1. Which of the following entities would not require accounting information pertaining to their economic activities? Social Clubs, Not for profit, State government, all require accounting info, or none of above 2. Which of the following are qualified to express an auditor’s opinion about entity financial statements? A comptroller, certified management account, certified internal auditor, or certified public accountant 3. An unqualified auditors opinion about an entity’s financial statements: is a clean bill of health, means that all of the entity’s transactions during the audited period were checked out, guarantees that the entity was not involved in or the victim of any fraudulent activities during the audited period, or states that they are presented in conformance with generally accepted accounting principles. 4. Which of the following is not a principal form of business organization? Partnership, Sole proprietorship, limited unregistered business, corporation, or none of these 5.The income statement shows amounts for: revenues, expenses, losses, and liabilities; revenues, expenses, gains, and market value per share; revenues, assets, gains, and losses; revenues, gains, expenses, and losses 6. Paid in Capital represents: Earnings retained for use in the business, the amount invested in the entity by the owners, market value of the entity’s common stock. Net assets of the entity at the date of the statement 7. Retained Earnings represents; the amount invested in the entity by the owners, cash that is available for dividends, cumulative net income that has not been distributed to owners as dividends, par value of common stock outstanding 8. In an advertiser’s records, a newspaper ad submitted and published this week with the agreement to pay for it next week would: decrease assets and decrease expenses, increase liabilities and increase expenses, decrease assets and increase revenues, or increase assets and decrease liabilities 9. In the buyer’s record, the purchaser of merchandise on account would: Increase assets and increase expenses, increase assets and increase liabilities, increase liabilities and increase paid in capital, or have no effect on total assets. 10. A debit entry will: decrease an asset account, increase a liability account, increase paid in capital, of increase an expense account 11. A credit entry will: Increase an asset account, increase a liability account, increase paid in capital, or increase an expense account 12 A credit entry to an account will: always decrease the account balance, always increase the account balance, increase the balance of a revenue account, or increase the balance of an expense account 13. A debit entry to an account will: always decrease the account balance, always increase the account balance, increase the balance of a revenue account, or increase the balance of an expense account 14. If an organization purchases $700 of supplies on account, with terms of 2/15 or n50: $650 must be paid within 15days of the invoice date, $698 must be paid within 50 days of the invoice date, $686 can be paid within 15days of eh invoice date, or $700 must be paid within 50 days of the invoice date, $686 can be paid within 15 days of the invoice date, or $741 must be paid within 50 days of the invoice date. 15. An accounts receivable results from the sale of: Property, plant and equipment for cash, goods and services to customers on account, goods and services to customers for cash, or the firm’s common stock 16. The principal reason for converting a customer’s account receivable to a note receivable is: the note receivable earns interest and the account receivable does not, the receivable is less likely to have to be written off as uncollectible, working capital is immediately increased, or the customer is more likely to continue purchasing the company’s products. 17. Long lived, intangible assets such as leasehold improvements, patents, and copyrights are all subject to: depreciation, amortization, depletion, or consolidation 18. Cassady, Inc. borrowed $5,000 for 3 months at an APR of 10%. The amount of interest paid on this loan was $240, $120, $125, or $500 19. Orpah Inc, borrowed $12,000 for 4 months on a discount basis. The lender used the interest rate of 8% to calculate the discount. The amount of cash Orpah, Inc actually had available to use from this loan was $11,040, $11680, $12,000, or $12,320 20. Which of the following is not an owner’s equity account? Common stock, capital stock, retained earnings, noncontrolling interests, or paid in capital in excess of par. 21. The annual per share dividend requirement of a 6% par value preferred stock that was issued for $85 is $4.80, $5.10, $6.00, or $8.00 22. The number of shares of a class of stock that are outstanding is: the number of shares authorized minus the number of shares issued, the number of shares authorized minus the number of shares held in the treasury, or number of shares issued minus the number of shares owned by directors. 23. The term preemptive rights pertain to which of the following? The board of directors rights to liquidation, present shareholders right to purchase shares from any additional share issuance, present shareholders right to purchase treasury shares when reissued, of preferred stockholders right to dividends 24. The declaration date pertains to: the date used to determine who receives the dividends, the date on which the board of directors declares it’s going to liquidate the firm, the date on which the board of directors declares a dividend, or date a dividend is paid 25. Fred Jones owns 56 shares of the Robust Corp stock. Robust announces a 3 for 2 stock split. How many shares will Fred have after this split? 178 shares, 112 shares, 84 shares, or 56 shares 26. Baco has 40,000 shares of $100 par value common stock outstanding and 10,000 shares in the treasury. The number of additional shares that would be issued in a 5% stock dividend is 500, 1,000, 1,500, or 2, 500 27. The principle reason for a company having a common stock split is to: increase the total cash dividends paid to stockholders, capitalize retained earnings, decrease total owner’s equity, or decrease the market value per share of common stock. 28. Which of the following accounts are not included in the calculation for Gross Profit? Revenue, cost of goods sold, net sales, or general and selling expenses 29. Under most circumstances, in order to recognize revenue: cash must have been received, the entity must expect to receive cash in the future, the entity must have paid for all expenses incurred in generating the revenue, or revenue must be realized or realizable, and earned. 30. Most entities satisfy the accounting criteria for recognizing revenue when: an order is received from a customer, cash is received from a customer, an unearned revenue account is credited, or a product is delivered or a service is provided. 31. Most entities satisfy the accounting criteria for recognizing an expense when: a commitment is made to purchase a product or service, cash is paid to a supplier, a cost is incurred in the revenue generating process, or a dividend is paid to stockholders 32. An item that cost $90 is sold for $120. The gross profit ratio for this item is: 20%, 25%, 33.3% or 60% 33. In the statement of cash flows, the amount of depreciation and amortization expense is added back to net income because: the expenses do not affect cash, but were subtracted in the determination of net income, these expenses affect investing activities, not operating activities, the cash disbursements for these accrued expenses will be made in a future period, or these expenses are recognized for accounting purposes, but they do not represent economic costx.
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