Q1 Over 90 of the total dollars of business receipts are received by proprietorships a true b false Q2 Assets are acquired through investing activities when resources are purchased a true b false Q3 A note payable requires payment of the amount borrowed plus a interest b cash c accounts payable d investments Q4 A limited liability corporation combines attributes of a partnership and a corporation a true b false Q5 Merchandising businesses produce products rather than provide services to customers a true b false Q6 Manufacturing businesses change basic inputs into products that are sold to individual customers a true b false Q7 Merchandising businesses must be corporations a true b false Q8 The basic type of stock issued to owners is called common stock a true b false Q9 Who has first preference to assets in case a business fails a Stockholders b Long term creditors c Customers d Employees Q10 What is the primary objective of most businesses a To maximize profits b To pay dividends to stockholders c To provide a benefit to society d To manufacture a quality product Q11 Expressing financial data as if a business will continue operating for an indefinite period time refers to which concept a Business entity concept b Going concern concept c Objectivity concept d Adequate disclosure concept Q12 Motel 6 is an example of a business using which of the following a Low cost emphasis b Combination emphasis c Differentiation strategy d Premium price emphasis Q13 A partnership is owned by two or more individuals a true b false Q14 Shares of ownership are evidenced by issuing a bonds payable b commercial paper c shares of stock d notes payable Q15 Capital market stakeholders have an interest in the company because a they provide incentives for the company to market their products b they are part of the Marketing Department that is responsible for promoting the products or services to increase the business profits c they help market their products to customers or find vendors to supply needed inputs d they provide major financing for the business Q16 The debt created by a business when it makes a purchase on account is referred to as an a account payable b account receivable c asset d expense payable Q17 When a business borrows money, it incurs a(n) a tax b liability c receivable d additional equity Q18 Which of the items below is NOTa business organization form a Venture entrepreneurship b Proprietorship c Partnership d Corporation Q19 When a product is sold, this cost is often called a cost of goods sold b revenue c products d retained earnings Q20 The popularity of the sole proprietorship is due to the ease and low cost of organizing a true b false Q21 Stockholders in a corporation are internal stakeholders a true b false Q22 Accounting is thought to be the 'language of business' because business information is communicated to stakeholders a true b false Q23 Which of the following is an example of an intangible asset a Patent b Cash c Land d Equipment Q24 The Balance Sheet represents the accounting equation a true b false Q25 Given the following list of accounts, calculate Total Assets Accounts Receivable 5,000 Capital Stock 20,000 Cash 19,300 Equipment 15,400 Fees Earned 44,400 Miscellaneous Expense 18,200 Rent Expense 4,150 Retained Earnings 6,550 Wages Expense 13,900 a $84,100 b $59,700 c $46,250 d $39,700 Q26 For EFG Co , the transaction 'Receipt of interest income' would a increase total assets b decrease total assets c have no effect on total assets d decrease total liabilities Q27 Philip Corporation purchased equipment on account What is the effect of this transaction a Cash will decrease and equipment will increase b Total assets will remain unchanged c Cash flow from Investing Activities will decrease d Total assets and total liabilities will both increase Q28 Expenses can be defined as a assets consumed b services used in the process of generating revenues c costs that have been incurred during the normal course of business d all of these Q29 The statement of cash flows is integrated with the balance sheet because a the cash at the beginning of the period plus or minus the cash flows from operating, investing, and financing activities equals the end of period cash reported on the balance sheet b the cash at the beginning of the period plus or minus the net income equals the end of period cash reported on the balance sheet c the cash at the beginning of the period plus or minus assets and liabilities equals the end of period cash reported on the balance sheet d the cash at the beginning of the period plus or minus the cash flows from operating activities equals the end of period cash reported on the balance sheet Q30 For EFG Co , the transaction 