5 multiple choice questions

1. Which of the following is an example of an Asset Use Transaction?

Anna Co. received $500,000 by selling its products to customers.

Franco Co. acquired $500,000 of cash by borrowing from a bank.

Melissa Co. uses cash to pay its employees.

Tulip Co. uses cash to buy inventory.

2. Arrange the steps of an accounting cycle in the right order:

A adjusting the accounts

B closing the temporary accounts

C recording transactions

D preparing financial statements

Answer options:

CADB

CBDA

CABD

DCBA

3. Which of the following accounting entries is NOT correct? If a company pays cash for salary expense, the Salary Expense account is credited and the Cash account is debited.

If a company purchases supplies on account, the Supplies account is debited, and the Account Payable is credited.

If a company pays cash to purchase land, the Land account is debited and the Cash account is credited.

If a company recognizes other operating expenses on account, the Other Operating Expenses account is debited and Accounts Payable are credited.

4. A company reported the following results: Total assets $100,000; Current assets $80,000; Net Income $20,000; Gross Income $40,000. Which of the following is the companys return-on-assets ratio?

0.4

0.25

0.5

0.2

5. The method according to which when valuing a company's inventory, it is recorded on the balance sheet at either the historical cost or the market value is called what?

Lower-of-Cost-or-Market rule

Gross Margin method

Historical cost method

Specific Identification