Câ u 1: Cost of goods sold is determined only at the end of the accounting period in

A) a perpetual inventory system.

B) a periodic inventory system.
C) both a perpetual and a periodic inventory system.
D) neither a perpetual nor a periodic inventory system.
Câ u 2: After closing entries are made, the balance in the owner's capital account in the ledger will
be
A) reported on the income statement
B) reported on the balance sheet.
C) zero balance.
D) the loss for the period.
Câ u 3: Sales Returns and Allowances is increased when
A) goods are sold on credit
B) goods that were sold on credit are returned
C) customers refuse to pay their accounts
D) an employee does a good job
Câ u 4: Borry Company has total proceeds from sales of $ 7,140 inclusive sales taxes of 5 %. The
amount will be credited to Sales Revenue is
A) $ 7,140
B) $ 6,783
C) $ 7,497
D) $ 6,800
Câ u 5: If an individual asset is increased, then
A) There must be an equal decrease in a specific liability.
B) There must be an equal decrease in owner's equity.
C) There must be an equal decrease in another asset.
D) All of these answer choices are possible.
Câ u 6: On May 1, 2020 Bactom company purchased a truck for $ 200,000. It was estimated to have a
$ 2,000 salvage value at the end of its 10 -year useful life, using the straight-line method. The
balance of Accummulated Depreciation Account of the truck at December 31,2021 would be
A) $ 33,000
B) $ 165,000
C) $ 19,800
D) $ 167,000
Câ u 7: Goods in transit is reported in the inventory of the buyer when the
A) Terms of sale are FOB shipping point
B) Delivery company accepts the goods from the seller
C) Goods reach the buyer.
D) Terms of sale are FOB destination
Câ u 8: The cost of equipment includes all of the following except
A) Property insurance
B) Freight charges
C) Property tax
D) Purchase price
Câ u 9: A retail store receives total cash sales of $ 136,500 excluding taxes 5 %. The journal entry to
record the sale would be
a. Sale Tax Payable: 6.825
Cash: 6.825
b. Sale Tax Expense: 6.500
Cash: 6.500
c. Sales Tax Expense: 6.825
Cash: 6.825
d. Sales Tax Payable: 6.500
Cash: 6.500
Câ u 10: Juggernaut Company buys a $31,000 van on credit. The transaction will affect the
A) income statement only.
B) balance sheet only.
C) income statement and owner's equity statement only.
D) income statement, owner's equity statement, and balance sheet.
Câ u 11: A system that records in appropriate accounts the dual effect of each transaction is
A) Double-entry system
B) Chart of accounts
C) Trial balance
D) Ledger
Câ u 12: A debit to an asset account indicates
A) a credit was made to a liability account.
B) an increase in the asset.
C) a decrease in the asset.
D) an error.
Câ u 13: Closing the temporary accounts at the end of each accounting period:
A) Gives the revenue and expense accounts zero balances
B) Serves to transfer the effects of these accounts to the owner's capital account on the balance
sheet.
C) Causes owner's capital to reflect increases from revenues and decreases from expenses and
withdrawals
D) All of these.
Câ u 14: Which of the following should be included in the physical count for inventory of a
company?
A) Goods held on consignment from another company.
B) Goods in transit from another company shipped FOB shipping point
C) Goods in transit to another company shipped FOB shipping point.
D) Both b and c above.
Câ u 15: Financial accounting provides economic and financial information for all of the following
except
A) Investors
B) Other external users
C) Managers
D) Creditors
Câ u 16: H&M sells uniforms. On November 14, they shipped $ 5,000 worth of uniforms to TH
School, terms 2/10 , n/30. On November 21 , they received an order from Vins school for $ 1,500
worth of uniforms to be produced in December. On November 30, TH School returned $ 300 of
defective merchandise. H&M has received no payments from either school as of month end. What
amount will be recognized as net accounts receivable on the balance sheet as of November 30 ?
A) $ 6,200
B) $ 6,500
C) $ 4,700
D) $ 5.000
Câ u 17: A 30-day note dated June 13 has a maturity date of
A) July 11
B) July 12
C) July 14
D) July 13
Câ u 18: Which of the following is not true of the terms debit and credit?
A) They can be interpreted to mean increase and decrease.
