Question #: 1

A company's income statement reports all of the following except:

A. The revenues it earned
B. The assets it owned
C. The net profit or loss it earned
D. The time period over which its earnings occurred

Question #: 2

Paxton Computer Services had $600,000 in assets and $250,000 in liabilities at

the beginning of the year. By the end of the year, assets had decreased by
$150,000 while its liabilities remained the same. Its return on assets (ROA) for the
year is 8%. What is its net income for the year?

A. 42,000
B. 22,000
C. 30,000
D. 36,000

Question #: 3

The transactions carried out by Galaxy Corporation during the year caused an
increase in total assets of $75,000 and a decrease in total liabilities of $9,000. If
no additional share capital was issued during the year and the net income for the
year is $126,000, how much dividends was paid during the year?

A. 84,000
B. 60,000
C. 66,000
D. 42,000

Question #: 4

At the beginning of January of the current year, Lil-Orchid Art Gallery reflected a normal balance of
$52,000 for accounts receivable. During January, the company collected $14,800 from customers on
account and provided additional services to customers on account totaling $12,500. Additionally, during
January one customer paid Lil-Orchid $5,000 for services to be provided in the future. At the end of
January, the balance in the accounts receivable account should be:

A. $54,700.
 B. $49,700
C. $54,300.
D. $49,300

Question #: 5

A debit entry is used to record:

A. A decrease in accounts receivable

B. A decrease in an unearned revenue.
C. A decrease in prepaid rent.
D. A decrease in rent expense

Question #: 6

Lalita Industries purchased a factory equipment for $12,000, and paid half of it immediately. The general
journal entry made to record this transaction will include a:

A. Credit to Accounts Payable for $6,000.

B. Debit to Cash for $6,000
C. Credit to Factory Equipment for $12,000
D. Credit to Cash for $12,000

Question #: 7

The purchase of Inventory on credit for $3,000 was posted to the trial balance as a
$3,000 debit to
Inventory and a $3,000 debit to Accounts Payable. What effect would this error have on the trial
balance?

A. The total of the Debit column of the trial balance will exceed the total of the Credit column by
$3,000.

B. The total of the Credit column of the trial balance will exceed the total of the Debit column
by $3,000.
C. The total of the Debit column of the trial balance will exceed the total of the Credit column by
$6,000
D. The total of the Credit column of the trial balance will exceed the total of the Debit column by
$6,000

Question #: 8
On June 30, Hugo Company had a normal balance of $5,000 in its Cash account.
During the month of June, Hugo collected $12,200 for its cash sales and disbursed
a total of $11,500 for its operating expenses. Hugo operates on a purely cash basis.
What was the balance in the Cash account at the beginning of June?

A. Cash account had a $4,300 debit balance

B. Cash account had a $4,300 credit balance.
C. Cash account had a $5,700 debit balance
D. Cash account had a $5,700 credit balance

Question #: 9

Supreme Moon Property Holdings, a calendar-year company, had the following

transactions during 2022:
• On March1, rented a shophouse to Aqua Cloud Enterprise. Supreme Moon
received one year's worth of rent in the amount of $300,000 on March 1.

• On September 30, collected $45,000 cash commission from its customer

Sun Energy Corp for helping to sell one of Sun's manufacturing facility in
September.

• On November 2, performed and completed appraisal services in the amount

of $28,000 for Skye Inc. Supreme Moon had only collected payment on half of the
amount from Skye.

• On December 15, received $33,000 cash from a client for services that will
be performed during 2023.

• Incurred operating expenses of $165,000, of which 60% was paid during the
year.

• On December 1, paid $16,800 on a fire insurance policy that will start in

March of 2023.
What is Supreme Moon's cash-basis net income?

A. $276,200
B. $290,200
C. $224,200
D. $210,200
Question #: 10

Supreme Moon Property Holdings, a calendar-year company, had the following

transactions during 2022:
• On March 1, rented a shophouse to Aqua Cloud Enterprise. Supreme Moon
received one year's worth of rent in the amount of $300,000 on March 1.

• On September 30, collected $45,000 cash commission from its customer

Sun Energy Corp for helping to sell one of Sun's manufacturing facility in
September.

• On November 2, performed and completed appraisal services in the amount

of $28,000 for Skye Inc. Supreme Moon had only collected payment on half of the
amount from Skye.

• On December 15, received $33,000 cash from a client for services that will
be performed during 2023.

• Incurred operating expenses of $165,000, of which 60% was paid during the
year.

• On December 1, paid $16,800 on a fire insurance policy that will start in

March of 2023.

What is Supreme Moon's accrual-basis net income?