'Billed a customer for fees earned' would a increase total assets b decrease total assets c have no effect on total assets d increase total liabilities Q31 A transaction can affect at most two elements of the accounting equation a true b false Q32 A to Z Corporation engaged in the following transaction 'Paid a $10,000 cash dividend ' On the Statement of Cash Flows, the transaction would be classified as a Cash Flows from Operating Activities b Cash Flows from Investing Activities c Cash Flows from Financing Activities d Noncash transaction Q33 Flow, Inc received cash from fees earned How does this transaction affect the Statement of Cash Flows a Increase cash from Operating Activities b Increase cash from Investing Activities c Increase cash from Financing Activities d No effect on the Statement of Cash Flows Q34 Buying equipment for cash affects which accounts a Cash only b Retained earnings only c Equipment and retained earnings d Cash and equipment Q35 Any given transaction must affect at least two different parts of the accounting equation a true b false Q36 Retained earnings will be increased by the amount in the dividend account a true b false Q37 Johnson, Inc receives $5,000 cash for fees earned What is the effect of this transaction a Total assets remain unchanged b Cash flow from Financing Activities will increase c Net income will increase d Retained earnings will remain unchanged Q38 Declaring and paying cash dividends affects which accounts a Cash only b Capital stock only c Cash and retained earnings d Cash and capital stock Q39 Equality of the accounting equation means that no errors have occurred a true b false Q40 Which of the following group of accounts are all assets a Cash, Accounts Payable, Buildings b Accounts Receivable, Revenue, Cash c Prepaid Expenses, Buildings, Patents d Unearned Revenues, Prepaid Expenses, Cash Q41 Johnson, Inc purchased land for cash What effect does this transaction have on the following accounts a Increase in Cash and decrease in Land b Decrease in Cash and decrease in Land c Increase in Cash and increase in Land d Decrease in Cash and increase in Land Q42 Rush Corporation borrowed $25,000 from the bank Which of the following accurately shows the effects of the transaction a Increase cash $25,000 and decrease notes payable $25,000 b Increase cash $25,000 and increase notes payable $25,000 c Decrease cash $25,000 and decrease notes payable $25,000 d Decrease cash $25,000 and increase notes payable $25,000 Q43 It is possible for a transaction to change the makeup of assets, but to NOT affect assets in total a true b false Q44 The accounting equation can be expressed Assets Liabilities Revenues a true b false Q45 By keeping a running total of the effects of transactions, the accounting equation provides a framework for summarizing the effects of a series of transactions a true b false Q46 The effect of every transaction is an increase or a decrease in one or more of the accounting equation elements a true b false Q47 Dividends are an example of an expense a true b false Q48 A is an economic event that under generally accepted accounting principles affects an element of the financial statements and must be recorded a framework b control c set of rules d transaction Q49 Gibbs Company has $16,000 in Retained Earnings, $27,000 in Assets, and $5,000 in Liabilities How much is in Common Stock a $22,000 b $16,000 c $11,000 d $6,000 Q50 Johnson, Inc issued $15,000 in capital stock in exchange for cash What is the effect of this transaction a Total assets remain unchanged b Cash flow from Financing Activities will increase c Net Income will increase d Total Retained Earnings will increase Q51 Physical assets of a long term nature are referred to as fixed assets a true b false Q52 The accrual basis of accounting recognizes a revenues when cash is received and expenses when cash is paid b revenues when earned and expenses when cash is paid c revenues when cash is received and expenses when incurred d revenues when earned and expenses when incurred Q53 Accrued expenses are ordinarily reported on the balance sheet as a assets b liabilities c fixed assets d prepaid expenses Q54 Which transaction would be recorded in a cash basis system of accounting a Purchase of equipment on credit b Purchase of supplies on credit c Sale of goods on credit d Sale of goods for cash Q55 The process that begins with the analysis of transactions and ends with preparing the accounting records for the next accounting period is called the accounting cycle a true b false Q56 Every company must use the cash basis of accounting a true b false Q57 X Y Co received $4,000 in payments from clients for services billed in a previous month What