MULTIPLE CHOICE QUESTIONS

1. (TCO 1) Which financial statement provides a snapshot of one moment in time? (Points : 6)

Income statement Balance sheet Statement of cash flows Statement of owner's equity

Question 2.2. (TCO 1) How do revenues for a period relate to the beginning and ending balances in retained earnings? (Points : 6)

Revenues will increase the beginning balance of retained earnings for the period. Revenues will increase the ending balance of retained earnings for the period. Revenues less expenses will either increase or decrease the beginning balance of retained earnings for the period. None of the above

Question 3.3. (TCO 2) The purchase of office computers for cash would include a (Points : 6)

debit to Office Equipment and credit to Accounts Payable. debit to Office Equipment and a credit to Cash. debit to Accounts Payable and credit to Office Equipment. debit to Cash and a credit to Office Equipment.

Question 4.4. (TCO 2) The normal balance of a liability account is a _____ and the normal balance of the common stock account is a _____. (Points : 6)

debit; credit debit; debit credit; debit credit; credit

Question 5.5. (TCO 3) Which statement about a trial balance is NOT true? (Points : 6)

The trial balance can be prepared at any time, but is generally prepared at the end of the accounting period. The trial balance is a list of all accounts with their balances. The trial balance lists the income statement accounts and their balances first and then the balance sheet accounts and their balances. The trial balance lists asset accounts and their balances first, then liability accounts and their balances, and then stockholders equity accounts and their balances.

Question 6.6. (TCO 3) The normal balance of Accounts Receivable is a _____ because it is a(n) _____ account. (Points : 6)

credit; liability debit; asset credit; stockholders equity debit; expense

Question 7.7. (TCO 4) An accountant recognizes the impact of a business event as it occurs and accounts for it appropriately under which basis of accounting? (Points : 6)

Cash Liability Accrual Deferred

Question 8.8. (TCO 4) At the time of payment, what journal entry is required to record a petty cash disbursement for postage? (Points : 6)

Debit Postage Expense, credit Petty Cash Debit Postage Expense, credit Cash Debit Petty Cash, credit Cash No journal entry is required.

Question 9.9. (TCO 5) In a bank reconciliation, items recorded by the company, but not yet recorded by the bank, include (Points : 6)

deposits in transit. bank fees. outstanding checks. both deposits in transit and outstanding checks.

Question 10.10. (TCO 5) All of the following are purposes of internal control EXCEPT (Points : 6)

to promote operational inefficiency. to encourage adherence to company policies. to ensure accurate and reliable accounts records. to safeguard assets.

Question 1.1. (TCO 6) Under the allowance method for estimating uncollectible accounts, the entry to write off an account (Points : 6)

has no effect on net realizable value. decreases both Accounts Receivable and Uncollectible Accounts, thus decreasing net realizable value. decreases Accounts Receivable, thus decreasing net realizable value. increases Allowance for Uncollectible Accounts, thus decreasing net realizable value.

Question 2.2. (TCO 6) Which account shows the amount of accounts receivable that the business does NOT expect to collect? (Points : 6)

Sales Returns and Allowances Unearned Accounts Receivable Allowance for Uncollectible Accounts Uncollectible Accounts Expense

Question 3.3. (TCO 7) If a company is using a perpetual inventory system, the balance in its inventory account three-quarters of the way through an accounting period would be equal to (Points : 6)

the total of the beginning inventory plus goods purchased during the accounting period. the amount of goods purchased during the period. the inventory on hand at the beginning of the period. the inventory on hand at the beginning of the period plus goods purchased during the accounting period minus goods sold during the period.

Question 4.4. (TCO 7) When the LIFO method is used, cost of goods sold is assumed to consist of (Points : 6)

units with the lowest per unit cost. oldest units. units with the highest per unit cost. most recently purchased units.

Question 5.5. (TCO 8) On January 3, 2013, ZB Corporation acquired equipment for $180,000. The estimated life of the equipment is 5 years. The estimated residual value is $30,000. What is the book value of the asset on December 31, 2014, if ZB Corporation uses the straight-line method of depreciation? (Points : 6)

$150,000 $130,000 $120,000 $90,000

Question 6.6. (TCO 8) When computing depreciation for a plant asset, which of the following must be estimated? (Points : 6)

Useful life and residual value Residual value and current market value Useful life and current market value Useful life, current market value, and residual value

Question 7.7. (TCO 9) Short-term notes payable (Points : 6)

are shown on the balance sheet with current liabilities. are shown on the balance sheet after bonds payable. are shown as a reduction to notes receivable on the balance sheet, with an appropriate footnote disclosure. are generally due within 3 months, with a maximum time period of 6 months.

Question 8.8. (TCO 9) Monthly sales were $100,000. It was estimated that 4% of the units sold would have to be replaced under warranty. On the date of sale, the company should record a debit to (Points : 6)

Sales for $4,000. Warranty Expense for $4,000. Warranty Payable for $4,000. No entry is required since the actual liability amount is not known.

Question 9.9. (TCO 10) The employer sends the master copy of the W-2 form to (Points : 6)

the Internal Revenue Service. the Federal Reserve Bank. the Social Security Administration. the Treasurer of the United States.

Question 10.10. (TCO 10) The employer sends copies of the W-2 to the (Points : 6)

employee. Social Security Administration. Internal Revenue Service. A and B