Question 1
When a business is likely to begin selling new products or expand to other markets, which of the following characteristics of an effective accounting system would be most significant?
A) Control
B) Flexibility
C) Compatibility
D) Both B and C
Question 2
In which journal would a return of merchandise purchased on account be recorded?
The purchases journal
The sales journal
The cash receipts journal
The general journal
The cash payments journal
Question 3
Case 5.7
Sam’s purchases $20,000 worth of goods on September 2. Terms of the purchase are 2/10 net 30 and FOB destination. The goods are shipped on September 3. The goods arrive at Sam’s store on September 5. Shipping costs are $70. Sam pays for the goods on September 25.
Refer to Case 5.7. Sam will debit inventory for which of the following amounts?
$20,000
$20,070
$18,000
$19,600
Question 4
Case 4.1
Tyco had the following at year end:
Cash$34,000
Accounts receivable$50,000
Inventory$75,000
Accounts Payable$20,000
Owners’ Capital$140,000
Owner’s Withdrawal $10,000
Sales Revenue$220,000
Expenses$180,000
Refer to Case 4.1. What is the journal entry to close Owner’s Withdrawals?
A)Owner’s Withdrawal$10,000
Owner’s Capital$10,000
B)Owner’s Capital$10,000
Owner’s Withdrawal$10,000
C)Expenses$10,000
Owner’s Withdrawal$10,000
D)Owner’s Capital$10,000
Income Summary$10,000
A)
B)
C)
D)
Question 5
According to the book. The first step in the closing process is which of the following?
Close owner’s withdrawals to owner’s capital.
Close revenues to income summary.
Close expenses to income summary.
Close income summary to owner’s capital.
Question 6
In which journal would a return of merchandise sold on account be recorded?
The cash payments journal
The general journal
The cash receipts journal
The purchases journal
The sales journal
Question 7
Case 5.3
Sam’s Sports Store purchases $10,000 worth of shoes from Nike on February 1. The terms of the purchase is 2/10, Net 30.
Refer to Case 5.3. Sam’s pays for the purchase on February 7. How much does Sam pay?
$10,000
$9,500
$9,800
$9,000
Question 8
Which of the following is TRUE of an effective accounting information system?
An effective accounting information system must be compatible with the accounting systems of other companies in the same industry.
An effective accounting information system must be flexible to accommodate changes in the business over time.
Internal control is a set of accounting procedures to help a company recover in the event of a natural disaster.
None of the above is true of an effective accounting information system.
Question 9
Case 5.8
Revenues:
Net sales (net of sales discounts, $1,400, and returns and allowances, $2,000) $167,900
Expenses:
Cost of goods sold90,900
Wage expense10,200
Rent expense8,400
Advertising expense1,200
Insurance expense1,000
Depreciation expense 600
Supplies expenses550
Total expenses112,850
Net Income$55,050
Refer to Case 5.8. Bob’s gross profit is:
$90,000.
$167,900.
$55,050.
$77,000.
Question 10
Which of the following is the correct journal entry for paying $5,000 for an amount owed to a supplier?
A)Accounts Payable$5,000
Supplies$5,000
B)Cash$5,000
Accounts Payable$5,000
C)Supplies$5,000
Accounts Payable$5,000
D)Accounts Payable$5,000
Cash$5,000
A)
B)
C)
D)
Question 11
Which financial statement is prepared third?
Statement of Owner’s Equity
Income Statement
Balance Sheet
Cash Flows Statement
Question 12
Which statement best describes an organization’s accountability?
Legal liability to creditors
Ethical responsibility to the public, employees and other stakeholders
Fiduciary responsibility to manage the resources of an organization
Obligation to pay local, state and federal taxes
Question 13
In which journal would the receipts of the proceeds from a note receivable (including accrued interest) be recorded?
The sales journal
The general journal
The cash receipts journal
The cash payments journal
The purchases journal
Question 14
Case 5.7
Sam’s purchases $20,000 worth of goods on September 2. Terms of the purchase are 2/10 net 30 and FOB destination. The goods are shipped on September 3. The goods arrive at Sam’s store on September 5. Shipping costs are $70. Sam pays for the goods on September 25.
Refer to Case 5.7. When will Sam have legal title to the goods?
September 3
September 2
September 5
September 1
Question 15
Which of the following are important design features of an effective accounting system?
Compatibility
Flexibility
Control
All of the above
Question 16
When should the individual amounts in the Accounts Receivable column in the Cash Receipts journal be posted to the Accounts Receivable Ledger?
Annually
Daily
Monthly
Weekly
Question 17
Gross profit percentage is a measure of which of the following?
A retailer’s profitability
A retailer’s liquidity
A retailer’s leverage
A retailer’s currency
Question 18
Which of the following are typical functions within a spreadsheet?
Subtraction
Summation of a range of cells
Addition
All of the above
Question 19
In which journal would the sale of merchandise on account be recorded?
The general journal
The sales journal
The purchases journal
The cash payments journal
The cash receipts journal
Question 20
Which of the following is the correct order in preparing the financial statements?
Income Statement, Statement of Owner’s Equity, Balance Sheet
Statement of Owner’s Equity, Income Statement, Balance Sheet
Income Statement, Balance Sheet, Statement of Owner’s Equity
Balance Sheet, Income Statement, Statement of Owner’s Equity
Question 21
The formula for gross profit percentage is which of the following?
Gross profit divided by Net sales revenue
Net sales revenue minus Cost of goods sold
Cost of goods sold divided by Net sales revenue
Net sales revenue divided by Cost of goods sold
Question 22
According to the book. The fourth and last step in the closing process is which of the following?
Close expenses to income summary.
Close owner’s withdrawals to owner’s capital.
Close revenues to income summary.
Close income summary to owner’s capital.
Question 23
When a customer returns goods, the effect on the business is which of the following?
Decrease sales
Increase inventory
Decrease cost of goods sold
All of the above
Question 24
Case 5.6
Sam’s purchases $20,000 worth of goods on September 2. Terms of the purchase are 2/10 net 30 and FOB shipping point. The goods are shipped on September 3. The goods arrive at Sam’s store on September 5. Shipping costs are $70. Sam pays for the goods on September 25.
Refer to Case 5.6. Sam will debit inventory for which of the following amounts?
$18,000
$20,070
$20,000
$19,600
Question 25
Which of the following accounts would be closed?
Salaries payable
Inventory
Unearned revenue
Interest expense