GB 518 Unit 1 Quiz Updated

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GB 518 Week 1 Quiz Updated

GB 518 Quiz 1

GB518 Financial Accounting Principles and Analysis

Question : If equity is $300,000 and liabilities are $192,000, then assets equal:

Question 2. Question : If assets are $99,000 and liabilities are $32,000, then equity equals:

Question 3. Question : Reebok had income of $150 million and average assets of $1,800 million. Its return on assets is:

Question 4. Question : Unearned revenues are:

Revenues that have been earned and received in cash

Revenues that have been earned but not yet collected in cash

Liabilities created when a customer pays in advance for products or services before the revenue is earned

Recorded as an asset in the accounting records

Increases to retained earnings

Question 5. Question : Technological advancement

Has replaced accounting

Has not changed the work that accountants do

Has freed accounting professionals to concentrate more on the analysis and interpretation of information

In accounting has replaced the need for decision makers

In accounting is only available to large corporations

Question 6. Question : Of the following accounts, the one that normally has a credit balance is:

Cash

Office Equipment

Sales Salaries Payable

Dividends

Sales Salaries Expense

Question 7. Question : Net Income:

Decreases equity

Represents the amount of assets owners put into a business

Equals assets minus liabilities

Is the excess of revenues over expenses

Represents the owners’ claims against assets

Question 8. Question : Internal users of accounting information include:

Shareholders

Customers

Creditors

Government regulators

Line Supervisor

Question 9. Question : A company has twice as much owner’s equity as it does liabilities. If total liabilities are $50,000, what amounts of assets are owned by the company?

$50,000

$100,000

$150,000

$200,000

Question 10. Question : A credit is used to record:

An increase in an expense account

An increase in an asset account

An increase in an unearned revenue account

A decrease in a revenue account

A decrease to retained earnings

Question 11. Question : Apatha Company has assets of $600,000, liabilities of $250,000 and equity of $350,000. It buys office equipment on credit for $75,000. The effects of this transaction include:

Assets increase by $75,000 and expenses increase by $75,000

Assets increase by $75,000 and expenses decrease by $75,000

Liabilities increase by $75,000 and expenses decrease by $75,000

Assets decrease by $75,000 and expenses decrease by $75,000

Assets increase by $75,000 and liabilities increase by $75,000

Question 12. Question : The principle that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash and (3) measures the amount of revenue as the cash plus the cash equivalent value of any non-cash assets received from customers in exchange for goods or services is called the:

Going-concern principle

Cost principle

Revenue recognition principle

Objectivity principle

Business entity principle

Question 13. Question : Which of the following is the primary purpose of accounting?

To establish a business

To identify, record and communicate business transactions

To deceive stockholders

To keep from paying taxes

To establish credit for a company

Question 14. Question : Assets created by selling goods and services on credit are:

Accounts payable

Accounts receivable

Liabilities

Expenses

Question 15. Question : Double-entry accounting is an accounting system:

That records each transaction twice

That records the effects of transactions and other events in at least two accounts with equal debits and credits

In which the impact of each transaction is recorded in two or more accounts but that could include two debits and no credits

That may only be used if T-accounts are used

That insures that errors never occur

Question 16. Question : An example of a financing activity is:

Buying office supplies

Obtaining a long-term loan

Buying office equipment

Selling inventory

Buying land

Question 17. Question : A debit is:

An increase in an account

The right-hand side of a T-account

A decrease in an account

The left-hand side of a T-account

An increase to a liability account

Question 18. Question : Risk is:

Net income divided by average total assets

The reward for investment

The uncertainty about the expected return that will be earned from an investment

Unrelated to expected return

Question 19. Question : Which of the following statements best describes the relationship of U.S. GAAP and IFRS?

They are identical

They are entirely different conceptual frameworks

They are similar but not identical

Neither has anything to do with accounting

They both relate only to publicly traded companies

Question 20. Question : Source documents include all of the following except:

Sales tickets

Ledgers

Checks

Purchase orders

Bank statements

Question 21. Question : Stride Rite has total assets of $425 million. Its total liabilities are $110 million. Its equity is $315 million. Calculate the debt ratio.

38.6%

13.4%

34.9%

25.9%

14.9%

Question 22. Question : An asset created by prepayment of an expense is:

Recorded as a debit to an unearned revenue account

Recorded as a debit to a prepaid expense account

Recorded as a credit to an unearned revenue account

Recorded as a credit to a prepaid expense account

Not recorded in the accounting records until the earnings process is complete

Question 23. Question : Increases in retained earnings from a company’s earnings activities are:

Assets

Revenues

Liabilities

Stockholder’s Equity

Expenses

Question 24. Question : Which of the following accounting principles dictates when expenses are recognized?

