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Posted: May 13th, 2018
ACCT multiple choice questions-Temporary accounts would not include
1. Temporary accounts would not include
A. salaries payable.
B. cost of goods sold.
C. depreciation expense.
D. supplies expense.
2. In a recent annual report, Apple Computer reported the
following in one of its disclosure notes: “Warranty Expense: The Company
provides currently for the estimated cost for product warranties at the time
the related revenue is recognized.” This note exemplifies Apple’s use of
A. economic entity.
B. realization principle.
C. the matching principle.
D. conservatism.
3. Listed below are account balances (in $millions) taken
from the records of Symphony Stores. All of these are permanent accounts,
except the last two that have yet to be closed. The installment receivables are
current. Symphony uses a perpetual inventory system.
What would Symphony report as total shareholders’ equity?
A. $808
B. $838
C. $323
D. $928
4 . Janson Corporation Co.’s trial balance included the
following account balances at December 31, 2011:
Accounts receivable
$12,000
Inventories
40,000
Patent
12,000
Investments
30,000
Prepaid insurance
6,000
Note receivable, due 2014
50,000
Investments consist of treasury bills that were purchased in
November and mature in January. Prepaid insurance is for the next two years.
What amount should be included in the current asset section of Janson’s
December 31, 2011, balance sheet?
A. $88.000
B. $55,000
C. $135,000
D. $85,000
5. Janson Corporation Co.’s trial balance included the
following account balances at December 31, 2011:
Accounts payable
$25,000
Bond payable, due 2020
22,000
Salaries payable
16,000
Note payable, due 2012
20,000
Note payable, due 2016
40,000
What amount should be included in the current liability
section of Janson’s December 31, 2011, balance sheet?
A. $63,000
B. $41,000
C. $101,000
D. $61,000
6. Listed below are account balances (in $millions) taken
from the records of Symphony Stores. All of these are permanent accounts,
except the last two that have yet to be closed. The installment receivables are
current. Symphony uses a perpetual inventory system.
https://my.pennfoster.com/exams/images/061500NR_Q16-19.gif
What is the amount of working capital for Symphony?
A. $98
B. $113
C. $128
D. $143
7. In its first year of operations Acme Corp. had income
before tax of $400,000. Acme made income tax payments totaling $150,000 during
the year and has an income tax rate of 40%. What would be the balance in income
tax payable at the end of the year?
A. $10,000 debit.
B. $150,000 credit.
C. $10,000 credit.
D. $160,000 credit.
8. On December 31, 2011, the end of Larry’s Used Cars first
year of operations, the accounts receivable was $53,600. The company estimates
that $1,200 of the year-end receivables will not be collected. Accounts
receivable in the 2011 balance sheet will be valued at
A. $1,200.
B. $52,400.
C. $53,600.
D. $54,800.
9. Which of the following was the first private sector
entity that set accounting standards in the United States?
A. AICPA
B. Committee on Accounting Procedure
C. Accounting Principles Board
D. Financial Accounting Standards Board
10. The most political issue in the FASB’s most recent
deliberations and amendments to GAAP on business combinations was
A. the negative effects on subsequent earnings of amortizing
goodwill if firms were required to use the pooling method of accounting for the
combination.
B. the unrealistic balance sheet assets that would be
created if firms were required to use the purchase method of accounting for the
combination.
C. the negative effects on subsequent earnings of amortizing
goodwill if firms were required to use the purchase method of accounting for
the combination.
D. the unrealistic balance sheet assets that would be
created if firms were required to use the pooling method of accounting for the
combination.
11. On September 1, 2011, Fortune Magazine sold 600 one-year
subscriptions for $81 each. The total amount received was credited to unearned
subscriptions revenue. What would be the required adjusting entry at December
31, 2011?
a.
Unearned subscriptions revenue
48,600
?Subscriptions revenue
16,200
?Prepaid subscriptions
32,400
b.
Unearned subscriptions revenue
16,200
?Subscriptions revenue
16,200
c.
Unearned subscriptions revenue
16,200
?Subscriptions payable
16,200
d.
Unearned subscriptions revenue
32,400
?Subscriptions revenue
32,400
A. Option b
B. Option c
C. Option a
D. Option d
12. Eve’s Apples opened business on January 1, 2011, and
paid for two insurance policies effective that date. The liability policy was
$36,000 for eighteen months, and the crop damage policy was $12,000 for a
two-year term. What was the balance in Eve’s prepaid insurance as of December
31, 2011?