effect does this transaction have on the accounts under the accrual basis of accounting a Total assets increase by $4,000 b Assets will increase by $4,000 and revenues will increase $4,000 c Total assets will be decrease by $4,000 d The net effect on assets is zero Q58 To determine cash payments for operating expenses for the cash flow statement using the direct method, depreciation expense is added to net income a true b false Q59 The fixed asset section of a balance sheet may also be labeled as property, plant, and equipment a true b false Q60 A M Co purchased land for $50,000 with $10,000 paid in cash and $40,000 in a note payable due three years from now What effect does this transaction have on the accounts under the accrual basis of accounting a Net increase in assets of $40,000 and a net increase in liabilities of $40,000 b Net increase in assets and liabilities of $50,000 c Net increase in assets of $50,000 and a net decrease in liabilities of $40,000 d Net increase in assets of $60,000 and a net decrease in liabilities of $40,000 Q61 Fees receivable would appear on the balance sheet as a(n) a asset b liability c fixed asset d unearned revenue Q62 To arrive at cash flows from operations, it is necessary to convert the income statement from an accrual basis to the cash basis of accounting a true b false Q63 Expenses on the income statement are assets used up or services consumed in the process of generating revenues a true b false Q64 Using accrual accounting, revenue is recorded and reported only a when cash is received without regard to when the services are rendered b when the services are rendered without regard to when cash is received c when cash is received at the time services are rendered d if cash is received after the services are rendered Q65 Which of the following accounts would likely be included in a deferral adjusting entry a Interest Revenue b Unearned Revenue c Salaries Payable d Accounts Receivable Q66 The unearned rent account has a balance of $50,000 If $3,000 of the $50,000 is unearned at the end of the accounting period, the amount of the adjusting entry is a $47,000 b $53,000 c $50,000 d $3,000 Q67 Cash receipts from interest and dividends are classified as a investing activities b operating activities c either financing or investing activities d financing activities Q68 Deferred revenues (unearned revenues) are items initially recorded as liabilities, but expected to become over time a liabilities b assets c revenues d expenses Q69 Which asset is NOT depreciated as it usually does NOT lose its ability to provide service a Prepaid insurance b Equipment c Building d Land Q70 XYZ Co received $3,000 in payments from clients for services billed in a previous month Which accounts will be affected and by what amounts under the accrual basis of accounting a Cash will increase by $3,000 and accounts receivable decrease by $3,000 b Cash will increase by $3,000 and revenues will increase $3,000 c Accounts receivable will increase by $3,000 and revenue will increase by $3,000 d Accounts receivable will increase by $3,000 and cash will increase by $3,000 Q71 The is prepared with various sections, subsections, and captions that aid in its interpretation and analysis a accounting equation b retained earnings statement c intangible asset section d classified balance sheet Q72 Which one of the following should be added to net income in calculating net cash flow from operating activities using the indirect method a A gain on the sale of land b A decrease in accounts payable c An increase in accrued liabilities d Dividends paid on common stock Q73 Accrual accounting does NOT require that the accounting records be updated prior to preparing financial statements a true b false Q74 Which of the following is an example of a deferred expense a Prepaid advertising b Unearned revenue c Accounts payable d Accounts receivable Q75 When an adjusting entry is made to record insurance expense and reduce the prepaid insurance account, which section of the statement of cash flows is affected a Cash Flow from Operating Activities b Cash Flow from Investing Activities c Cash Flow from Financing Activities d There is no effect on the statement of cash flows Q76 Under the indirect method for preparing the statement of cash flows, increases in current liabilities are net income in the cash flows from operating activities section a subtracted from b added to c not used when calculating d cannot tell from the information given Q77 Inventory shortage is recorded when a merchandise is returned by a buyer b merchandise purchased from a seller is incomplete or short c merchandise is returned to a seller d there is a difference between a physical count of