A. $158,000
B. $208,000
C. $174,200
D. $276,200

Question #: 11

Dong Fang Corporation issued financial statements for the year ended December
31, 2022 and reported Total Assets of $800,000, Total Liabilities of $620,000 and
Net Income of $47,000. However, Dong Fang Corporation had FAILED to include
the following:
• Revenues of $12,000, originally recorded as unearned, have been earned by the
end of the year.
• Revenues of $4,500 have been earned by the end of the year, even though
payment has not been collected.
• Rent of $8,800, originally recorded as prepaid, have been incurred by the end of
the year.
• Salaries of $4,200 have been incurred by the end of the year, but payment has
not been made to the employees.
What is the correct amount of Total Assets it should have reported on its Dec 31,
2022 financial statements?

A. $795,700
B. $804,300
C. $788,100
D. $800,000

Question #: 12

Dong Fang Corporation issued financial statements for the year ended December
31, 2022 and reported Total Assets of $800,000, Total Liabilities of $620,000 and
Net Income of $47,000. However, Dong Fang Corporation had FAILED to include
the following:
• Revenues of $12,000, originally recorded as unearned, have been earned
by the end of the year.

Revenues of $4,500 have been earned by the end of the year, even though
payment has not been collected.
Rent of $8,800, originally recorded as prepaid, have been incurred by the end of
the year.
Salaries of $4,200 have been incurred by the end of the year, but payment has not
been made to the employees.
What is the correct amount of Total Liabilities it should have reported on its Dec
31, 2022 financial statements?

A. $620,000
B. $612,200
C. $627,800
D. $616,500

Question #: 13

Dong Fang Corporation issued financial statements for the year ended December
31, 2022 and reported Total Assets of $800,000, Total Liabilities of $620,000 and
Net Income of $47,000. However, Dong Fang Corporation had FAILED to include
the followings:
• Revenues of $12,000, originally recorded as unearned, have been earned
by the end of the year.

Revenues of $4,500 have been earned by the end of the year, even though
payment has not been collected.
Rent of $8,800, originally recorded as prepaid, have been incurred by the end of
the year.
Salaries of $4,200 have been incurred by the end of the year. but payment has not
been made to the employees.
What is the correct amount of Net Income it should have reported on its Dec 31,
2022 financial statements?

A. $47,300
B. $50,200
C. $43,500
D. $50,500

Question #: 14

Black Dragon Co. mistakenly forgot to record depreciation expense on its office
equipment at the end the accounting period. What is the effect of this omission on
its financial statements prepared?

A. Assets overstated and equity understated

B. Assets and equity both understated
C. Assets understated and equity overstated
D. Assets and equity both overstated

Question #: 15

An annual reporting period consisting of any twelve consecutive months is known

as:

A. Fiscal year.
B. Calendar year.
C. Interim financial period
D. Seasonal year.

Question #: 16

The following information is available for Didi Inc. before closing the accounts.
After the closing process, what is the balance of the Retained Earnings account?

Share capital 100,000

Retained earnings 15,000
Dividends 8,000
 Dividends Payable 5,000
Sales Revenue 162,000
Salaries Expense 38,000
Depreciation Expense 4,000
Insurance Expense 3,300
Rent Expense 21,000
Prepaid Rent 7,000

A. $110,700
B. $102,700
C. $98,700
D. $95,700

Question #: 17

Temporary accounts include all of the following except:

A. Consulting revenue
B. Dividends
C. Salaries expense
D. Prepaid expense

Question #: 18

The Income Statement and Statement of Financial Position of Qing Cang Systems
Pte. Ltd. for the year ended December 31, 2022 are shown below:

Cing Qang System PTE Ltd

Income statement
For the year ended 31/12/2022

Sales Revenue 780,000

Cost of goods sold (inventory) (465,000)
Gross profit 315,000
Rent Expense (65,000)
Salary expense (76,000)
Advertising expense (24,500)
Utilities expense (6,200)
Operating income 143,300
Interest expense (12,000)
Profit before tax 131,300
tax expense (15,000)
Profit after tax (Net Income) 116,300

Cing Qang System PTE Ltd

Statement of financial position (balance sheet)

As on 31/12/2022

Assets
Current Assets
Cash 365,000
Receivables 102,000
Inventory 98,000
Total current assets 565,000
Property plant and equipment (gross) 300,000
Less accumulated depreciation (60,000)
Total non-current assets 240,000
Total Assets 805,000

Liabilities
Current Liabilities
Accounts payable 71,700
Interest payable 12,000
Total current liabilites 83,700
Non current liabilities
Long term debt 100,000
Total non current liabilities 183,700
Shareholders Equity
Contributed Capital 450,000
Retained earnings 171,300
Total Shareholders equity 621,300
Total Shareholders equity and Liabilities 805,000
If during the year-end audit, the auditor found that a collection of an account
receivable for $5,500 was previously recorded twice, what will the corrected
financial statements reflect after the auditor corrects the error?
(Note: This is an independent scenario and is not connected to any other
questions in this midterm assessment)

