1. The accountant failed to make the adjusting entry to record the amount of insterest owed on a note to the bank at the end of the year. This error would cause an overstatement of:

A) assets B) expenses C) liabilities D) owners equity

2. Changes in the seperate stockholders' equity accounts can be disclosed in all of the following ways, except

A) financial statement B) a note to the financial statements C) a parenthetical remark D) a supporting schedule

3. Cash control systems are the methods and prodcedures used to ensure

A) the current obligations are met B) that excess cash does not exist C) the safeguarding of cash D that unused cash is invested

4. The steven co. sells $50,000 of accounts receivables to a factor and receives 92% of the value of the factored accounts less a 10% commission based on the gross amount of factored accounts receivable. After the journal entry to record this factoring transaction is made, Steven Co.'s total asset will be

A) reduced by $4000 B) Reduced by $5000 C) Reduced by $9000 D) increased by $41,000

5. Which one of the following types of costs is most likely to be included in determine the cost of inventory?

A) freight-in costs B) freight-out costs C) interest cost for amounts borrowed to finance the purchase of inventory D) Marketing costs

6. What is the effect on net income if a company fails to record a purchase in transit (FOB shipping point) and also fails to include the purchase in phyical invnetory?

A) income is overstated B) Income is understated C) income is correct D) Not enough information is provided to determine the answere

7. Which of the following is not one of the characteristics of effective writing as determined by the AICPA?

A/ Conciseness B. Use of standard English C. Reasonableness D) Responsiveness to the requirements