inventory and inventory records Q78 When merchandise is purchased to resell to customers, it is recorded in the account entitled a Supplies b Cost of Goods Sold c Merchandise Inventory d Sales Q79 If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a a sales invoice b purchase invoice c credit memorandum d debit memorandum Q80 On the income statement, sales returns and allowances and sales discounts are added to gross sales to yield net sales a true b false Q81 Gold Co sold merchandise to Bronze Co on account, $25,000, terms 2 15, net 45 The cost of the merchandise sold is $18,500 Gold Co issued a credit memorandum for $2,500 for merchandise returned that originally cost $1,900 Bronze Co paid the invoice within the discount period What is amount ofnet salesfrom the transactions a $22,500 b $22,000 c $5,450 d $22,050 Q82 The indirect method of preparing the statement of cash flows reconciles net income with net cash flows from operating activities a true b false Q83 Which of the following would NOT affect the operating activities section of the statement of cash flows, using the indirect method a Decrease in merchandise inventory b Payment on a note payable c Decrease in unearned rent d Depreciation expense Q84 If the buyer is to pay the delivery expense of delivering merchandise, delivery terms are stated as a FOB shipping point b FOB destination c FOB n 30 d FOB buyer Q85 Expenses that CANNOT be traced directly to operations are identified as a other income b operating expenses c cost of goods sold d other expenses Q86 Gross profit is determined by subtracting the cost of merchandise sold from what a The cost of merchandise purchased b Fees earned c Accounts receivable d Net sales Q87 When merchandise that was sold is returned, the seller decreases accounts payable a true b false Q88 Using the indirect method for preparing the statement of cash flows, what is the net cash flow from operating activities if net income is $39,000 depreciation expense is $9,000 and the decrease in accounts payable is $5,000 a $48,000 b $53,000 c $35,000 d $43,000 Q89 Sales returns are granted by the seller to customers for damaged or defective merchandise a true b false Q90 If merchandise costing $2,500, terms FOB destination, 2 10, n 30, with prepaid transportation costs of $100, is paid within 10 days, the amount of the purchases discount is $48 a true b false Q91 If a $20,000 sale is made on January 1, with terms of 2 10, n 30, how much would the discount be if payment is made on January 9 a $0 b $200 c $1,000 d $400 Q92 A sales invoice included the following information merchandise price, $5,000 terms 1 10, n eom Assuming that a credit for merchandise returned of $600 is granted prior to payment, and that the invoice is paid within the discount period, what is the amount of cash received by the seller a $4,656 b $4,400 c $4,356 d $4,950 Q93 If the seller is to pay the delivery expense of delivering merchandise, the delivery terms are stated as a FOB shipping point b FOB destination c FOB n 30 d FOB seller Q94 Discounts taken by the buyer for early payment of an invoice are called purchases discounts by the buyer a true b false Q95 Which financial statement reconciles net income with net cash flows from operating activities a Balance sheet b Statement of retained earnings c Statement of cash flows d Income statement Q96 When the perpetual inventory system is used, the inventory sold is shown on the income statement as a cost of merchandise sold b purchases c purchases returns and allowances d net purchases Q97 What is the term applied to the excess of net revenue from sales over the cost of merchandise sold a Gross profit b Income from operations c Net income d Gross sales Q98 Which term indicates that merchandise is free of transportation charges to the buyer a FOB destination b Transportation out c FOB shipping point d Transportation in Q99 There are two alternatives to reporting cash flows from operating activities in the statement of cash flows (1) the direct method and (2) the indirect method a true b false Q100 Sometimes a(n) is offered to buyers as a means of encouraging them to pay before the end of the credit period a accounts receivable b credit card c sales discount d cash sale

Question