Revenue recognition principle

Monetary unit principle

Business entity principle

Matching principle

Full disclosure principle

Question 25. Question : Prepaid expenses are:

Payments made for products and services that do not ever expire

Classified as liabilities on the balance sheet

Decreases in retained earnings

Assets that represent prepayments of future expenses

Promises of payments by customers

GB 518 Unit 2 Quiz Updated

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GB 518 Unit 2 Quiz Updated

GB 518 Quiz 2

GB518 Financial Accounting Principles and Analysis

1. Question : Financial statements are typically prepared in the following order:

Balance sheet, statement of retained earnings, income statement

Statement of retained earnings, balance sheet, income statement

Income statement, balance sheet, statement of retained earnings

Income statement, statement of retained earnings, balance sheet

Question 2. Question : A 10-column spreadsheet used to draft a company’s unadjusted trial balance, adjusting entries, adjusted trial balance and financial statements and which is an optional tool in the accounting process is a(n):

Adjusted trial balance

Work sheet

Post-closing trial balance

Unadjusted trial balance

General ledger

Question 3. Question : The Retained Earnings account has a credit balance of $17,000 before closing entries are made. If total revenues for the period are $55,200, total expenses are $39,800 and dividends are $9,000, what is the ending balance in the Retained Earnings account after all closing entries are made?

Question 4. Question : A company earned $2,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:

Question 5. Question : A company pays each of its two office employees each Friday at the rate of $100 per day each for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is:

Debit Unpaid Salaries $600 and credit Salaries Payable $600

Debit Salaries Expense $400 and credit Salaries Payable $400

Debit Salaries Expense $600 and credit Salaries Payable $600

Debit Salaries Payable $400 and credit Salaries Expense $400

Question 6. Question : A company’s Office Supplies account shows a beginning balance of $600 and an ending balance of $400. If office supplies expense for the year is $3,100, what amount of office supplies was purchased during the period?

Question 7. Question : A company had no office supplies available at the beginning of the year. During the year, the company purchased $250 worth of office supplies. On December 31, $75 worth of office supplies remained. How much should the company report as office supplies expense for the year?

Question 8. Question : An account linked with another account that has an opposite normal balance and that is subtracted from the balance of the related account is a(n):

Question 9. Question : The Income Summary account is used:

To adjust and update asset and liability accounts

To close the revenue and expense accounts

To determine the appropriate dividend amount

In some situations to replace the income statement

To replace the retained earnings account in some businesses

Question 10. Question : The accrual basis of accounting:

Is generally accepted for external reporting since it is more useful for most business decisions

Is flawed because it gives complete information about cash flows

Recognizes revenues when received in cash

Recognizes expenses when paid in cash

Eliminates the need for adjusting entries at the end of each period

Question 11. Question : On April 1, 2011, a company paid the $1,350 premium on a three-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the year ended December 31, 2011?

Question 12. Question : The main purpose of adjusting entries is to:

Record external transactions and events

Record internal transactions and events

Recognize assets purchased during the period

Recognize debts paid during the period

Correct errors

Question 13. Question : Unearned revenue is reported on the financial statements as:

A revenue on the balance sheet

A liability on the balance sheet

An unearned revenue on the income statement

An asset on the balance sheet

An operating activity on the statement of cash flows

Question 14. Question : The length of time covered by a set of periodic financial statements is referred to as the:

Fiscal cycle

Natural business year

Accounting period

Business cycle

Operating cycle

Question 15. Question : On April 30, 2011, a three-year insurance policy was purchased for $18,000 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company’s income statement for the year ended December 31, 2011?

$500

$4,000

$6,000

$14,000

$18,000

Question 16. Question : Based on the following information, what would be the beginning balance in the Retained Earnings Account, assuming all accounts have a normal balance?

Cash $ 6,754 Dividends $ 2,000

Accounts receivable $ 13,733 Consulting fees earned $ 13,718

Office supplies $ 2,625 Rent expense $ 3,673

Land $ 37,153 Salaries expense $ 6,642

Office equipment $ 14,535 Telephone expense $ 560

Accounts payable $ 6,463 Miscellaneous expense $ 280

Common stock $ 54,490 Retained Earnings ?

Question 17. Question : Which of the following statements is incorrect?

An income statement reports revenues earned less expenses incurred

An unadjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments

Interim financial reports can be based on one-month or three-month accounting periods

Property, plant and equipment are referred to as plant assets

Question 18. Question : On January 1, Able Company purchased equipment costing $135,000 with an estimated salvage value of $10,500, and an estimated useful life of five years. What is the amount that should be recorded as depreciation on December 31?

