1. a List of Assets, Liabilities, and Owners' Equity As of a Specific Date Is a (N) (Points: 4)

1.  A list of assets, liabilities, and owners' equity as of a specific date is a (n) (Points: 4)

Balance sheet

2.  Which principle determines the amount initially entered into the records for purchases (Points: 4)

Cost principle

3.  The "rules" of accounting are called (Points: 4)

Generally Accepted Accounting Principals

4.  The portion of a corporation's net income retained in the business is called (Points: 4)

Retained Earnings

5.  Brennan, Inc. had revenues of $234,000, expenses of $175,000, and dividends of $40,000 during 2009. Which of the following statements is correct? (Points: 4)

Net income for 2009 totaled $59,000

6.  Which statement is normally prepared first? (Points: 4)

Income statement

7.  The resources a business owns are called (Points: 4)

assets

8.  Which of the following is not a characteristic of a corporation (Points: 4)

Corporations make up 20% of all businesses.

9.  An entity that is organized according to state or federal statutes and in which ownership is divided into shares of stock is a (Points: 4)

Governmental Unit

10.  Which of the following is NOT an element of the financial accounting system? (Points: 4)

A set of rules for the stock exchange Controls to determine whether errors occur during recording

11.  The basic financial statements do NOT include the (Points: 4)

tax return.

12.  In October, cash is received in advance of rendering services. Assuming that half of the services have been performed by December 31, the year-end adjustment would (Points: 4)

Decrease Unearned Service Revenue and increase Service Revenue.

13.  Fees receivable would appear on the balance sheet as a(n) (Points: 4)

asset

14.  A&M Co. purchased land for $50,000 with $10,000 paid in cash and $40,000 in a note payable due three years from now. What effect does this transaction have on the accounts under the accrual basis of accounting? (Points: 4)

Net increase in assets of $40,000 and a net increase in liabilities of $40,000

15.  As time passes, fixed assets, other than land, lose their capacity to provide useful services. To account for this decrease in usefulness, the cost of fixed assets is systematically allocated to expense through a process called (Points: 4)

depreciation

16.  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: 4)

Increase prepaid insurance and decrease cash by $3,600 each

17.  Unearned revenue is what type of an account? (Points: 4)

Liability

18.  If the seller is to pay the delivery expense of delivering merchandise, the delivery terms are stated as (Points: 4)

FOB destination.

19.  The amount of the total cash paid to the seller for merchandise purchased would normally include (Points: 4)

the list price plus the sales tax.

20.  Using a perpetual inventory system, the purchase of $30,000 of merchandise on account would include a(n) (Points: 4)

increase in Merchandise Inventory

21.  Profit is equal to (Points: 4)

sales less (sales discounts and sales returns and allowances) less cost of merchandise sold.

22.  Office salaries, depreciation of office equipment, and office supplies are examples of what type of expense? (Points: 4)

Administrative expense

23.  Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as (Points: 4)

selling expenses

24.  ABC Company had $32,000 in net sales, $15,000 in cost of merchandise sold, $16,000 in operating expenses, and $2,000 in other income. What is ABC Company’s gross profit? (Points: 4)

$17,000

25.  Accompanying the bank statement was a debit memorandum for bank service charges. What adjustment is required in the depositor’s accounts? (Points: 4)

Increase Miscellaneous Expense; decrease Cash

26.  Which of the following should NOT be considered cash by an accountant? (Points:4)

Postage stamps

27.  Which of the following would be deducted from the balance per books on a bank reconciliation? (Points: 4)

Outstanding checks

28.  The bank reconciliation (Points: 4)

is part of the internal control system.

29.  Requiring employees to take annual vacations is part of which element of internal control? (Points: 4) The control environment Risk assessment Control procedures Monitoring

30. An element of internal control is (Points: 4) risk assessment

30.  Which of the following reflects a weak internal control system? (Points: 4)

A single employee is responsible for the collecting and recording of cash

32. If the cost of an item of inventory is $60 and the current replacement cost is $65, the amount included in inventory according to the lower of cost or market is (Points: 4) $60.

33. If the cost of an item of inventory is $70, the current replacement cost is $65, and the sales price is $85, the amount included in inventory according to the lower of cost or market is (Points: 4) $65.

34. The term “inventory” indicates (Points: 4)

merchandise held for sale in the normal course of business

35. After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $450,000 and Allowance for Doubtful Accounts has a balance of $25,000. What is the net realizable value of the accounts receivable? (Points: 4)

$425,000

36. The process of a company selling its accounts receivable to another company is referred to as (Points: 4)

factoring.

37. Receivables are usually a significant portion of (Points: 4)

total current assets.

38. Which of the following is NOT an intangible asset? (Points: 4)

Long-term receivable

39. If a fixed asset is sold and the book value is less than cash received, the company must (Points: 4) recognize a gain on the income statement under other revenues.

40. Salvage value has a similar meaning as (Points: 4) residual value

41. Book value is defined as (Points: 4)

cost less accumulated depreciation.

42. Which of the following expenditures would NOT be included in the cost of an asset?< (Points: 4)

Vandalism

43. A capital expenditure would appear on the (Points: 4) balance sheet under fixed assets.

44. A patent was purchased for $670,000 with a legal life of 20 years. Management estimates that the patent has an 8-year economic life. The entry to record amortization would include< (Points: 4)

an increase in amortization expense for $33,500

45. Significant changes in stockholders’ equity are reported in the (Points:4) retained earnings statement.

46. 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: 4) 35,000

47. Stockholders’ equity (Points: 4) includes retained earnings and paid-in capital

48. The market interest rate related to a bond is also called the (Points: 4) stated interest rate.

49. Most employers are required to withhold from employees for (Points: 4)

both federal and state unemployment compensation.

50. The total earnings of an employee for a payroll period are referred to as (Points:4)

gross pay.