Quiz Detail

Q1 . A current liability is a liability that can reasonably be expected to be paid:

A Within one year

B Between six months and 18 months

C Out of currently recognized revenues

D Out of cash currently on hand

Q2 . Which of the following is included in the computation of gross profit?

A Income tax expense

B Other income-other expense

C Cost of Goods Sold

D Operating Expenses

Q3 . At October 1, 2014, Metz Industries had an Accounts Payable balance of $30,000. During the month, the company made purchases on account of $25,000 and made payments on account of $40,000. At October 31, 2014, the Accounts Payable balance is

A $30,000 debit

B $10,000 credit

C $15,000 credit

D $40,000 credit

Q4 . The most useful financial statement for analyzing a company's profitability is the:

A Balance Sheet

B Statement of Retained Earnings

C Statement of Cash Flows

D Income Statement

Q5 . Accounts receivable are valued and reported on the balance sheet

A In the investment section

B At gross amounts less sales returns and allowances

C At cash realizable value

D Only if they are not past due

Q6 . With accrual accounting, expenses should be recorded when:

A Costs are incurred

B An invoice is received

C The company decides it wants to

D Cash payments are made

Q7 . With accrual accounting, revenues should be recorded when:

A Cash is collected from customers

B It is probable that a sale will be made

C The company decides it wants to

D Earned

Q8 . The financial statement that reports what a company owns, what it owes, and what the owners of the company currently have invested in the company is called:

A A balance sheet

B An income statement

C A Statement of Stockholders' Equity

D A Statement of Cash Flows

Q9 . The two primary external users of financial accounting reports are

A The federal government and management

B The federal government and investors

C Management and creditors

D Investors and creditors

Q10 . With accrual accounting, costs (expenses) need to be matched either to "specific accounting periods" or

A To operating cycles

B When paid for

C To reporting entities

D To the period when revenues are earned

Q11 . A measurement of an entity's ability to pay its obligations due within the next year or operating cycle is called

A Profitability

B Long-term risk

C Leverage

D Liquidity

Q12 . On Oct. 1, 2014, the Landlord Corp. received $32,000 in advance for eight months of rent from Oct. 1 of 2014 through May 31 of 2015. Landlord closes its books once a year on Dec. 31. How much does Landlord want to report in "rent Income" on its 2014 Income Statement?

A $4,000

B $12,000

C $20,000

D $32,000

Q13 . In performing a complete liquidation of a corporation, which of the following is the proper order of cash distributions?

A Common shareholders, preferred shareholders, and creditors

B Common shareholders, creditors, and preferred shareholders

C Creditors, preferred shareholders, and common shareholders

D Creditors, common shareholders, and preferred shareholders

Q14 . What kind of adjusting entry would use a "Rent Payable" account?

A Accrual

B Depreciation

C Transaction

D Deferral

Q15 . If total liabilities decreased by $4,000, then:

A Stockholders' equity must have decreased by $4,000

B Assets must have decreased by $4,000, or stockholders' equity must have increased by $4,000

C Assets and stockholders' equity each increased by $2,000

D Assets must have increased by $4,000

Q16 . Which of the following is an inventory system?

A LIFO

B Perpetual

C Weighted Average

D Gross Profit

Q17 . Most companies record revenue:

A During the production process

B When production is completed

C At the point of sale

D When cash is received for the sale

Q18 . On January 15, Nifty Company sells merchandise on account to Martinez Associates for $2,000 with terms 3/10, n/30. On January 20, Martinez returns merchandise worth $400 to Nifty. On January 24, payment is received from Martinez for the balance due. What is the amount of cash received?

A $1,600

B $1,552

C $1,540

D $1,120

Q19 . All of the following requirements about internal controls were enacted under the Sarbanes Oxley Act of 2002 except:

A Independent outside auditors must attest to the level of internal control

B Companies must develop sound internal controls over financial reporting

C Companies must continually assess the functionality of internal controls

D Independent outside auditors must eliminate redundant internal control

Q20 . Which one of the following represents the expanded basic accounting equation?

A Assets = Liabilities + Common Stock + Dividends - Revenue - Expenses

B Assets + Dividends + Expenses = Liabilities + Common Stock + Revenues

C Assets - Liabilities - Dividends = Common Stock + Revenue - Expenses

D Assets = Revenues + Expenses - Liabilities

Q21 . "Merchandise Inventory" is reported at lower-of-cost-market because of the accounting concept of:

A Matching

B Consistency

C Conservatism

D Materiality

Q22 . In theory, the reason that depreciation is record on fixed assets is because of:

A Revenue recognition