Question 19. Question : A classified balance sheet:

Measures a company’s ability to pay its bills on time

Organizes assets and liabilities into important subgroups

Presents revenues, expenses and net income

Reports operating, investing and financing activities

Reports the effect of profit and dividends on retained earnings

Question 20. Question : The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the retained earnings account is the:

Income Summary account

Closing account

Balance column account

Contra account

Question 21. Question : The difference between the cost of an asset and the accumulated depreciation for that asset is called

Depreciation Expense

Unearned Depreciation

Prepaid Depreciation

Depreciation Value

Book Value

Question 22. Question : Based on the following information, determine the current assets, assuming all accounts have a normal balance?

Cash $ 6,754 Dividends $ 2,000

Accounts receivable $ 13,733 Consulting fees earned $ 13,718

Office supplies $ 2,625 Rent expense $ 3,673

Land $ 37,153 Salaries expense $ 6,642

Office equipment $ 14,535 Telephone expense $ 560

Accounts payable $ 6,463 Miscellaneous expense $ 280

Common stock $ 54,490 Retained Earnings ?

Question 23. Question : On June 30, 2011, Apricot Co. paid $5,000 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment.

The adjusting entry on December 31, 2011 for Apricot would include:

A debit to an expense for $1,250

A debit to a prepaid expense for $1,250

A credit to an expense for $3,750

A debit to a prepaid expense for $3,750

A credit to a liability for $1,250

Question 24. Question : On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:

Debit Prepaid Insurance, $1,800; credit Cash, $1,800

Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440

Debit Prepaid Insurance, $360; credit Insurance Expense, $360

Debit Insurance Expense, $360; credit Prepaid Insurance, $360

Debit Insurance Expense, $360; credit Prepaid Insurance, $1,440

Question 25. Question : The adjusted trial balance contains information pertaining to:

Asset accounts only

Balance sheet accounts only

Income statement accounts only

All general ledger accounts

Revenue accounts only

GB 518 Unit 4 Quiz Updated

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GB 518 Unit 4 Quiz Updated

GB518 Financial Accounting Principles and Analysis

1. Question : A depreciation method that produces larger depreciation expense during the early years of an asset’s life and smaller expense in the later years is a(n):

Accelerated depreciation method

Book value depreciation method

Straight-line depreciation method

Units-of-production depreciation method

Unrealized depreciation method

Question 2. Question : A 90-day note issued on April 20 has a maturity date of:

July 17

July 18

July 19

July 20

July 21

Question 3. Question : The buyer who pays cash for an account receivable referred to as a:

Payor

Pledgor

Factor

Payee

Pledgee

Question 4. Question : The maturity date of a note receivable:

Is the day of the credit sale

Is the day the note was signed

Is the day the note is due to be paid

Is the date of the first payment

Is the last day of the month

Question 5. Question : Cardco Inc. has an annual accounting period which ends on December 31. During the current year a depreciable asset which cost $42,000 was purchased on September 2. The asset has a $4,000 estimated salvage value. The company uses straight-line depreciation and expects the asset to have a 5 year life. What is the total depreciation expense for the current year?

$1,900.00

$7,600.00

$2,533.33

$2,800.00

$3,166.67

Question 6. Question : A copyright:

Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years

Is an exclusive right granted to its owner to manufacture and sell a device or to use a process for 17 years

Is an exclusive right granted to its owner to manufacture and sell a device or to use a process for 50 years

Is the amount by which the value of a company exceeds the fair market value of a company’s net assets if purchased separately

Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 17 years

Question 7. Question : The interest accrued on $3,600 at 7% for 60 days is:

$36

$42

$252

$180

$420

Question 8. Question : A machine originally had an estimated useful life of 5 years, but after 3 complete years, it was decided that the original estimate of useful life should have been 10 years. At that point the remaining cost to be depreciated should be allocated over the remaining:

2 years

5 years

7 years

8 years

10 years

Question 9. Question : Obsolescence:

Occurs when an asset is at the end of its useful life

Refers to a plant asset that is no longer useful in producing goods and services

Refers to the insufficient capacity of a company’s plant assets to meet the company’s productive demands

Occurs when an asset’s salvage value is less than its replacement cost

Does not affect plant assets

Question 10. Question : Pepsi’s accounts receivable turnover was 9.9 for this year and 11.0 for last year. Coke’s turnover was 9.3 for this year and 9.3 for last year. These results imply that:

Coke has the better turnover for both years

Pepsi has the better turnover for both years

Coke’s turnover is improving

Coke’s credit policies are too loose

Coke is collecting its receivables more quickly than Pepsi in both years

Question 11. Question : A company had average total assets of $897,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company’s total asset turnover is equal to:

0.82

0.90

1.09

1.11

1.26

Question 12. Question : A company purchased a delivery van for $23,000 with a salvage value of $3,000 on September 1, 2010. It has an estimated useful life of 5 years. Using the straight-line method, how much depreciation expense should the company recognize on December 31, 2010?

