Accounting I Exam 2 Name:

Accounting I
— Examination —

This examination consists of two sections:

I. Multiple Choice

Answer all 50 questions. This section is worth 75% of the final grade

II. Short Answer

Answer 10 out 15 questions. This section is worth 25% of the final grade

Time: You will have one hour and forty minutes to complete the examination.

NOTES:
a. Please use dark black ink for all your answers.
b. Make sure to write your name in the top right corner of EACH page in the
answer booklet.
c. If you need extra room to write your answers, ask the proctor for
supplementary answer sheets.
d. The passing grade is 70%. In the case of a failed or illegible examination,
you may retake the examination after waiting six months.

Accounting I Exam 2
Accounting I Exam 2 Name:

Examination Rules

Please read the following rules before starting your examination:

1. You may not have anything with you while you take the exam (including
books, cell phones, keys, food, etc.). Please make sure all cell phones are
turned off.
2. It is your responsibility to make sure that you have received the correct
examination — and the corresponding CD, if applicable.
3. Write your full name in the top right corner of EVERY page in the answer
booklet.
4. Use dark black ink for all your answers. If you are taking an exam at a
TTI testing site, you must use the black pen provided.
5. If you have any questions or need help, do not leave your seat. Please raise
your hand and a proctor will come to you. When you have finished your
exam, do NOT leave your seat; raise your hand and a proctor will come to
you.
6. You may not talk or communicate with anyone other than the proctor. If you
communicate with anyone other than the proctor, you will fail the
examination.
7. You may not leave the room until you hand in your exam.
8. All exams must be handed in within the time limit. When the proctor
announces the end of the session, failure to hand in your exam will
invalidate it.
9. All papers, including test questions and scrap paper, must be handed in to
the proctor upon completion of the exam.
10. If you are taking an exam through TTI services, a transcript will
automatically be sent to the college of your choice after the exam is
graded.

Accounting I Exam 2
Accounting I Exam 2 Name:

I. Multiple Choice
Directions: Answer all of the following 50 questions. For each question, select the
best answer out of the four choices. Mark the corresponding letter, ‘A’, ‘B’, ‘C’, or
‘D’ (in capitals) in the answer grid on page 2 of your answer booklet.

NOTE: No handwritten notes or circled answers will be evaluated. ONLY the

letter responses in the answer grid will be graded.

1) Long-term assets that are used in the operations of the business, but do not exist
physically, are called _________________.
A) Tangible assets
B) Intangible assets
C) Transparent assets
D) Invisible assets

2) If a trademark is purchased from another business, its cost is recorded as a(n)

__________.
A) Debit
B) Credit
C) Asset
D) Liability

3) A proprietorship is a company owned by ____________________.

A) A single individual
B) A partnership
C) A single active owner and multiple silent partners
D) Three or more individuals

4) The objective of _________________________ is to provide relevant and timely

information for the decision-making needs of users outside of the business.
A) Forensic accounting
B) Basic accounting
C) Managerial accounting
D) Financial accounting

5) A listing of the titles and numbers of all the accounts in the ledger is called
________________________.
A) A roll call
B) The ledger book
C) A chart of accounts
D) A book of debits
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6) Double-entry account systems requires every business transaction to be

A) Recorded in at least one account.
B) Recorded in at least two accounts.
C) Recorded in at least three accounts.
D) Recorded automatically and then checked manually.

7) The process of transferring the debits and credits from the journal entries to the
accounts is called ______________.
A) Journaling
B) Introductory accounting
C) Debiting
D) Posting

8) __________________________ are physical resources that are owned and used by

a business and are permanent or have a long life.
A) Fixed assets
B) Firm assets
C) Fixed resources
D) Firm resources

9) The accounting process that begins with analyzing and journalizing transactions
and ends with the post-closing trial balance is called _____________________.
A) Intermediate accounting practices
B) The accounting cycle
C) The AR cycle
D) The AP cycle

10) The ______________ is used for recording fees earned on account.

A) Cash receipts journal
B) Revenue journal
C) Payable journal
D) Notes journal

11) All transactions that involve the receipt of cash are recorded in a
__________________.
A) Cash receipts journal
B) Revenue journal
C) Payable journal
D) Notes journal

Accounting I Exam 2
Accounting I Exam 2 Name:

12) Computerized systems are generally ___________________ than manual systems.

A) Used in conjunction with
B) No less accurate
C) More accurate
D) Less accurate

13) When transactions are between two companies, it is termed________e-commerce.

