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1) Which financial statement is used to determine cash generated from operations?
1. Income statement
2. Statement of operations
3. Statement of cash flows
4. Retained earnings statement
2) In terms of sequence, in what order must the four basic financial statements be
prepared?
1. Balance sheet, income statement, statement of cash flows, and capital statement
2. Income statement, capital statement, statement of cash flows, and balance sheet
3. Balance sheet, capital statement, statement of cash flows, and income statement
4. Income statement, capital statement, balance sheet, and statement of cash
flows
3) In classifying transactions, which of the following is true in regard to assets?
1. Normal balances and increases are debits.
2. Normal balances and decreases are credits.
3. Normal balances can either be debits or credits for assets.
4. Normal balances are debits and increases can be debits or credits.
11) The Vintage Laundry Company purchased $6,500 worth of laundry supplies on June 2
and recorded the
purchase as an asset. On June 30, an inventory of the laundry supplies indicated only
$2,000 on hand. The adjusting
entry that should be made by the company on June 30 is
1. debit Laundry Expense, $2,000; credit Laundry Expense $2,000
2. debit Laundry Expense, $4,500; credit Laundry Supplies Expense, $4,500
3. debit Laundry Supplies, $2,000; credit Laundry Supplies Expense, $2,000
4. debit Laundry Supplies Expense, $4,500; credit Laundry Supplies, $4,500
12) Greese Company purchased office supplies costing $4,000 and debited Office Supplies
for the full amount. At the end of the accounting period, a physical count of office supplies
revealed $1,100 still on hand. The appropriate adjusting journal entry to be made at the end
of the period would be
1. debit Office Supplies Expense, $1,100; credit debit Office Supplies Expense
2. debit Office Supplies, $2,900; credit Office Supplies Expense, $2,900
3. debit Office Supplies Expense, $2,900; credit Office Supplies, $2,900
4. debit Office Supplies, $1,100; credit Office Supplies Expense, $1,100
13) Based on the account balance below, what is the total of the debit and credit columns of
the adjusted trial balance?
Service revenue$3,300 Equipment$6,400
Cash1,525 Prepaid insurance1,225
Unearned revenue5,320 Depreciation expense640
Salary1,050 Accum. depreciation1,280
Common stock390 Retained earnings550
1. $9,150
2. $10,840
3. $9,560
4. $10,430
14) An adjusted trial balance
1. is prepared after the financial statements are completed
2. proves the equality of the total debit balances and total credit balances of ledger
accounts after all adjustments have been made
3. is a required financial statement under generally accepted accounting principles
4. cannot be used to prepare financial statements
15) Given the following adjusted trial balance:
Debit Credit
Cash $781
Accounts receivable 1,049
Inventory 1,562
Prepaid rent 43
Property, plant & equipment 150
Accumulated depreciation 26
Accounts payable 41
Unearned revenue 61
Common stock 103
Retained earnings 3,305
20) During the year, Sarahs Pet Shops merchandise inventory decreased by $30,000. If the
companys cost of goods sold for the year was $450,000, purchases would have been
1. $480,000
2. $420,000
3. $390,000
4. Insufficient data to determine
21) At the beginning of the year, Wildcat Athletic had an inventory of $200,000. During the
year, the company purchased goods costing $700,000. If Wildcat Athletic reported ending
inventory of $300,000 and sales of $1,000,000, their cost of goods sold and gross profit rate
would be
1. $400,000 and 60%
2. $600,000 and 40%
3. $400,000 and 40%
4. $600,000 and 60%
22) The entry to record of sale of $900 with terms of 2/10, n/30 will include a
1. debit to Sales Discount for $18354 (This is not correct)
2. debit to Sales Revenue for $882
3. credit to Accounts Receivable for $900 (Probably correct)
4. credit to Sales Revenue for $900354 (This is not correct)
23) Dobler Company uses a periodic inventory system. Details for the inventory account for
the month of January 2012 are as follows:
Units Per unit price Total
Balance, 1/1/2012 200 $5.00 $1,000
Purchase, 1/15/2012 100 5.30 530
assumption?
1. $11,300
2. $12,000
3. $10,000
4. $10,700
27) A very small company would have the most difficulty in implementing which of the
following internal control activities?
1. Separation of duties
2. Limited access to assets
3. Periodic independent verification
4. Sound personnel procedures
28) A system of internal control
1. is infallible
2. can be rendered ineffective by employee collusion
3. invariably will have costs exceeding benefits
4. is premised on the concept of absolute assurance
29) The custodian of a company asset should
1. have access to the accounting record for that asset
2. be someone outside the company
3. not have access to the accounting record for that asset
4. be an accountant
30) The Sarbanes Oxley Act (2002) applies to