4.2 Accounting Test

1. Which of the following is not part of the financial statement?

income statement

balance sheet

general journal

statement of owners equity

2. Which of the following is considered a manufacturing company?

Toyota

Delta

Walmart

Amazon

3. What is the first step in the accounting cycle?

prepare the financial statement

analyze and record transaction in the journal

prepare the adjusted trial balance

prepare the end of period worksheet

4. Who is considered an external user of the financial statement?

employee

owner

investor

manager

5. On which side of the T-account should we record debits?

middle

bottom

left

right

6. Which of the following is considered revenue?

fees earned

cash

accounts receivable

owners capital

7. Which of the following accounts increases with a debit?

revenue

owners capital

liability

asset

8. Which of the following concept requires business transactions to be recorded in at least two accounts?

business concept

double-entry bookkeeping

growing concern concept

cost concept

9. Which of the following is required by generally accepted accounting principles?

income basis accounting

financial basis accounting

accrual basis accounting

cash basis accounting

10. Unearned revenue is categorized as:

liability.

asset.

expense.

revenue.

11. When should revenue be reported on the income statement?

when you provide your customer with an estimate

when you send the invoice to your customer

when service is performed or product is delivered

when payment is received

12. When should we prepare the financial statement?

after we prepare the unadjusted trial balance

before we post to the ledger

before we prepare the adjusted trial balance

after we prepare the adjusted trial balance

13. Which account is considered a permanent account?

owners withdraw

wage expense

fees earned

account receivable

14. What is the purpose of the closing process?

to adjust the balance of the permanent account

to make the total debits and credits equal

to set the balance of temporary account to zero

to verify the ending balance of each account

15. What is the last step in the accounting cycle?

journalize closing entries

prepare post-closing trial balance

post transactions to the ledger

prepare adjusted trial balance

16. Which trial balance do you use to prepare the financial statement?

preadjusted trial balance

adjusted trial balance

post-closing trial balance

unadjusted trial balance

17. Which items should be deducted from the bank record balance during the bank reconciliation process?

deposit in transit

interest earned

outstanding checks

notes receivable

18. Which item below is not part of the five elements of internal control?

monitoring

risk assessment

control environment

auditing system

19. Which of the following is not one of the reasons why companies use bank accounts as part of their internal control?

to reduce the amount of cash on hand

to help the company get approved for a loan in the future

easier to transfer funds using the EFT system

provide independent recording of cash transaction

20. What is the purpose of the Sarbanes Oxley Act?

minimize the companys expense

increase the companys value

increase the companys revenue

prevent fraud