A) Open
B) Closed
C) B2C (business-to-consumer)
D) B2B (business-to-business)

14) A physical inventory or count of inventory should be taken

_____________________ to make sure that the quantity of inventory reported in
the financial statements is accurate.
A) Daily
B) Weekly
C) Monthly
D) Near year-end

15) ______________ is the primary basis for valuing and reporting inventories in the
financial statements.
A) Cost
B) Debt
C) Market value
D) Demand

16) ___________ is the asset most likely to be stolen or used improperly in a business.
A) Assets
B) Inventory
C) Cash
D) Time

17) It is usually not practical for a business to write checks to pay small amounts for
such items as postage, office supplies, or minor repairs, so they keep a
____________________.
A) Company gift card
B) Petty cash fund
C) Slush fund
D) False balance

Accounting I Exam 2
Accounting I Exam 2 Name:

18) A __________________, or promissory note, is a written document containing a

promise to pay the face amount, usually with interest, on demand or at a date in
the future.
A) Payable
B) Chart
C) Note receivable
D) Record

19) Recording the cost of fixed assets as an expense is called

_______________________.
A) Depreciation
B) Appreciation
C) Association
D) Rumination
20) The two systems of accounting for merchandise transactions are ________ and
_________.
A) Perpetual and Periodic
B) Immediate and Long term
C) Payable and Receivable
D) Assets and resources

21) When a new partner is admitted by contributing assets to the partnership, the
total assets and the total owners' equity of the partnership are _______________.
A) Split evenly
B) Unaffected
C) Decreased
D) Increased

22) The resources owned by a business are its _______________.

A) Assets
B) Liabilities
C) Debts
D) Owner's equity

23) Accounting reports providing transactions that have been recorded and
summarized are called ________________________________.
A) Banking trials
B) Accu-statements
C) Financial statements
D) Permanent records

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Accounting I Exam 2 Name:

24) A balance sheet is a list of _________________________________as of a specific

date.
A) Resources and assets
B) The assets, liabilities, and owner's equity
C) Income and expenses
D) The owner's equity

25) _______________________ is the owner's right to the assets of the business after
all liabilities have been paid.
A) Equity rights
B) Right of Ownership
C) Owner's bill of rights
D) Owner's equity

26) A ___________________ is an association of two or more persons who own and

manage a business for profit.
A) Corporation
B) Pairing
C) Partnership
D) Limited liability company (LLC)

27) Accounts receivable are normally collected within:

A) The fiscal year.
B) The week.
C) A long period, such as 3-5 years.
D) A short period, such as 30 or 60 days.

28) Accounts that report amounts for only one period are called ________________.
A) Unmonitored accounts
B) Major accounts
C) Minor accounts
D) Temporary accounts

29) Two of the most common subsidiary ledgers are the:

A) Revenue subsidiary journal and cash receipts subsidiary ledger.
B) Revenue subsidiary journal and the accounts receivable subsidiary ledger.
C) Accounts managed subsidiary ledger and the accounts payable subsidiary
ledger.
D) Accounts receivable subsidiary ledger and the accounts payable subsidiary
ledger.

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30) The terms for when payments for merchandise are to be made are called the
________.
A) Payment outline
B) Payable outline
C) Debit terms
D) Credit terms

31) If a buyer is paid a refund, the seller:

A) Credits Customer Refunds Payable and debits Cash.
B) Debits Customer Refunds Payable and credits Cash.
C) Debits Customer Refunds Payable and debits Cash.
D) Credits Customer Refunds Payable and credits Cash.

32) Two primary objectives of control over inventory are safeguarding the inventory
from damage or theft and:
A) Reporting inventory in the financial statements.
B) Updating inventory daily
C) Updating inventory weekly
D) Balancing inventory counts in the financial statements.

33) Internal control is defined as the procedures and processes used by a company to
safeguard its assets, process information accurately and:
A) Inform investors of significant changes in the organization.
B) Manage inventory.
C) Collect necessary data for the sale of the organization.
D) Ensure compliance with laws and regulations.

34) _________________________ are amounts that customers owe for which a

formal, written instrument of credit has been issued.
A) Payroll dues
B) Accounts payable
C) Notes receivable
D) Accounts receivable

35) ________________ refers to an intangible asset of a business that is created from

such favorable factors as location, product quality, reputation, and managerial
skill.
A) Goodwill
B) Charity
C) Owner's equity
D) A charter book

Accounting I Exam 2
Accounting I Exam 2 Name:

36) A person may be admitted to a partnership by purchasing an interest from one

or more of the existing partners or:
A) By contributing assets to the partnership.
B) By a legal decree.
C) By capitalizing on one partner not renewing their agreement on time.
D) By petitioning the state the partnership was founded in.

37) If a partner leaves, the withdrawing partner's interest is normally sold to the
_______.
A) Existing partners or partnership
B) Lowest bidder
C) Government
D) Employees

38) The employer tax provides for temporary payments to those who become
unemployed is called ___________________________.
A) Temporary Employment Rate (TER)
B) Universal Payment Option (UPO)
C) State Unemployment Compensation Tax (SUTA)
D) Federal Unemployment Compensation Tax (FUTA)

39) The ___________________ records bad debt expense by estimating uncollectible

accounts at the end of the accounting period.
A) Negative tracking process
B) Owed tracking process
C) Allowance method
D) Disallowance method

40) Selling the partnership assets is called ________________.