Q1  Over 90  of the total dollars of business receipts are received by proprietorships  a  true b  false Q2  Assets are acquired through investing activities when resources are purchased  a  true b  false Q3  A note payable requires payment of the amount borrowed plus a  interest  b  cash  c  accounts payable  d  investments  Q4  A limited liability corporation combines attributes of a partnership and a corporation  a  true b  false Q5  Merchandising businesses produce products rather than provide services to customers  a  true b  false Q6  Manufacturing businesses change basic inputs into products that are sold to individual customers  a  true b  false Q7  Merchandising businesses must be corporations  a  true b  false Q8  The basic type of stock issued to owners is called common stock  a  true b  false Q9  Who has first preference to assets in case a business fails  a  Stockholders b  Long term creditors c  Customers d  Employees Q10  What is the primary objective of most businesses  a  To maximize profits b  To pay dividends to stockholders c  To provide a benefit to society d  To manufacture a quality product Q11  Expressing financial data as if a business will continue operating for an indefinite period time refers to which concept  a  Business entity concept b  Going concern concept c  Objectivity concept d  Adequate disclosure concept Q12  Motel 6 is an example of a business using which of the following  a  Low cost emphasis b  Combination emphasis c  Differentiation strategy d  Premium price emphasis Q13  A partnership is owned by two or more individuals  a  true b  false Q14  Shares of ownership are evidenced by issuing a  bonds payable  b  commercial paper  c  shares of stock  d  notes payable  Q15  Capital market stakeholders have an interest in the company because a  they provide incentives for the company to market their products  b  they are part of the Marketing Department that is responsible for promoting the products or services to increase the business profits  c  they help market their products to customers or find vendors to supply needed inputs  d  they provide major financing for the business  Q16  The debt created by a business when it makes a purchase on account is referred to as an a  account payable  b  account receivable  c  asset  d  expense payable  Q17  When a business borrows money, it incurs a(n) a  tax  b  liability  c  receivable  d  additional equity  Q18  Which of the items below is NOTa business organization form  a  Venture entrepreneurship b  Proprietorship c  Partnership d  Corporation Q19  When a product is sold, this cost is often called a  cost of goods sold  b  revenue  c  products  d  retained earnings  Q20  The popularity of the sole proprietorship is due to the ease and low cost of organizing  a  true b  false Q21  Stockholders in a corporation are internal stakeholders  a  true b  false Q22  Accounting is thought to be the 'language of business' because business information is communicated to stakeholders  a  true b  false Q23  Which of the following is an example of an intangible asset  a  Patent b  Cash c  Land d  Equipment Q24  The Balance Sheet represents the accounting equation  a  true b  false Q25  Given the following list of accounts, calculate Total Assets  Accounts Receivable 5,000 Capital Stock 20,000 Cash 19,300 Equipment 15,400 Fees Earned 44,400 Miscellaneous Expense 18,200 Rent Expense 4,150 Retained Earnings 6,550 Wages Expense 13,900 a  $84,100 b  $59,700 c  $46,250 d  $39,700 Q26  For EFG Co , the transaction 'Receipt of interest income' would a  increase total assets  b  decrease total assets  c  have no effect on total assets  d  decrease total liabilities  Q27  Philip Corporation purchased equipment on account  What is the effect of this transaction  a  Cash will decrease and equipment will increase  b  Total assets will remain unchanged  c  Cash flow from Investing Activities will decrease  d  Total assets and total liabilities will both increase  Q28  Expenses can be defined as a  assets consumed  b  services used in the process of generating revenues  c  costs that have been incurred during the normal course of business  d  all of these  Q29  The statement of cash flows is integrated with the balance sheet because a  the cash at the beginning of the period plus or minus the cash flows from operating, investing, and financing activities equals the end of period cash reported on the balance sheet  b  the cash at the beginning of the period plus or minus the net income equals the end of period cash reported on the balance sheet  c  the cash at the beginning of the period plus or minus assets and liabilities equals the end of period cash reported on the balance sheet  d  the cash at the beginning of the period plus or minus the cash flows from operating activities equals the end of period cash reported on the balance sheet  Q30  For EFG Co , the transaction 'Billed a customer for fees earned' would a  increase total assets  b  decrease total assets  c  have no effect on total assets  d  increase total liabilities  Q31  A transaction can affect at most two elements of the accounting equation  a  true b  false Q32  A to Z Corporation engaged