A. $18,000
B. $48,000
C. $30,000
D. $9,000
13. The mostlikely important flaw leading to the demise of
the APB was the perceived lack of
A. competence.
B. confidence.
C. importance.
D. independence.
14. An example of a contra account is
A. depreciation expense.
B. accounts receivable.
C. accumulated depreciation.
D. sales revenue.
15. Yummy Foods purchased a two-year fire and extended
coverage insurance policy on August 1, 2011, and charged the $4,200 premium to
Insurance expense. At its December 31, 2011, year-end, Yummy Foods would record
which of the following adjusting entries?
a.
Insurance expense
875
?Prepaid insurance
875
b.
Prepaid insurance
875
?Insurance expense
875
c.
Insurance expense
875
Prepaid insurance
3,325
?Insurance payable
4,200
d.
Prepaid insurance
3,325
?Insurance expense
3,325
A. Option c
B. Option d
C. Option b
D. Option a
16. The primary historical reason for the FASB reversing its
positions when political pressures occur is that
A. the cost of gathering data was prohibitive.
B. the SEC didn’t support the FASB position.
C. they have no authority in such situations.
D. the difficulties in measurement were too great.
17. In its first year of operations Best Corp. had income
before tax of $500,000. Best made income tax payments totaling $210,000 during
the year and has an income tax rate of 40%. What was Best’s net income for the
year?
A. $300,000
B. $306,000
C. $294,000
D. $290,000
18. Based on recent financial statement data for Harmony
Health Foods, Inc. (HHF), shown below, HHF’s debt-to-equity ratio is (rounded)
https://my.pennfoster.com/exams/images/061500NR_Q36-38.gif
A. 0.53.
B. 0.75.
C. 1.13.
19. Listed below are account balances (in $millions) taken
from the records of Symphony Stores. All of these are permanent accounts,
except the last two that have yet to be closed. The installment receivables are
current. Symphony uses a perpetual inventory system.
https://my.pennfoster.com/exams/images/061500NR_Q16-19.gif
What would Symphony report as total current assets?
A. $838
B. $843
C. $1,696
D. $823
20. Davis Hardware Company uses a perpetual inventory
system. How should Davis record the sale of merchandise, costing $620, and sold
for $960 on account?
a.
Inventory
620
?Accounts receivable
620
Sales
960
?Revenue from sales
960
b.
Accounts receivable
960
?Sales revenue
960
Cost of goods sold
620
?Inventory
620
c.
Inventory
620
Gain on sale
340
?Sales revenue
960
d.
Accounts receivable
960
?Sales revenues
620
?Gain on sale
340
A. Option b
B. Option c
C. Option a
D. Option d
21. SFAC No.5 focuses on
A. recognition and measurement concepts in accounting.
B. qualitative characteristics of accounting information.
C. objectives of financial reporting.
D. elements of financial statements.
22. The primary objective of financial accounting
information is to provide useful information to
A. capital providers.
B. none of the entities mentioned here.
C. regulators.
D. management.
23. In its first year of operations, Best Corp. had income
before tax of $500,000. Best made income tax payments totaling $210,000 during
the year and has an income tax rate of 40%. What was Best’s net income for the
year?
A. $306,000
B. $294,000
C. $290,000
D. $300,000
24. Permanent accounts would not include
A. accumulated depreciation.
B. inventory.
C. cost of goods sold.
D. current liabilities.
25. Ace Bonding Company purchased merchandise inventory on
account. The inventory costs $2,000 and is expected to sell for $3,000.
Indicate how Ace should record the purchase by selecting one of the options
listed below.
a.
Inventory
2,000
?Accounts payable
2,000
b.
Cost of goods sold
2,000
Deferred revenue
1,000
?Sales in advance
3,000
c.
Cost of goods sold
2,000
?Inventory payable
2,000
d.
Cost of goods sold
2,000
Profit
1,000
?Sales payable
3,000
A. Option a
B. Option b
C. Option d
D. Option c
26. The Hamada Company sales for 2011 totaled $150,000 and
purchases totaled $95,000. Selected January 1, 2011, balances were: accounts
receivable, $18,000; inventory, $14,000; and accounts payable, $12,000.
December 31, 2011, balances were: accounts receivable, $16,000; inventory,
$15,000; and accounts payable, $13,000. Net cash flows from these activities
were
A. $74,000.
B. $45,000.
C. $58,000.
D. $55,000.
27. Which of the following accounts has a debit balance?
A. Accumulated depreciation
B. Bad debt expense
C. Accounts payable
D. Accrued taxes
28. On June 1, Royal Corp. began operating a service company
with an initial cash investment by shareholders of $2,000,000. The company
provided $6,400,000 of services in June and received full payment in July.
