Accounting Test (V2.

1)13-4-2018
1- Which of the following is an item of working capital?

a. Fixed assets
b. Long-term investments
c. Accounts receivable
d. Bonds payable

2- Accounts Payable is classified as a/an ___________ in the _____________.

a. Current asset; Balance Sheet

b. Current liability; Balance Sheet
c. Expense; Income Statement
d. Revenue; Income Statement

3- Which of the following documents authorizes the purchase transaction?

a. Credit memo from supplier

b. Invoice or bill from supplier
c. Purchase order
d. Purchase requisition

4- What is meant by accounts receivable?

a. Money owed to a company by its debtors

b. Money owed by a company to its creditors
c. Money owed to a company by its employees
d. Money owed by a company to its vendors

5- Which accounting assumption assumes that an enterprise will continue in operation long enough to
carry out its existing objectives and commitments?
a. Monetary unit assumption
b. Economic entity assumption
c. Time period assumption
d. Going concern assumption
e. None of the options listed

Johnny’s Car Repair Shop started the year with total assets of $60,000 and total liabilities of $40,000.
During the year the business recorded $100,000 in car repair revenues, $55,000 in expenses, and
dividends of $10,000. ____

6- The net income reported by Johnny’s Car Repair Shop for the year was
a. $35,000.
b. $45,000.
c. $20,000.
d. $90,000.
e. none of the options listed

7- If beginning capital was $25,000, ending capital is $37,000, and the owner's withdrawals were $23,000,
the amount of net income or net loss for the period was:
a. net loss of $35,000
b. net income of $35,000
c. net income of $14,000
d. net loss of $14,000
e. none of the options listed

8- A company purchased a POS cash register on January 1 for $5,400. This register has a useful life of 10
years and a salvage value of $400. What would be the depreciation expense for the second-year of its
useful life using the straight-line method?
a. $ 500.
b. $ 800.
c. $ 864.
d. $1,000.
e. $1,080.

9- A company normally sells its products for $20 per unit, which includes a profit margin of 25%. What is
the cost of this product?
a. $ 15.
b. $ 16.
c. $ 17.
d. $18.
e. $19.

10- Which of the following is an example of a deferral?

a. Accruing year-end wages
b. Recognizing revenues earned but not yet recorded
c. Recording prepaid rent
d. Recognizing expenses incurred but not yet recorded
e. None of the options listed

11- The financial statement that reports the revenues and expenses for a period of time such as a year or a
month is the
a.Balance Sheet
b.Income Statement
c.Statement Of Cash Flows

12- Under the accrual basis of accounting, revenues are reported in the accounting period when the
a.Cash Is Received
b.Service Or Goods Have Been Delivered

13- Assets are usually reported on the balance sheet at which amount?
a.Cost
b.Current Market Value
c.Expected Selling Price

14- Unearned Revenues is what type of account

a.Asset
b.Liability
c.Equity

15- The inventory cost flow assumption where the cost of the most recent purchases are likely to remain in
inventory

a.FIFO
b.LIFO
c.Weighted Average

16- The inventory system that does NOT update the Inventory account automatically at the time of each
purchase or sales is the _______________ method/system.
a.Periodic
b.Perpetual

17- On December 1 a company borrowed $100,000 at 12% per year. The interest will be paid quarterly,
with the first payment due on March 1. What should the company report on its income statement for
December?
a.nothing
b. Interest Expense Of $1,000

18- A business has a year ended 30 September 2016 and received and paid an invoice for rent of 6,000 for
the six months to 31 December 2016. What accrual and prepayment are required for the invoice in the
year end accounts?
a.3,000 Prepayment
b.4,000 Accrual

19- . A business has a beginning electricity accrual of 5,000, an ending accrual of 6,000, and during the
year pays for electricity of 8,000. What is the electricity expense for the year?
a.9,000
b.14,000

20- Shortly after the end of an accounting period, a business receives an invoice for annual insurance to 31
August 2017 for 9,000. If the accounting period ended of 30 November 2016, what is the required
accrual or prepayment?
a.2,250 Accrual
b.6,750 Accrual

21- Resources owned by a company (such as cash, accounts receivable, vehicles) are
reported on the balance sheet and are referred to as

22- The listing of all the accounts available for use in a company's accounting system is known as the

23- A company disposes of equipment that it no longer uses in its business. The amount received by the
company is 100 while the cost of asset is 350 and has accumilated Depreciation by amount of 150. The
company will report a. what are the needed journals to prove the above tranaction.

A company has sold an item by amount of 200 and its cost was 150, the company has received 100 by cash
and 100 still remaining as receivable.

24- Write the needed journals if the company is following inventory perpetual method
25- Write the needed journals if the company is following inventory periodic method