in the following transaction 'Paid a $10,000 cash dividend ' On the Statement of Cash Flows, the transaction would be classified as a  Cash Flows from Operating Activities  b  Cash Flows from Investing Activities  c  Cash Flows from Financing Activities  d  Noncash transaction  Q33  Flow, Inc  received cash from fees earned  How does this transaction affect the Statement of Cash Flows  a  Increase cash from Operating Activities b  Increase cash from Investing Activities c  Increase cash from Financing Activities d  No effect on the Statement of Cash Flows Q34  Buying equipment for cash affects which accounts  a  Cash only b  Retained earnings only c  Equipment and retained earnings d  Cash and equipment Q35  Any given transaction must affect at least two different parts of the accounting equation  a  true b  false Q36  Retained earnings will be increased by the amount in the dividend account  a  true b  false Q37  Johnson, Inc  receives $5,000 cash for fees earned  What is the effect of this transaction  a  Total assets remain unchanged  b  Cash flow from Financing Activities will increase  c  Net income will increase  d  Retained earnings will remain unchanged  Q38  Declaring and paying cash dividends affects which accounts  a  Cash only b  Capital stock only c  Cash and retained earnings d  Cash and capital stock Q39  Equality of the accounting equation means that no errors have occurred  a  true b  false Q40  Which of the following group of accounts are all assets  a  Cash, Accounts Payable, Buildings b  Accounts Receivable, Revenue, Cash c  Prepaid Expenses, Buildings, Patents d  Unearned Revenues, Prepaid Expenses, Cash Q41  Johnson, Inc  purchased land for cash  What effect does this transaction have on the following accounts  a  Increase in Cash and decrease in Land b  Decrease in Cash and decrease in Land c  Increase in Cash and increase in Land d  Decrease in Cash and increase in Land Q42  Rush Corporation borrowed $25,000 from the bank  Which of the following accurately shows the effects of the transaction  a  Increase cash $25,000 and decrease notes payable $25,000 b  Increase cash $25,000 and increase notes payable $25,000 c  Decrease cash $25,000 and decrease notes payable $25,000 d  Decrease cash $25,000 and increase notes payable $25,000 Q43  It is possible for a transaction to change the makeup of assets, but to NOT affect assets in total  a  true b  false Q44  The accounting equation can be expressed  Assets   Liabilities   Revenues  a  true b  false Q45  By keeping a running total of the effects of transactions, the accounting equation provides a framework for summarizing the effects of a series of transactions  a  true b  false Q46  The effect of every transaction is an increase or a decrease in one or more of the accounting equation elements  a  true b  false Q47  Dividends are an example of an expense  a  true b  false Q48  A       is an economic event that under generally accepted accounting principles affects an element of the financial statements and must be recorded  a  framework b  control c  set of rules d  transaction Q49  Gibbs Company has $16,000 in Retained Earnings, $27,000 in Assets, and $5,000 in Liabilities  How much is in Common Stock  a  $22,000 b  $16,000 c  $11,000 d  $6,000 Q50  Johnson, Inc  issued $15,000 in capital stock in exchange for cash  What is the effect of this transaction  a  Total assets remain unchanged  b  Cash flow from Financing Activities will increase  c  Net Income will increase  d  Total Retained Earnings will increase  Q51  Physical assets of a long term nature are referred to as fixed assets  a  true b  false Q52  The accrual basis of accounting recognizes a  revenues when cash is received and expenses when cash is paid  b  revenues when earned and expenses when cash is paid  c  revenues when cash is received and expenses when incurred  d  revenues when earned and expenses when incurred  Q53  Accrued expenses are ordinarily reported on the balance sheet as a  assets  b  liabilities  c  fixed assets  d  prepaid expenses  Q54  Which transaction would be recorded in a cash basis system of accounting  a  Purchase of equipment on credit b  Purchase of supplies on credit c  Sale of goods on credit d  Sale of goods for cash Q55  The process that begins with the analysis of transactions and ends with preparing the accounting records for the next accounting period is called the accounting cycle  a  true b  false Q56  Every company must use the cash basis of accounting  a  true b  false Q57  X Y Co  received $4,000 in payments from clients for services billed in a previous month  What effect does this transaction have on the accounts under the accrual basis of accounting  a  Total assets