MCQ FMS FINANCIAL ACCOUNTING- 2011 1) All of the following are examples of internal users except: A) Board of directors

s (B) Line Supervisors (C) Stockholders (D) Chief financial officer 2) Interim Financial statements may be prepared for A) 1 year (B) less than 1 year (C) Ten years (D) 53 week period 3) Which of the following is NOT a basic function of an accounting system: A) To interpret and record the effects of a business transactions.(B) To classify the effects of similar transactions in a manner that permits determination of various totals and sub totals useful to management(C) to ensure that a business organization will be managed profitably (D) To summarize and communicate information to decision maker 4) The left-hand side of an account is used in recording debits, and the right hand side is used for recording credits in: A) asset accounts only (B) liability accounts only (C) both asset and liability accounts (D) neither asset nor liability accounts 5) A statement of cash flow depicts the way profits have changed during a designated period A)True (B) False 6)The accounting principle that assumes that a company will operate in the foreseeable future is: A)Going concern (B) Objectivity (C) Liquidity (D) Disclosure 7)Limited liability means that the owners of a business are only liable for the debts of the business up to the amount they can afford A)True (B) False 8) Retained earning appears on: A)The income statement (B) balance sheet (C) statement of cash flow (D) all three statement 9) Metropole Corporation recently borrow $35,000 cash from its bank. Which of the following was unaffected by this transaction. A) assets(B) Liabilities (C) Owners equity (D) cash 10) Asset must always have physical characteristics such as building machinery or inventory A) True (B) False 11) Each year the accountant for the Regal Real Estate Company adjusts the recorded value of each asset to its market value. Using these market value figures om the balance sheet violate: A) accountant equation (B) stable-dollar assumption (C) business entity concept (D) cost principle 12) The principle that states revenue should be recognized at the time goods are sold or service rendered is called. A)adequate disclosure (B) Conservatism (C) Matching (D) Revenue realization 13)Transaction are recorded in the journal in: A) numerical order(B) chronological order (C) account number order (D) Financial statement order 1

14) The accrual basis of accounting recognizes expenses only when they are paid (A) True (B) False The following transaction occurred during May, The first month of operation for Braun Products INC. *Issued 50,000 shares of capital stock to the owners of the corporation in exchange for $600,000 cash * Purchase a piece of land for $400,000, making a $150,000 cash down payment and signing a note payable for the balance. * Made a $60,000 cash payment on the note payable from the purchase of the land. * Purchase equipment on credit from LLT Inc. for $63,000 15) Refer to the above data What is the balance in the cash account at the end of May. A) $210,000 (B) $390,000 (C) $600,000 (D) $ 810,000 16) Refer to the above data. What is the total of Braun Products liabilities at the end of May A) $253,000 (B) $190,000 (C) $63,000 (D) $313,000 17) Rosas Pizza Restaurant makes a full payment of $8,300 on an account payable to Caesars Cheese Co. Caesar would record this transaction with a: A)Debit to accounts payment for $8,300 (B) credit to cash for $8,300 (C) credit to accounts receivable for $8,300 (D) credit to account payable for $8,300 The following entry appears in Tri-Country general journal on March 10, 2005 Accounts Receivable .25,000 Cash .11,000 Equipment .36,000 Refer to the data above This transaction involves: A) Tri-Country collection of $25,000 on an account receivable (B) Payment of $11,000 cash by Tri-Country (C) An $11,000 overall increase in Tri-Country assets (D)Sales of equipment by Tri-Country fo $36,000 Water Saver report these account balance at December 31,2005 Accounts Payable..$70,000 Land.$180,000 Note Payable.$ 240,000 Equipment.. $140,000 Cash $90,000 Accounts Receivable.$30,000 Building$220,000 Capital Stock..$300,000 Retained Earning $50,000 18) Refer to the above data. In a trail balance prepare ay December 31, 2005 the total of the debit column is A)$660,000 (B) $1,370,000 (C) $640,000 (D) $360,000 19) Refer to the above data. In a trail balance prepare ay December 31, 2005 the total liabilities are: A) $290,000 (B) $310,000 (C) $200,000 (D) $50,000 2

20) Materiality is a well define concept and is not a matter of professional judgment A)True (B) False. 21) Which of the following would not be a proper application of the concept of materiality by central corporation A) Transaction involving small dollar amount are not recorded in Central accounting records(B) Estimates the supplies on hand are used to determine the supplies expense for the period (C) On a monthly basis, utility bills are expensed in the month paid rather than in the month in which services are used (D) Immaterial items are ignored in making end of the period adjusting entries. 22) If an asset is purchase on 1 January 2001 for $60,000 with an estimated life of 5 years, what is the accumulated depreciation at December 31, 2004? A)$12,000 (B) $48,000 (C) $24,000 (D) $36,000 23) Adjusting entries are needed whenever transaction affect the revenue or expense of more than one accounting period A) True (B) False 24) Little Tots Co. began providing day care for the children of employees of a large corporation of large on January 15 for an agreed monthly fee of $6,000 . The first payment is to be received on Feb15 . The adjusting entry required by little Tot Co .on 31 Jan Includes A) credit to child care fees earned of $3,000 (B) debit to child care fees receivable of $6,000 (C) debit to Unread child care Revenue of $3,000 (D) debit to fees receivable of $6,000 25) Which of the following is not an example of adjusting entry ? A) To record unpaid expenses (B) To record uncollected revenues (C) To convert liabilities to revenue (D) To pay outstanding bills 26) The need for adjusting entries result from timing difference between the receipt or disbursement of cash and the dates on the financial statements. A) True (B) False 27) Working capital equal current assets divided by current liabilities A) True (B) False 28) The Retained Earning statement is based upon which of the following relationship A) Retained Earning-net Income Dividends (B) ) Retained Earning-net Income +Dividends (C) Retained Earning+ net Income +Dividends (D) Retained Earning + net Income Dividends 29) Net income from income statement appears on: A) The balance sheet (B) The retained earning statement(C) Neither the balance sheet nor the retainer earning (D) Both the balance sheet and the retained earning statement 30) The following information is available Sale..$300,000 Net Income ..$15,000 Retained Earning..$30,000 Avg. Stockholders Equity $100,000 Dividends.$5,000 3

What is the return on equity A) 5% (B) 20% (C) 25% (D) 15% 31) If current assets are $140,000 and the current liabilities are $100,000, the current ratio will be A) 71% (B) $40,000 (C) 1:4:1 (D) $240,000 32) The net income % can be measured by dividing net income by the total revenue. A) True (B) False 33) In the notes to financial statements adequate disclosure would typically not include: A)The accounting method in use(B)Lawsuit pending against the business (C) Due dates of major liabilities(D) The optimism of the CFO regarding future profits 34)Dividends are reported on the income statement as an expense ? A) True (B )False 35) Assets are considered current assets if they are cash or will usually be converted into cash: A) within a month or less(B) within 3 months (C) within a year or less (D) within 6 months or less 36)A _________ is used to summarize the operating results of a business by matching the revenue earned during a given period of time with the expenses incurred in generating that revenue. A)Balance Sheet (B) Statement of retained earning (C)Income statement (D) Adjusted trail balance