ACC/290 Final Exam (30 Multiple Choice Questions)

ACC290 Final Exam (30 Multiple Choice Questions)

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1. The best definition of assets is the

• cash owned by the company.
• owners’ investment in the business.
• resources belonging to a company that have future benefit to the company.
• collections of resources belonging to the company and the claims on these resources.

2. Which of the following is not a liability?

• Entry field with correct answer
• Unearned Service Revenue
• Interest Payable
• Accounts Receivable
• Accounts Payable

3. Which of the following financial statements is divided into major categories of operating, investing, and financing activities?

• Entry field with correct answer
• The balance sheet.
• The retained earnings statement.
• The statement of cash flows.
• The income statement

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4. Ending retained earnings for a period is equal to beginning        

• Retained earnings + Net income + Dividends.
• Retained earnings + Net income – Dividends.
• Retained earnings – Net income – Dividends.
• Retained earnings – Net income + Dividends.

5. Which of the following is not an advantage of the corporate form of business organization?

• Entry field with correct answer
• Easy to raise funds
• Favorable tax treatment
• No personal liability
• Easy to transfer ownership

6. An advantage of the corporate form of business is that

• it has limited life.
• it is simple to establish.
• its ownership is easily transferable via the sale of shares of stock.
• its owner’s personal resources are at stake.

7. A small neighborhood barber shop that is operated by its owner would likely be organized as a:

• joint venture.
• proprietorship
• corporation
• partnership

8. If services are rendered for cash, then 

• liabilities will increase.
• stockholders’ equity will decrease.
• liabilities will decrease.
• assets will increase.

9. A revenue generally

• increases assets and stockholders’ equity.
• increases assets and decreases stockholders’ equity.
• leaves total assets unchanged.
• increases assets and liabilities.

10. A revenue account  

• is decreased by credits.
• is increased by credits.
• is increased by debits.
• has a normal balance of a debit.

11. Which accounts normally have debit balances?

• Assets, expense, and retained earnings
• Assets, expenses, and dividends
• Assets, liabilities, and dividends
• Assets, expenses, and revenues

12. In recording an accounting transaction in a double-entry system     

• there must only be two accounts affected by any transaction.
• the number of debit accounts must equal the number of credit accounts.
• there must always be entries made on both sides of the accounting equation.
• the amount of the debits must equal the amount of the credits.

13. The usual sequence of steps in the transaction recording process is    

• journalize, post to the ledger, analyze.
• post to the ledger, journalize, analyze.
• journalize, analyze, post to the ledger.
• analyze, journalize, post to the ledger.

14. Under the expense recognition principle expenses are recognized when           

• the invoice is received.
• they contribute to the production of revenue.
• they are paid.
• they are billed by the supplier.

15. The revenue recognition principle dictates that revenue should be recognized in the accounting records:      

• when the performance obligation is satisfied.
• in the period that income taxes are paid.
• at the end of the month.
• when cash is received.

16. Merchandising companies that sell to retailers are known as    

• service firms.
• wholesalers
• brokers
• corporations

17. Gross profit equals the difference between       

• sales revenue and cost of goods sold plus operating expenses.
• net income and operating expenses.
• sales revenue and cost of goods sold.
• sales revenue and operating expenses.

18. Net income will result if gross profit exceeds    

• operating expenses.
• cost of goods sold plus operating expenses.
• purchases.
• cost of goods sold.

19. Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account?

• Freight Expense
• Freight-In
• Inventory
• Freight-Out

20. Financial information is presented below:

Operating expenses                      $ 29000

Sales revenue                                 244000

Cost of goods sold                         141000

The profit margin ratio would be

• 70.
• 30.
• 42.
• 58.

21. Financial information is presented below:

Operating expenses                         $ 28000

Sales returns and allowances            6000

Sales discounts                                    5000

Sales revenue                                   160000

Cost of goods sold                            107000

The gross profit rate would be

• 26.
• 32.
• 28.
• 71.

22. Financial information is presented below:

Operating expenses                         $ 63000

Sales returns and allowances            2000

Sales discounts                                    9000

Sales revenue                                   194000

Cost of goods sold                            94000

Gross Profit would be

Entry field with correct answer

• $89000.
• $98000.
• $100000.
• $102000.

23. The LIFO inventory method assumes that the cost of the latest units purchased are

• not allocated to cost of goods sold or ending inventory.
• the first to be allocated to cost of goods sold.
• the last to be allocated to cost of goods sold.
• the first to be allocated to ending inventory.

24. Which of the following statements is correct with respect to inventories?

• Under FIFO, the ending inventory is based on the latest units purchased.
• The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold.
• It is generally good business management to sell the most recently acquired goods first.
• FIFO seldom coincides with the actual physical flow of inventory.

25. All of the following are examples of internal control procedures except

• reconciling the bank statement.
• customer satisfaction surveys.
• insistence that employees take vacations.
• using prenumbered documents.

26. Each of the following is a feature of internal control except

• an extensive marketing plan.
• recording of all transactions.
• bonding of employees.
• separation of duties.

27. For which of the following errors should the appropriate amount be subtracted from the balance per books on a bank reconciliation?

• A returned $900 check recorded by the bank as $90.
• Check written for $95, but recorded by the company as $59.
• Deposit of $400 recorded by the bank as $40.
• Check written for $93, but recorded by the company as $39.

28. A check written by the company for $149 is incorrectly recorded by a company as $194. On the bank reconciliation, the $45 error should be

• deducted from the balance per books.
• deducted from the balance per bank.
• added to the balance per bank.
• added to the balance per books.

29. The following information was available for Sunland Company at December 31, 2017: beginning inventory $86000; ending inventory $146000; cost of goods sold $644000; and sales $976000. Sunland inventory turnover ratio (rounded) in 2017 was

• 5 times.
• 4 times.
• 6 times.
• 4 times.

30.The following information was available for Metlock, Inc. at December 31, 2017: beginning inventory $79000; ending inventory $134000; cost of goods sold $608000; and sales      $888000. Metlock days in inventory (rounded) in 2017 was

• 4 days.
• 0 days.
• 0 days.
• 1 days.

Course: ACC290 Principles of Accounting I
School: University of Phoenix

• Due Date (Double Check): 27/05/2018
• Willing to Pay (USD): 50