increase by $4,000  b  Assets will increase by $4,000 and revenues will increase $4,000  c  Total assets will be decrease by $4,000  d  The net effect on assets is zero  Q58  To determine cash payments for operating expenses for the cash flow statement using the direct method, depreciation expense is added to net income  a  true b  false Q59  The fixed asset section of a balance sheet may also be labeled as property, plant, and equipment  a  true b  false Q60  A M Co  purchased land for $50,000 with $10,000 paid in cash and $40,000 in a note payable due three years from now  What effect does this transaction have on the accounts under the accrual basis of accounting  a  Net increase in assets of $40,000 and a net increase in liabilities of $40,000 b  Net increase in assets and liabilities of $50,000 c  Net increase in assets of $50,000 and a net decrease in liabilities of $40,000 d  Net increase in assets of $60,000 and a net decrease in liabilities of $40,000 Q61  Fees receivable would appear on the balance sheet as a(n) a  asset  b  liability  c  fixed asset  d  unearned revenue  Q62  To arrive at cash flows from operations, it is necessary to convert the income statement from an accrual basis to the cash basis of accounting  a  true b  false Q63  Expenses on the income statement are assets used up or services consumed in the process of generating revenues  a  true b  false Q64  Using accrual accounting, revenue is recorded and reported only a  when cash is received without regard to when the services are rendered  b  when the services are rendered without regard to when cash is received  c  when cash is received at the time services are rendered  d  if cash is received after the services are rendered  Q65  Which of the following accounts would likely be included in a deferral adjusting entry  a  Interest Revenue b  Unearned Revenue c  Salaries Payable d  Accounts Receivable Q66  The unearned rent account has a balance of $50,000  If $3,000 of the $50,000 is unearned at the end of the accounting period, the amount of the adjusting entry is a  $47,000  b  $53,000  c  $50,000  d  $3,000  Q67  Cash receipts from interest and dividends are classified as a  investing activities  b  operating activities  c  either financing or investing activities  d  financing activities  Q68  Deferred revenues (unearned revenues) are items initially recorded as liabilities, but expected to become       over time  a  liabilities b  assets c  revenues d  expenses Q69  Which asset is NOT depreciated as it usually does NOT lose its ability to provide service  a  Prepaid insurance b  Equipment c  Building d  Land Q70  XYZ Co  received $3,000 in payments from clients for services billed in a previous month  Which accounts will be affected and by what amounts under the accrual basis of accounting  a  Cash will increase by $3,000 and accounts receivable decrease by $3,000  b  Cash will increase by $3,000 and revenues will increase $3,000  c  Accounts receivable will increase by $3,000 and revenue will increase by $3,000  d  Accounts receivable will increase by $3,000 and cash will increase by $3,000  Q71  The       is prepared with various sections, subsections, and captions that aid in its interpretation and analysis  a  accounting equation b  retained earnings statement c  intangible asset section d  classified balance sheet Q72  Which one of the following should be added to net income in calculating net cash flow from operating activities using the indirect method  a  A gain on the sale of land b  A decrease in accounts payable c  An increase in accrued liabilities d  Dividends paid on common stock Q73  Accrual accounting does NOT require that the accounting records be updated prior to preparing financial statements  a  true b  false Q74  Which of the following is an example of a deferred expense  a  Prepaid advertising b  Unearned revenue c  Accounts payable d  Accounts receivable Q75  When an adjusting entry is made to record insurance expense and reduce the prepaid insurance account, which section of the statement of cash flows is affected  a  Cash Flow from Operating Activities b  Cash Flow from Investing Activities c  Cash Flow from Financing Activities d  There is no effect on the statement of cash flows  Q76  Under the indirect method for preparing the statement of cash flows, increases in current liabilities are       net income in the cash flows from operating activities section  a  subtracted from b  added to c  not used when calculating d  cannot tell from the information given Q77  Inventory shortage is recorded when a  merchandise is returned by a buyer  b  merchandise purchased from a seller is incomplete or short  c  merchandise is returned to a seller  d  