Royal also incurred expenses of $3,000,000 in June that were paid in August.
During June, Royal paid its shareholders cash dividends of $1,000,000. What was
the company’s income before income taxes for the two months ended July 31 under
the following methods of accounting?
??
Cash Basis
Accrual Basis
a.
$3,400,000
$3,400,000
b.
$5,400,000
$2,400,000
c.
$6,400,000
$3,400,000
d.
$6,400,000
$2,400,000
A. Option a
B. Option d
C. Option b
D. Option c
29. Which of the following is nottrue about net operating
cash flow?
A. It’s easy to understand, and all information required to
measure it is factual.
B. It’s a measure used in accrual accounting and is
recognized as the best predictor of future operating cash flows.
C. It’s the difference between cash receipts and cash
disbursements from providing goods and services.
D. Over short periods of time, it may not be indicative of
long-run cash-generating ability.
30. Dave’s Duds reported cost of goods sold of $2,000,000
this year. The inventory account increased by $200,000 during the year to an
ending balance of $400,000. What was the cost of merchandise that Dave
purchased during the year?
A. $1,800,000
B. $2,200,000
C. $2,400,000
D. $1,600,000
31. A cause-and-effect relationship is implicit in the
A. matching principle.
B. realization principle.
C. historical cost principle.
D. going concern assumption.
32. On November 1, 2011, Tim’s Toys borrows $30,000,000 at
9% to finance the holiday sales season. The note is for a six-month term and
both principal and interest are payable at maturity. What should be the balance
of interest payable for the loan as of December 31, 2011?
A. $450,000.
B. $112,500.
C. $225,000.
D. $1,350,000.
33. Molly’s Auto Detailers maintains its records on the cash
basis. During 2011, Molly’s collected $72,000 from customers and paid $21,000
in expenses. Depreciation expense of $5,000 would have been recorded on the
accrual basis. Over the course of the year, accounts receivable increased
$4,000, prepaid expenses decreased $2,000, and accrued liabilities decreased
$1,000. Molly’s accrual basis net income would be
A. $54,000.
B. $38,000.
C. $42,000.
D. $49,000.
34. Pat’s Custom Tuxedo Shop maintains its records on the
cash basis. During this past year Pat’s collected $42,000 in tailoring fees,
and paid $14,000 in expenses. Depreciation expense totaled $2,000. Accounts
receivable increased $1,500, supplies increased $4,000, and accrued liabilities
increased $2,500. Pat’s accrual basis net income would be
A. $23,000.
B. $34,000.
C. $18,000.
D. $29,000.
35. Cal Farms reported supplies expense of $2,000,000 this
year. The supplies account decreased by $200,000 during the year to an ending
balance of $400,000. What was the cost of supplies the Cal Farms purchased
during the year?
A. $2,400,000
B. $1,800,000
C. $2,200,000
D. $1,600,000
36. The full disclosure principle requires a balance between
A. relevance and cost effectiveness.
B. timeliness and predictive value.
C. reliability and neutrality.
D. comparability and consistency.
37. In its first year of operations Acme Corp. had income
before tax of $400,000. Acme made income tax payments totaling $150,000 during
the year and has an income tax rate of 40%. What would be the balance in income
tax payable at the end of the year?
A. $160,000 credit.
B. $10,000 debit.
C. $10,000 credit.
D. $150,000 credit.
38. Listed below are account balances (in $millions) taken
from the records of Symphony Stores. All of these are permanent accounts,
except the last two that have yet to be closed. The installment receivables are
current. Symphony uses a perpetual inventory system.
https://my.pennfoster.com/exams/images/061500NR_Q16-19.gif
What would Symphony report as total assets?
A. $2,318
B. $2,303
C. $2,338
D. $2,323
39. Assume a company’s liquidity and financing ratios all
are less than 1.0 before it purchases inventory on credit. When it makes the
purchase,
A. its quick ratio remains unchanged.
B. its quick ratio decreases.
C. its current ratio remains unchanged.
D. its current ratio decreases.
40. Based on recent financial statement data for Harmony
Health Foods, Inc. (HHF), shown below, HHF’s long term debt-to-equity ratio
equity is
https://my.pennfoster.com/exams/images/061500NR_Q36-38.gif
.
A. 133.3%.
B. 180%.
C. 75%
41. Based on recent financial statement data for Harmony
Health Foods, Inc. (HHF), shown below, HHF’s times interest earned ratio is
(rounded):
https://my.pennfoster.com/exams/images/061500NR_Q36-38.gif
.
A. 3.47
B. 1.73.
C. 2.47.
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