$1,000

$1,333

$1,533

$4,000

$4,600

Question 13. Question : A credit sale of $2,500 to a customer would result in:

A debit to the Accounts Receivable account in the general ledger and a debit to the customer’s account in the accounts receivable ledger

A credit to the Accounts Receivable account in the general ledger and a credit to the customer’s account in the accounts receivable ledger

A debit to the Accounts Receivable account in the general ledger and a credit to the customer’s account in the accounts receivable ledger

A credit to the Accounts Receivable account in the general ledger and a debit to the customer’s account in the accounts receivable ledger

A credit to Sales and a credit to the customer’s account in the accounts receivable ledger

Question 14. Question : Amortization:

Is the systematic allocation of the cost of an intangible asset to expense over its estimated useful life

Is the process of allocating to expense the cost of a plant asset to the accounting periods benefiting from its use

Is the process of allocating the cost of natural resources to periods when they are consumed

Is an accelerated form of expensing an asset’s cost

Is the same as depletion

Question 15. Question : A company’s annual accounting period ends on September 30. During the current year a depreciable asset which cost $16,000 was purchased on January 1. The asset has a $2,000 estimated salvage value. The company uses straight-line depreciation and expects the asset to have a 4-year life. What is the total depreciation expense for the current year?

$4,000

$3,000

$3,500

$2,625

$875

Question 16. Question : On December 31, 2010, Stable Company sold a piece of equipment that was purchased on January 1, 2005. The equipment originally cost $820,000 and has an estimated useful life of eight years. Stable uses the straight-line method of depreciation. What is the gain/loss on the sale of equipment that Stable will recognize if the equipment was sold for $230,000?

$230,000 Gain

$25,000 Loss

$25,000 Gain

$73,750 Gain

. $0; no gain or loss

Question 17. Question : Cardco Inc. has an annual accounting period which ends on December 31. During the current year a depreciable asset which cost $42,000 was purchased on September 2. The asset has a $4,000 estimated salvage value. The company uses straight-line depreciation and expects the asset to have a 5 year life. What is the total depreciation expense for the current year?

$1,900.00

$7,600.00

$2,533.33

$2,800.00

$3,166.67

Question 18. Question : Dell reported net sales of $8,739 million and average accounts receivable of $864 million. Its accounts receivable turnover is:

0.90

10.1

36.1

50.0

3,686

Question 19. Question : Depreciation:

Measures the decline in market value of an asset

Measures physical deterioration of an asset

Is the process of allocating to expense the cost of a plant asset

Is an outflow of cash from the use of a plant asset

Is applied to land

Question 20. Question : Plant assets are:

Tangible assets used in the operation of a business that have a useful life of more than one accounting period

Current assets

Held for sale

Intangible assets used in the operations of a business that have a useful life of more than one accounting period

Tangible assets used in the operation of business that have a useful life of less than one accounting period

Question 21. Question : Many companies use accelerated depreciation in computing taxable income because:

It is required by the tax rules

It is required by financial reporting rules

It postpones tax payments until later years and the company can use the resources now to earn additional income before payment is due

Using it causes a company to use higher income in the early years of the asset’s useful life

The results are identical to straight-line depreciation

Question 22. Question : A company purchased a tract of land for its natural resources at a cost of $1,500,000. It expects to mine 2,000,000 tons of ore from this land. The salvage value of the land is expected to be $250,000. The depletion expense per ton of ore is:

$0.75

$0.625

$0.875

$6.00

$8.00

Question 23. Question : A promissory note received from a customer in exchange for an account receivable:

Is a cash equivalent for the recipient

Is an account receivable for the recipient

Is a note receivable for the recipient

Is a short-term investment for the recipient

Is a note payable for the recipient

Question 24. Question : The matching principle requires:

That expenses be ignored if their effect on the financial statements are less important than revenues to the financial statement user

The use of the direct write-off method for bad debts

The use of the allowance method of accounting for bad debts

That bad debts be disclosed in the financial statements

That bad debts not be written off

Question 25. Question : Extraordinary repairs:

Are revenue expenditures

Extend an asset’s useful life beyond its original estimate

Are credited to accumulated depreciation

Are additional costs of plant assets that do not materially increase the asset’s life

Are expensed as incurred