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                                Accounting Unit Test


Directions: Fill out each question with the best answer. Feel free to write on the test.


   1) If the merchandise is purchased for$1000 on August first, with terms of sale of
      2/10, n/30, then amount due to the vender on August 9 is

           a.   1000
           b.   990
           c.   980
           d.   20

   2) The journal entry for a cash receipt on account is

           a.   Debit Cash; credit Accounts Receivable
           b.   Debit Cash; credit Accounts Payable
           c.   Debit Accounts Payable; credit Cash
           d.   Debit Accounts Payable; credit Accounts Receivable

   3) When a customer is given a price reduction on an item (for example, a damaged
      item), the bookkeeper will use which one of the following accounts?

           a.   Purchase Allowance
           b.   Purchase Discount
           c.   Sales Discount
           d.   Sales Allowance

   4) To decrease the sales return and allowances account, the bookkeeper will

           a.   Credit the account
           b.   Debit the account
           c.   Both credit and debit the account
           d.   Use the Purchase Returns and Allowances account
5) When bankcard sales are entered in the general journal, what account is debited?

       a.   Bankcard Sales
       b.   Cash
       c.   Bankcard Sales Expense
       d.   Sales

6) If bankcard fees are automatically deducted from the checking account of a
   business. How will the bookkeeper journalize the fee?

       a. Capital account is increased by the amount of the fee
       b. Cash account is increased by the amount of the fee
       c. Bank Card Fees Expense is increased by the amount of the fee and Cash is
          decreased
       d. Cash account is increased by the amount of the fee and Bank Card Fees
          Expense is decreased

7) A business transaction that involves a purchase on account is considered to be
   a(n)
       a. Cash transaction
       b. Credit transaction
       c. Investment of the owner
       d. Expense transaction

8) A liability resulting form the purchase of goods or services on credit is usually
   recorded as

       a.   An account receivable
       b.   An account payable
       c.   A revenue
       d.   A reduction of equity
       e.   A net loss

9) If an invoice dated September 9 and received on September 12 shows terms of
   2/10 n/30, what is the last day that a discount may be taken?

        a. September 11
        b. September 19
        c. September 22
        d. October 9
        e.
10) A form prepared by the customer showing the price deducted taken by the
    customer for a return is a

       a.   Purchases Discount
       b.   Sales Return
       c.   Credit Memorandum
       d.   Debit Memorandum
11) True/False - A purchase journal is used to record purchases made on credit
    instead of with cash?


12) Name four commonly used special journals.


13) Describe the purpose of a special journal.


14) What is the purpose of a schedule of accounts receivable?


15) When is a sales journal used? (Hint: what two conditions have to be met?)


16) Define a footing.


17) List the steps to record transactions in the purchase journal.



18) What is the purpose of the schedule of accounts payable?



19) Describe the purpose of a cash payments journal.



20) Explain why it is important to prove cash.


21) The beginning balance of Pittsburgh Bottling Corporation’s Merchandise
    Inventory is $653,547.00 and at the end of the accounting period the physical
    inventory is taken and reveals $648,833.00 of merchandise on hand. What should
    be done at the end of the accounting period?
        a. Debit Merchandise Inventory for $4,714.00 and
                       1. Credit Income Summary for $4,714.00
        b. Debit Income Summary for $4,714.00 and
                       1. Credit Merchandise Inventory for $4,714.00
        c. Debit Purchases for $4,714.00 and
                       1. Credit Merchandise Inventory for $4,714.00
        d. No action is needed
22) The additional sections added to the Six-Column Work Sheet to form a Ten-
    Column Work Sheet are?

       a.   Income Statement and Balance Sheet
       b.   Adjusted Trial Balance and Cash Flow
       c.   Adjustments and Adjusted Trial Balance
       d.   Trial Balance and Adjusted Trial Balance

23) Every end-of-period adjustment

       a.   Affects at least one permanent account and one temporary account
       b.   Affects at least two temporary accounts
       c.   Reduces a company’s assets
       d.   Must be transferred to the Income Statement

24) On March 1 Red Spade Corporation rented an office for $8,700.00 for 6 months.
    On March 31, what adjustment needs to be made?

