1.Generally accepted accounting principles

Select one:

a. are sound in theory but rarely used in real life

b. gave eliminated all errors in accounting

c. are accounting rules formulated by the Internal Revenue Service

d. are accounting rules that are recognized as a general fuide for financial reporting

2. The two fundamental qualities of useful information are

Select one:

a. understandability and consistency

b. comparability and flexibility

c. relevance and faithful representation

d. verifiability and timeliness

3. An item is considered material if

Select one:

a. it does not costs a lot of money

b. it is of a tangible good

c. the cost of reporting the item is greater than its benefits

d. its size is likely to influence the decision of an investor or creditor

4. The economic entity assumption states that economic events

Select one:

a. of every entity can be separately identified and accounted for

b. must be reported to the Securities and Exchange Commission

c. of different entities can be combined if all the entities are corporations

d. of a sole proprietorship cannot be distinguished from the personal economic events of its owners

5. A revenue generally

Select one:

a. increases assets and decreases stockholders' equity

b. leaves total assets unchanged

c. increases assets and stockholders' equity

d. increases assets and liabilities

6. An expense

Select one:

a. decreases assets and liabilities

b. decreases stockholders' equity

c. leaves stockholders' equity unchanged

d. is basically the same as a liability

7. Howard Company had a transaction that caused a $5,000 increase in both assets and total liabilities. This transaction could have been a(n)

Select one:

a. repayment of a $5,000 bank loan

b. investment of $5,000 cash in the business by the stockholders

c. purchase of office equipment for $5,000 cash

d. purchase of office equipment for $12,000, paying $7,000 cash and issuing a note payable for the balance

8. At September 1, 2017, Kern Enterprises reported a cash balance of $140,000. During the month, Kern collected cash of $60,000 and made disbursements of $100,000. At September 30, 2017, the cash balance is

Select one:

a. $200,000

b. $100,000

c. $40,000

d. $180,000

9. Which one of the following is not an objective of a system of internal controls?

Select one:

a. Overstate liabilities in order to be conservative

b. Reduce the risks of errors

c. Safeguard company assets

d. Enhance the accuracy and reliability of accounting records

10. All of the following are examples of internal control procedures except

Select one:

a. customer satisfaction surveys

b. reconciling the bank statement

c. using prenumbered documents

d. insistence that employees take vacations

11. Having one person responsible for the related activities of ordering merchandise, receiving goods, and paying for them

Select one:

a. increases the potential for errors and fraud

b. decreases the potential for errors and fraud

c. is an example of good internal control

d. is a good example of safeguarding the company's assets

12. Internal auditors

Select one:

a. cannot evaluate the system of internal controls of the company that employs them because they are not independent

b. are employees of the IRS who evaluate the internal controls of companies filing tax returns

c. are hired by CPA firms to audit business firms

d. evaluate the system of internal controls for the companies that employ them

13. Physical controls to safeguard assets do not include

Select one:

a. vaults

b. cashier department supervisors

c. safety deposit boxes

d. locked warehouses

14. If a check correctly written and paid by the bank for $491 is incorrectly recorded on the company's books for $419, the appropriate treatment on the bank reconciliation would be to

Select one:

a. deduct $491 from the book's balance

b. subtract $72 from the book's balance

c. deduct $72 from the bank's balance

d. add $72 to the book's balance

15. In the month of May, Lopat Company Inc. wrote checks in the amount of $74,000. In June, checks in the amount of $101,264 were written. In May, $67,744 of these checks were presented to the bank for payment, and $87,064 in June. What is the amount of outstanding checks at the end of May?

Select one:

a. $20,456

b. $28,400

c. $6,256

d. $14,200