A. Total Assets of $805,000; Total Liabilities of 178,700; Net Income of $110,800

B. Total Assets of $810,500; Total Liabilities of 189,200; Net Income of $116,300
C. Total Assets of $799,500; Total Liabilities of $178,700; Net Income of $110,800
D. Total Assets of $805,000; Total Liabilities of $183,700 ; Net Income of $116,300

Question #: 19

The Income Statement and Statement of Financial Position of Qing Cang

Systems Pte. Ltd. for the year ended December 31, 2022 are shown below

Cing Qang System PTE Ltd

Income statement
For the year ended 31/12/2022

Sales Revenue 780,000

Cost of goods sold (inventory) (465,000)
Gross profit 315,000
Rent Expense (65,000)
Salary expense (76,000)
Advertising expense (24,500)
Utilities expense (6,200)
Operating income 143,300
Interest expense (12,000)
Profit before tax 131,300
tax expense (15,000)
Profit after tax (Net Income) 116,300

Cing Qang System PTE Ltd

Statement of financial position (balance sheet)

As on 31/12/2022

Assets
Current Assets
Cash 365,000
Receivables 102,000
Inventory 98,000
Total current assets 565,000
Property plant and equipment (gross) 300,000
Less accumulated depreciation (60,000)
Total non-current assets 240,000
Total Assets 805,000

Liabilities
Current Liabilities
Accounts payable 71,700
Interest payable 12,000
Total current liabilites 83,700
Non current liabilities
Long term debt 100,000
Total non current liabilities 183,700
Shareholders Equity
Contributed Capital 450,000
Retained earnings 171,300
Total Shareholders equity 621,300
Total Shareholders equity and Liabilities 805,000
What is the Debt Ratio of Qing Cang Systems Pte. Ltd.

A. 0.228
B. 0.236
C. 0.124
D. 0.296

Question #: 20

The Income Statement and Statement of Financial Position of Qing

Cang Systems Pte. Ltd. for the year ended December 31, 2022 are
shown below

Cing Qang System PTE Ltd

Income statement
For the year ended 31/12/2022

Sales Revenue 780,000

Cost of goods sold (inventory) (465,000)
Gross profit 315,000
Rent Expense (65,000)
Salary expense (76,000)
Advertising expense (24,500)
Utilities expense (6,200)
Operating income 143,300
Interest expense (12,000)
Profit before tax 131,300
tax expense (15,000)
Profit after tax (Net Income) 116,300

Cing Qang System PTE Ltd

Statement of financial position (balance sheet)

As on 31/12/2022

Assets
Current Assets
Cash 365,000
Receivables 102,000
Inventory 98,000
Total current assets 565,000
Property plant and equipment (gross) 300,000
Less accumulated depreciation (60,000)
Total non-current assets 240,000
Total Assets 805,000

Liabilities
Current Liabilities
Accounts payable 71,700
Interest payable 12,000
Total current liabilites 83,700
Non current liabilities
Long term debt 100,000
Total non current liabilities 183,700
Shareholders Equity
Contributed Capital 450,000
Retained earnings 171,300
Total Shareholders equity 621,300
Total Shareholders equity and Liabilities 805,000
During the year-end audit, the auditor found that the company had borrowed
$1,000,000 from a bank during the period, but the transaction was incorrectly
recorded into long term debt as $100,000. Additionally, accrued interest expense
was incorrectly recorded as $12,000 instead of $120,000 for the period.
What is the corrected Debt Ratio after the auditor corrects the errors?
(Note: This is an independent scenario and is not connected to any other
questions in this midterm assessment)

A. 0.699
B. 0.636
C. 0.657
D. 0.611

Question #: 21

Jackson Entertainment Inc. had incorrectly recorded the purchase of $20,000 worth of Audio Equipment
into Inventory, and also recorded Cost of Goods Sold of $6,500 on the incorrectly recorded Inventory.
What is the correcting journal entry to fix this error?

A. Dr Audio Equipment $20,000 Cr Inventory $20,000

B. Dr Audio Equipment $20,000
Dr Accounts Payable $6,500
Cr Inventory $20,000
 Cr COGS $6,500
C. Dr Audio Equipment $20,000
Dr COGS $6,500
Cr Inventory $26,500
D. Dr Audio Equipment $20,000
Cr Inventory $13,500
Cr COGS $6,500

Question #: 22

You are designing a system of internal accounting control for your company. Which
of the following recommendations would you most likely suggest to your company
for implementation?

