets is closest to:

On July 1, 2011 Albert Company paid $5,200 for a 1-year insurance policy.To record this transaction Albert Company should:

Which of the following is a revenue recognition criterion?

How are goods purchased for sale at a later date recorded in the financial statements?

Beginning inventory - purchases + ending inventory = COGS.

Which of the following will not appear on the income statement?

The issuance of common shares with a value of $5,000 to purchase land will increase the common share account.

Dividends are an expense of doing business.

On Oct.1, 2011 Bonita, Inc.signed a 1-year $75,000 note payable from First National Bank.The loan plus 6% interest is to be repaid on Sept.30, 2012.Bonita's year-end is December 31.In its 2011 financial statements Bonita will record interest expense of:

How is cash invested by shareholders in exchange for shares initially recorded in the accounting records?

Which of the following assets is never expensed on the income statement?

Which of the following expenses has NO effect on the cash flow of a firm?

Use the following information for questions During a recent week, Cairns Consulting received $15,000 cash from clients for services performed with a total value of $50,000.The balance is to be received within 30 days. -The effect on the balance sheet equation for this transaction would be:

Which of the following is an example of a non-monetary transaction?

Which of the following represents the cost of goods sold calculation?

The purchase of a three-year insurance policy should be reflected on the balance sheet under current assets.

The purchase of equipment costing $8,500 for $1,500 down and the balance on account will increase both sides of the balance sheet equation by $7,000.

When the board of directors declares a $500 dividend, which of the following would be included in recording the transaction?

The profit margin ratio = sales ÷ net income.

Overview of Corporate Financial Reporting

Processing Data Through the Accounting System

Revenue Recognition

Cash Flow Statement

Cash, Temporary Investments, and Accounts Notes Receivable

Inventory

Capital Assetstangible and Intangible

Short-Term Liabilities

Long-Term Liabilities

Shareholders Equity

Financial Statement Analysis

Accounting for Investments and Consolidated Financial Statements

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Exam 2: Business Transaction Analysis and Financial Statement Effects

Cost of goods sold should be matched up with the revenue generated on each year's income statement because of the:

Use the following information for questions: Revenues \ 50,000 Beginning liabilities \ 245,000 Cost of goods sold 35,000 Ending assets 450,000 Operating expenses 5,500 Ending liabilities 255,000 Beginning assets 350,000 -The return on assets is closest to:

On July 1, 2011 Albert Company paid $5,200 for a 1-year insurance policy.To record this transaction Albert Company should:

Which of the following is a revenue recognition criterion?

How are goods purchased for sale at a later date recorded in the financial statements?

Beginning inventory - purchases + ending inventory = COGS.

Which of the following will not appear on the income statement?

The issuance of common shares with a value of $5,000 to purchase land will increase the common share account.

Dividends are an expense of doing business.

On Oct.1, 2011 Bonita, Inc.signed a 1-year $75,000 note payable from First National Bank.The loan plus 6% interest is to be repaid on Sept.30, 2012.Bonita's year-end is December 31.In its 2011 financial statements Bonita will record interest expense of:

How is cash invested by shareholders in exchange for shares initially recorded in the accounting records?

Which of the following assets is never expensed on the income statement?

Which of the following expenses has NO effect on the cash flow of a firm?

Use the following information for questions During a recent week, Cairns Consulting received $15,000 cash from clients for services performed with a total value of $50,000.The balance is to be received within 30 days. -The effect on the balance sheet equation for this transaction would be:

Which of the following is an example of a non-monetary transaction?

Which of the following represents the cost of goods sold calculation?

The purchase of a three-year insurance policy should be reflected on the balance sheet under current assets.

The purchase of equipment costing $8,500 for $1,500 down and the balance on account will increase both sides of the balance sheet equation by $7,000.

When the board of directors declares a $500 dividend, which of the following would be included in recording the transaction?

The profit margin ratio = sales ÷ net income.

Overview of Corporate Financial Reporting

Processing Data Through the Accounting System

Revenue Recognition

Cash Flow Statement

Cash, Temporary Investments, and Accounts Notes Receivable

Inventory

Capital Assetstangible and Intangible

Short-Term Liabilities

Long-Term Liabilities

Shareholders Equity

Financial Statement Analysis

Accounting for Investments and Consolidated Financial Statements

Filters