       a. Debit Prepaid Insurance for $1,450.00 and
          Credit Insurance Expense for $1,450.00
       b. Debit Insurance Expense for $8,700.00 and
          Credit Prepaid Insurance for $8,700.00
       c. Debit Insurance Expense for $1,450.00 and
          Credit Prepaid Insurance for $1,450.00
       d. Debit Prepaid Insurance for $8,700.00 and
          Credit Insurance Expense for $8,700.00

25) The beginning balance of US Lumber Corporation’s Merchandise Inventory is
    $512,363.00 and at the end of the accounting period the physical inventory is
    taken and reveals $533,472.00 of merchandise on hand. Which of the following
    is the correct ending adjustment in the General Journal?


                                                       Debit         Credit
            a. Merchandise Inventory                   $21,109.00
                   Income Summary                                    $21,109.00
            b. Income Summary                          $21,109.00
                   Merchandise Inventory                             $21,109.00
            c. Purchases                               $21,109.00
                   Merchandise Inventory                             $21,109.00
            d. Income Summary                          $21,109.00
                   Net Income                                        $21,109.00
26) Stockholders’ investments are recorded in what account?

       a.   Capital
       b.   Stockholders’ Funds
       c.   Capital Stock
       d.   Retained Earnings
27) The Gross Profit on Sales is:

       a.   The sales for the period less any discounts or allowances
       b.   The profit made before operating expenses are deducted
       c.   The company’s income before deducting corporate taxes
       d.   Unclean profits that must later be adjusted

28) The Income Statement relates directly to the Balance Sheet through the influence
    of Net Income on:

       a.   Cash
       b.   Dividends
       c.   Cash Flow
       d.   Retained Earning

29) Which of the following is NOT a section on the Statement of Cash Flows:

       a.   Cash Flows from Financing Activities
       b.   Cash Flows from Capital Activities
       c.   Cash Flows from Operating Activities
       d.   Cash Flows from Investing Activities

30) Comparing items on a financial statement for two or more base periods is called:

       a.   Horizontal Analysis
       b.   Vertical Analysis
       c.   Base Point Analysis
       d.   None of the above

31) To close the sum of the balances in the Credit column of the Income Statement
    section of the work sheet which includes revenue and contra cost of merchandise
    accounts

       a.   Debit income summary
       b.   Credit income summary
       c.   Debit capital stock
       d.   Credit capital stock

32) To close withdrawals to capital in a corporation

       a.   Debit withdrawals and credit income summary
       b.   Credit withdrawals and debit income summary
       c.   There is no entry for closing withdrawals in a corporation
       d.   Debit income summary and credit capital stock

33) When recording closing entries for a merchandising business organized as a
    corporation, there are

       a. Three closing entries
       b. Four closing entries
       c. Five closing entries
       d. No closing entries

34) The post-closing trial balance contains only the

       a.   Balance Sheet accounts
       b.   Income Statements accounts
       c.   Equity accounts
       d.   Temporary Capital accounts

35) After all closing entries are posted

       a.   Income equals expenses
       b.   All permanent accounts have been closed to retained earnings
       c.   A post-closing trial balance in prepared
       d.   Income is greater than expenses

36) If a corporation issues only one class of stock it is called?

       a.   common
       b.   preferred
       c.   class A
       d.   stock

37) Corporations have several unique features, which are

       a. Legal permission to operate, separate legal entity and stockholders
       b. Separate legal entity, stockholders, board of directors and legal team
       c. Board of directors, stockholders, legal permission to operate, and separate
          legal entity
       d. Presidential advisors, legal permission to operate, stockholders, and a
          board of directors

38) If a corporation declared a $2 per share dividend, the accounts affected would be

       a.   Cash in Bank and Dividends
       b.   Common stock and Dividends
       c.   Cash in Bank and Dividends Payable
       d.   Dividends and Dividends Payable

39) Dividends

       a.   Increase retained earnings
       b.   Reduce retained earnings
       c.   Have no affect on retained earnings
       d.   Are paid preferred stockholders who vote prior to common stockholders

40) The statement of stockholder’ equity shows

       a. The changes in retained earnings for the period
b. The investments made in the company by its shareholders and net income
c. Changes in total assets held
d. Changes in total assets held, net income and retained earnings

				
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