A. To increase efficiency, an employee should be in charge of the whole purchasing and payment
process
B. Different levels of authorization for various employees according to their responsibility and
authority
C. Employees should not be rotated between different branches of the company so as to obtain the
benefit of understanding the local customer base
D. Only hire Certified Public Accounts as internal auditors of the company

Question #: 23

Saina Sports Company uses the allowance method of accounting for uncollectible accounts. The
following summary schedule was prepared from an aging of accounts receivable outstanding on
December 31 of the current year.

Past due Amount Percent uncollecible

0 to 60 days $200,000 3%
60 to 120 days $110,000 15%
Greater than 120 days $90,000 45%
The following additional information is available for the current year:
• Net credit sales for the year is $1,100,000

• Loss allowance at January 1 is $52,000 (normal balance)

• Accounts receivable written off during the period is $60,000.

If Saina Sports Company bases its estimate of uncollectible accounts on the aging
of accounts receivable, Bad debt expense for the current year ending December
31 is
 A. $55,000
B. $60,000
C. $71,000
D. $63,000

Question #: 24

Lan Hua Pharmaceuticals Inc. uses the allowance method of accounting for
uncollectible accounts and is on a calendar year end. On Jan 1, 2022, the balance
of its Loss Allowance account is $68,000. During the period of 2022, Lan Hua
managed to collect $8,500 from an account which was previously written off in
2021. Choose the most correct statement from the following:

A. The loss allowance account for the period of 2022 will have a credit entry of $8,500.
B. The loss allowance account will have an ending balance of $76,500 at the end of 2022
C. The expected credit loss account for the period of 2022 will have a credit entry of $8,500
D. The expected credit loss account will have an ending balance of $76,500 at the end of 2022

Question #: 25

Which of the following statements is false?

A. The journal entry to record bad debt expense decreases current assets.
B. The journal entry to record bad debt expense decreases retained earnings.
C. The journal entry to write-off an uncollectible account receivable decreases operating income.
D. The journal entry to write-off an uncollectible account receivable does not affect current assets.

Question #: 26

Majestic Line Company is reconciling its bank statement for the month of April using the following
information:

Item Amount
Cash balance per the books of the Co.
$8,750
on 30/4/2022
Deposits in transit at the month end $980
Outstanding checks at the month end $2,105
Bank charges $30
Collection of payments by Co.'s $560
customer by the bank on behalf of the
Co.
NSF check from one of Co.s customer $1,200
The adjusted cash balance per Majestic’s books on April 30 is:

A. $9,355
B. $8,080
C. $7,625
D. $7,520

Question #: 27

Kamala’s bank statement at the end of July showed an ending balance of

$29,600.
Kamala's bank reconciliation for the period showed adjustments for the following:
• deposit in transit of $1,200
• outstanding checks of $1,600
• NSF check of $560
• bank service charges of $24
direct transfer of $1,200 from a customer for payment on its accounts
receivable (customer did not inform Kamala when the direct transfer
was made to Kamala's bank account)
What was the cash balance at the end of July on Kamala's books before
the adjustments for items on the bank reconciliation?
?

A. $28,584
B. $29,200
C. $29,816
D. $30,984

Question #: 28

Which of the following demonstrates poor internal control procedure for Royal Rani Co?

A. Royal Rani’s accounting staff makes cash deposits and records the journal entries related to cash,
while the accounting manager prepares the bank reconciliation.
B. Royal Rani’s finance controller, who does no bookkeeping, prepares the bank reconciliation each
month.
C. Royal Rani’s finance controller signs all checks after the accounting staff prepares the supporting
 documents and the accounting manager reviews it.
D. Royal Rani’s sales staff prepares the cash deposits relating to sales and submits the deposit slips to
the accounting staff, who records the sales collections into the accounting system.

Question #: 29

On March 1, 2022, TokTok Company accepted an $80,000, 6-month, 6% note from one of its trading
partners. Both the principal and interest are due at the maturity of the note. TokTok is on a June 30 fiscal
year end. Which of the following is most likely to be part of TokTok's journal entry on the date of the
note's maturiy?

A. Credit to Interest Income of $1,600.

B. Credit to Interest Income of $800
C. Credit to Interest Income of $2,400.
D. Credit to Interest Income of $4,800

Question #: 30

On 1st November 2022, SubZero Company receives a $10,800, 3 months, 10% note from customer
Aaron Wok. What entry should be made on the maturity date of the note assuming that Aaron Wok pays
the note in full at maturity?

A. Debit Cash $10,800; credit Notes Receivable $10,800

B. Debit Cash $11,070; credit Interest Revenue $270; credit Notes Receivable $10,800.
C. Debit Cash $10,800; debit Interest Receivable $270; credit Interest Revenue $270; credit Notes
Receivable $10,800
D. Debit Cash $11,070; credit Interest Revenue $90; credit Interest Receivable $180; credit Notes
Receivable $10,800.