A) Remuneration
B) Realization
C) A buyout
D) Liquidation

41) If a contingent liability is probable and the amount of the liability can be
reasonably estimated,
A) It is recorded and disclosed.
B) It is not noted.
C) It is recalculated.
D) It is divided before it is recorded.

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Accounting I Exam 2 Name:

42) Under the ______________________, amounts are initially recorded in the

accounting records at their cost or purchase price.
A) Purchasing guide
B) Costing guide
C) Purchase concept
D) Cost concept

43) Accumulated depreciation accounts are called ________________________.

A) Contra debit accounts
B) Contra asset accounts
C) ADA records
D) AD recordings

44) The statement of owner’s equity reports the changes in the owner’s equity for a
period of time.
A) True
B) False

45) The following is a chronological record of business transactions:

A) Journal
B) Trial Balance
C) Tax statement
D) Petty Cash Account

46) An income statement for a merchandising business is normally prepared using

either a:
A) Refund account or Fiscal year summary
B) Operating cycle or Accounting Cycle
C) Multiple-step or Single-step format
D) Balance statement or Trial Balance

47) If there is a cash shortage, the Cash Short and Over account is:
A) Debited for the shortage.
B) Credited for the shortage.
C) Balanced.
D) Zeroed out.

48) One error that affects trial balance is called a _________________. It occurs
when the order of the digits is copied incorrectly.
A) Anti-error
B) Intra-error
C) Transposition
D) Trispotion

Accounting I Exam 2
Accounting I Exam 2 Name:

49) The ______________________ method records bad debt expense only when an
account is determined to be worthless.
A) Direct write-off
B) Indirect write-off
C) Subversive
D) Introspective

50) The ____________________provides for the same amount of depreciation

expense for each year of the asset's useful life.
A) Divided method
B) Curve method
C) Double-declining-balance method
D) Straight-line method

Accounting I Exam 2
Accounting I Exam 2 Name:

II. Short Answer Questions

Directions: Read the questions carefully and make sure you understand what is being asked.
Answer 10 out of 15 questions. Write your answers in the answer booklet. Be sure to write
clearly so that the grader can read your work. Illegible exams will NOT be graded.

NOTE: This section is worth 25% of the final grade.

1) Sales may be made to customers using credit cards such as MasterCard or VISA. Such
sales are recorded as ______________________.

2) When the periodic inventory system is used, only _____________ is recorded each time
a sale is made.

3) If the market is lower than the purchase cost, the _______________________________

method is used to value the inventory.

4) ________________________ measures the relationship between cost of merchandise

sold and the amount of inventory carried during the period.

5) The company’s checking account balance in the bank records is a _______________.

6) The _________________________ provides the same amount of depreciation expensefor

each unit of activity of the asset.

7) When a company or a bank advances credit, it is making a _____________________.

8) The four most common legal forms for organizing and operating a business are
proprietorship, corporation, partnership, and _______________________________.

9) ________________________ can be defined as an information system that provides

reports to users about the economic activities and condition of a business.

10) The area of accounting that provides internal users with information is called
_______________________.

11) The process of recording a transaction in the journal is called _____________________.

12) All fixed assets, except land, lose their usefulness and, thus, are said to
_________________.

13) _____________________ is the owner’s right to the assets of the business.

Accounting I Exam 2
Accounting I Exam 2 Name:

14) ___________________________ are the policies and procedures that protect assets
from misuse, ensure that business information is accurate, and ensure that laws and
regulations are being followed.

15) The _________________ is designed for recording all purchases on account.

Accounting I Exam 2
Accounting I Exam 2 Name:

Accounting I
— Answer Booklet —

Name: Date:

Last Four Digits of Your

Signature: Social Security #:

Please read and sign to indicate your acceptance of the following statements.

I hereby commit myself not to divulge or repeat any of the contents of this test in
any form whatsoever to any other individual.

I am aware that illegible exams will not be graded, and no money will be refunded
against the cost incurred in preparing for and taking such exams.

Signature:

Accounting I Exam 2
Accounting I Exam 2 Name:

I. Multiple Choice

Write your answers to the multiple choice questions in the appropriate boxes of the
answer grid below (in capitals).

1 11 21 31 41
2 12 22 32 42
3 13 23 33 43
4 14 24 34 44
5 15 25 35 45
6 16 26 36 46
7 17 27 37 47
8 18 28 38 48
9 19 29 39 49
10 20 30 40 50

II. Short Answer Questions

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For office use only:

Evaluator: Date:
Signature: Final Grade:
Comments:

Accounting I Exam 2