there is a difference between a physical count of inventory and inventory records  Q78  When merchandise is purchased to resell to customers, it is recorded in the account entitled a  Supplies  b  Cost of Goods Sold  c  Merchandise Inventory  d  Sales  Q79  If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a a  sales invoice  b  purchase invoice  c  credit memorandum  d  debit memorandum  Q80  On the income statement, sales returns and allowances and sales discounts are added to gross sales to yield net sales  a  true b  false Q81  Gold Co  sold merchandise to Bronze Co  on account, $25,000, terms 2 15, net 45  The cost of the merchandise sold is $18,500  Gold Co  issued a credit memorandum for $2,500 for merchandise returned that originally cost $1,900  Bronze Co  paid the invoice within the discount period  What is amount ofnet salesfrom the transactions  a  $22,500 b  $22,000 c  $5,450 d  $22,050 Q82  The indirect method of preparing the statement of cash flows reconciles net income with net cash flows from operating activities  a  true b  false Q83  Which of the following would NOT affect the operating activities section of the statement of cash flows, using the indirect method  a  Decrease in merchandise inventory b  Payment on a note payable c  Decrease in unearned rent d  Depreciation expense Q84  If the buyer is to pay the delivery expense of delivering merchandise, delivery terms are stated as a  FOB shipping point  b  FOB destination  c  FOB n 30  d  FOB buyer  Q85  Expenses that CANNOT be traced directly to operations are identified as a  other income  b  operating expenses  c  cost of goods sold  d  other expenses  Q86  Gross profit is determined by subtracting the cost of merchandise sold from what  a  The cost of merchandise purchased b  Fees earned c  Accounts receivable d  Net sales Q87  When merchandise that was sold is returned, the seller decreases accounts payable  a  true b  false Q88  Using the indirect method for preparing the statement of cash flows, what is the net cash flow from operating activities if net income is $39,000  depreciation expense is $9,000  and the decrease in accounts payable is $5,000  a  $48,000 b  $53,000 c  $35,000 d  $43,000 Q89  Sales returns are granted by the seller to customers for damaged or defective merchandise  a  true b  false Q90  If merchandise costing $2,500, terms FOB destination, 2 10, n 30, with prepaid transportation costs of $100, is paid within 10 days, the amount of the purchases discount is $48  a  true b  false Q91  If a $20,000 sale is made on January 1, with terms of 2 10, n 30, how much would the discount be if payment is made on January 9  a  $0 b  $200 c  $1,000 d  $400 Q92  A sales invoice included the following information  merchandise price, $5,000  terms 1 10, n eom  Assuming that a credit for merchandise returned of $600 is granted prior to payment, and that the invoice is paid within the discount period, what is the amount of cash received by the seller  a  $4,656 b  $4,400 c  $4,356 d  $4,950 Q93  If the seller is to pay the delivery expense of delivering merchandise, the delivery terms are stated as a  FOB shipping point  b  FOB destination  c  FOB n 30  d  FOB seller  Q94  Discounts taken by the buyer for early payment of an invoice are called purchases discounts by the buyer  a  true b  false Q95  Which financial statement reconciles net income with net cash flows from operating activities  a  Balance sheet b  Statement of retained earnings c  Statement of cash flows d  Income statement Q96  When the perpetual inventory system is used, the inventory sold is shown on the income statement as a  cost of merchandise sold  b  purchases  c  purchases returns and allowances  d  net purchases  Q97  What is the term applied to the excess of net revenue from sales over the cost of merchandise sold  a  Gross profit b  Income from operations c  Net income d  Gross sales Q98  Which term indicates that merchandise is free of transportation charges to the buyer  a  FOB destination b  Transportation out c  FOB shipping point d  Transportation in Q99  There are two alternatives to reporting cash flows from operating activities in the statement of cash flows  (1) the direct method and (2) the indirect method  a  true b  false Q100  Sometimes a(n)       is offered to buyers as a means of encouraging them to pay before the end of the credit period  a  accounts receivable b  credit card c  sales discount d  cash sale

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Q1. Over 90% of the total dollars of business receipts are received by proprietorships. a. true b. false Q2. Assets are acquired through investing activities

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