1) Carins Corporation purchased inventory for $4,000. Due to an error in recording the journal entry for this transaction, the inventory account was debited for only $400 while accounts payable was credited for $4,000. During which phase of the accounting cycle would this error be discovered?

a) Recording the transaction in the journal.

b) Preparation of the financial statements.

c) Analysis of each transaction.

d) Preparation of the trial balance.

e) Preparation of the consolidated analysis.

2) Failure to make an adjusting entry to recognise accrued salaries payable would cause an:

a) Understatement of expenses, liabilities and shareholders equity.

b) Overstatement of expenses and liabilities.

c) Understatement of expenses and liabilities and an overstatement of shareholders equity.

d) Understatement of assets and shareholders equity.

e) Overstatement of expenses and shareholders equity.

3) The primary basis for the classification of assets in the (balance sheet) statement of financial position) is:

a) Alphabetical

b) Profitability

c) Risk

d) Size

e) Liquidity

4) The books of Fiona Corporation provided the following information:

Beginning balances:

- Accounts receivable $50 000

- Allowances for doubtful accounts (a credit) 3 000

- Transactions during the year:

- Sales revenue (of which 1/2 were on credit) 3 000 000

Collections on accounts receivable- 980 000

Accounts written off as uncollectible 4 000

Past collection experience has indicated that 1% of credit sales normally are not collected. Therefore, an adjusting entry for bad debt expense should be made in the amount of:

a. $47,000

b. $20,000

c $15 000

d. $7,000

e. $1500

5) Which of the following statements is CORRECT?

a) Accounting data produced in different accounting periods is still comparable if indiscriminate changes in accounting method are permitted.

b) Consistency becomes an important consideration when alternative accounting methods are considered acceptable in a given situation.

c) Consistency completely rules out switching to an alternative acceptable method.

d) Once an inventory costing method has been selected, managements can indiscriminately switch to another.

e) All of the above

6) Which principle may conflict with the guidance provided by the relevance principle in the preparation of the financial statements?

a) Matching principle

b) Entity principle

c) Valuation principle

d) Reliability principle

e) None of the above

7)The purpose of an independent external audit of financial statements is to:

a) Predict future financial performance and expected returns.

b) Decide on the final numbers to report in financial statements.

c) Ensure a business is compliant with tax obligations.

d) Verify financial statements are compliant

e) Analyse current worth of business

8)When you receive payment for goods you previously sold on credit:

a) assets increase

b) revenues increase

c) liabilities decrease

d) expenses increase

e) none of the above

9) Raechelss books purchased supplies at a cost of $23,000 during 2012. At January 1, 2012, supplies on hand were $2,200. At December 31, 2012, supplies on hand are $3,100. Calculate supplies expense for 2012:

a) $25,200

b) $22,100

c) $23,900

d) $28,100

e) There is insufficient information to calculate expenses.

An events coordinator purchases $76,000 of supplies, paying 50% cash and putting 50% on credit. The correct jornal entry for this transaction would be:

a) Debit Cash at Bank, Debit Supplies Payable, Credit Supplies.

b) Debit Supplies, Credit Cash at Bank, Credit Supplies Payable.

c) Debit Supplies, Credit Cash at Bank.

d) Debit Supplies, Credit Supplies Payable.

e) Debit Cash at Bank, Debit Supplies Payable