B) They can be used to describe the balance of an account.
C) They can be abbreviated as Dr. and Cr.
D) They can be interpreted to mean left and right.
Câ u 19: When the allowance method of recognizing bad debts expense is used, the entry to
recognize that expense
A) decreases current assets
B) has no effect on current assets.
C) increases net income.
D) has no effect on net income.
Câ u 20: A company shows the following balances:
 Sales Revenue: $2,500,000
 Sales Returns and Allowances: $400,000
 Sales Discounts: $50,000
 Cost of Goods Sold: $1,353,000
What is the gross profit rate?
A) 46 %
B) 66 %
C) 34 %
D) 54 %
Cà 21: Net income is gross profit less
A) operating expenses.
B) other expenses
C) other expenses and losses
D) financing expenses.
Câ u 22: On May 1, 2020 Superstar company purchased a machine for $210,000$ with a useful life of
5 years and estimated salvage value of $20,000$. The book value of the machine in the end of year
2020 under the double-declining-balance method of depreciation would be
A) $139,333$
B) $126,000$
C) $154,000$
D) $114,000$
Câ u 23: A liability is classified as current if it is expected to be settled:
A) Within 1 year through the creation of other current liabilities
B) Within 1 year or the operating cycle, whichever is shorter
C) Between 6 months and 18 months
D) Within 1 year or the operating cycle, whichever is longer
Câ n 24: Entries for cash dividends are required on the:
A) Declaration date, record date, and payment date
B) Declaration date and the payment date.
C) Declaration date and the record date.
D) Record date and the payment date
Câ u 25: Unearned Ticket Revenue is
A) Reported as a current liability
B) A Revenue account
C) Debited when ticket is sold for future flights
D) A contra account to Ticket Revenue
Câ u 26: Correcting entries
A) are the same with adjusting entries
B) can be made any time when an error is identified
C) due to the difference in recognizing expense, revenue
D) used at the end of accounting period.
Câ u 27: Bad Debt Expense is considered
A) avoidable unless there is a recession.
B) an avoidable cost in doing business on a credit basis.
C) an internal control weakness.
D) a necessary risk of doing business on a credit basis.
Câ u 28: A company records the fees for legal services paid in advance by its clients in an account
called Unearned Legal Fees. If the company fails to make the end-of-period adjusting entry to
record the portion of these fees that has been earned, one effect will be:
A) An understatement of liabilities.
B) An understatement of assets.
C) An understatement of equity.
D) An overstatement of equity.
Câ u 29: Overstating ending inventory will overstate all of the following except:
A) Cost of Goods sold
B) Owner's Equity
C) Net income
D) Assets
Câ u 30: The revenue recognition states that revenue should be recognized in the accounting system
A) when the service is performed
B) when cash is paid
C) at the end of the accounting period
D) at the end of the accounting period after paying corporation taxes.
Câ u 31: On August 1, Cricket purchased supplies for $ 5,000 on account. At the last day of August, a
physical count shows $ 1,000 of supplies on hand. What adjusting journal entry should be made for
August?
A) Dr. Supplies Expense 1,000 and Cr. Supplies 1,000
B) Dr. Supplies 5,000 and Cr . Accounts payable 5,000
C) Dr. Supplies expense 4,000 and Cr. Supplies 4,000
D) Dr. Supplies Expense 5,000 and Cr. Supplies 5,000
Câ u 32: The statement of changes in stockholders' equity:
A) Describes changes in paid-in capital and retained eamings subcategories
B) Is part of the statement of retained earnings.
C) Does not include changes in treasury stock
D) Shows only the ending balances in stockholders' equity.
Câ u 33: Quarterly adjustments will be required if financial statements are prepared in:
A) 3 -month reporting basis
B) semi-annually reporting basis
C) a fiscal year
D) a calendar year
Câ u 34: Total expenses occurred $70,000$; Opening balance of Capital is $35,000 ; $5,000$
additional contribution during the period; closing balance of $55,000 . Total revenue earned should
be:
A) 130,000
B) 125,000
C) 110,000
D) 85,000
Câ u 35: Which of the following represents the largest number of common shares?
A) Issued shares
B) Outstanding shares
C) Authorized shares
D) Treasury shares