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Financial Accounting
Financial Accounting
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CGD Sem 1
Flashcards
54 cards
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Questions
54
Answers
1
The balance sheet reports the
results of operations on a specific date
results of operations for a specific period
financial position on a specific date
financial position for a specific period
2
Which of the following accounts would be included in the plant assets category?
mortgage payable
office supllies
land held for investment
accumulated depreciation
3
Which characteristic of a corporation is a disadvantage?
mutual agency
none are disadvantages
double taxation
limited liability
4
Which of the following accounts is a liability?
prepaid rent expense
accounts recievable
service revenue
unearned revenue
5
With good internal controls, the person who handles cash can also
account for cash payments
issue credits to costumers for sales returns
account for cash receipts from customers
none of the above
6
A company's own stock it has issued and repurchases is called
treasury stock
outstanding stock
dividend stock
issued stock
7
The left side of an account is used to record which of the following?
debit or credit, depending on the type of account
credits
increase
debits
8
The revenue recognition principle requires
expenses to be matched with revenue of the period
revenue to be recorded only after the business has earned it
revenue to be recorded only after the cash is recieved
time to be divided into annual periods to measure properly
9
What intangible asset is recorded only as part of the acquisition of another company?
patent
franchise
goodwill
copyright
10
A small stock divident
has no effect on total equity
all of the above
increase retained earnings
decreases common stock
11
Which type of business organization is owned by only one owner?
sole proprietorship
corporation
A, B, and C are all correct
partnership
12
Which accounts would be closed at the end of the year using perpetual inventory system?
accounts payable
cost of goods sold
accounts receivable
merchandise inventory
13
Document that explains all differences between a company's cash records & bank figure is called
bank statment
bank reconciliation
bank collection
electronic fund transfere
14
The adjusted trail balance shows...
amounts that may be out of balace
account balances after adjustments
revenues and expenses only
assets and liabilities
15
Which of the following is true of accrual basis accounting and cash basis accounting?
Accrual accounting records revenue only when it is earned
accrual accounting is not allowed under GAAP
cash basis accounting records all transactions
all of the above are true
16
Which cost is NOT recorded as part of the cost of a building?
construction materials and labor
real estate commission paid to buy the building
concrete for the buildings foundation
annual building maintenance
17
Separation of duties is important for internal control of
cash payments
cash receipts
both A and B
neither A or B
18
Which of the following accounts is NOT closed?
accumulated depreciation
dividends
Depreciated expense
service revenue
19
The employer is responsible for which of the following payroll taxes?
Federal and State unemployment tax
1.45% FICA-Medicare tax
6.2% FICA-OASDI tax
all of the above
20
Which inventory method assigns ending merch. invent the newest most recent costs during period
LIFO
Specific Identification
Weighted-average
FIFO
21
Which of the following is most closely linked to accounting conservatism?
lower-of-cost or market rule
materiality concept
consistency principle
disclosure principle
22
Which situation indicated a net loss within the Income Statement section of the worksheet?
total credits exceed total debits
total debits exceed total credits
to debits equal total credits
none of the above
23
If a company owns 25% of the voting stock of Pink Co, dividends received will be
credited to long-term investments Pink Co
credite to dividend income
debited to long-term investments Pink Co
credited to cash
24
Which of the following is not an external user of a business's financial information?
employees
customers
investors
taxing authorities
25
Adjusting the accounts is the process of
subtracting expenses from revenues to measure net income
zeroing out account balances to prepare for the next period
recording transactions as they occur during the period
updating accounts at the end of the period
26
Which method is not used to compute depletion?
depletion method
double-declining balance method
units-of-production method
straight-line method
27
Which of the following steps of the accounting cycle is not completed at the end of the period?
journalize and post the closing enteries
prepare the financial statements
prepare the post-closing trail balance
journalize transactions as they occur
28
Which of the following statements concerning reversing entries is true?
reversing entires are dated December 31
reversing entries are required by GAAP
reversing entries R most often used w/ accrual-type adjustme
reversing entries are recorded before adjusting entries
29
Accounting is the information system that
measures business activites
all of the above
communicates the results to decision makers
processes information into reports
30
Which of the following characteristics best describes a corporation?
gross profit, operating income, other rev, & exp, net income
gross profit, operating income, net income, other rev. & exp
other rev. & exp, operating income, gross profit, net income
operating income, gross profit, net income, other rev. & exp
31
Which sequence correctly summarizes the accounting process?
prepare trail balance, journalize trans, post to accounts
journalize trans, post to accounts, prepare trail balance
journalize trans, prepare trail balance, post to accounts
post to accounts, journalize trans, prepare trail balance
32
A worksheet
internal doc that helps summarize data for prep of statement
a ledger listing account balance & changes in those accounts
is a journal used to record transactions
is financial statement that reports net income during period
33
Which account does a merchandiser use that a service company does not use?
merchandise inventory
sale revenue
cost of goods sold
all of the above
34
The debt to equity ration is calculated as
current liability/total equity
total liablitities/total assets
total assets/total equity
total liabilities/ total equity
35
Entry to record write-off of uncollectable account using the direct-write off method involves
credit to cash
debit to bad debits expense
debit to allowance for bad debts
debit t accounts receivable
36
Assets and liabilities are listed on the balance sheet in order of their
adjustments
balance
liquidity
purchase date
37
Recorded cash collection on account by debiting Cash & crediting accounts payable. What error?
cash is overstated
liabilities are overstated
the trail balance will not balance
expenses are overstated
38
Which principle/concept states businesses should use the same accounting method for all periods
consistency
disclosure
conservatism
materiality
39
Known liabilities of estimated amounts are
ignored (record when paid)
reported only in the notes to the financial statements
reported on the balance sheet
reported on the income statment
40
Daniel's bonds payable carry stated interest of 5% & market rate of 7%. Price of the bonds are
par value
discount
face value
premium
41
Detailed record of the changes in a particular asset, liability, or stockholders equity is ..
an account
a trail balance
a journal
a ledger
42
Which of the following statements is correct?
accounts payable s increased with a credit
unearned revenue is increase with a debit
prepaid expenses are decreased with a debit
rent expense is increased with a credit
43
A bond that matures in installments at regular intervals is a
periodic bond
term bond
serial bond
terminal bond
44
Which of the following accounts may appear on a post-closing trail balance?
cash, salaries payable, and salaries expense
cash, salaries payable, and service revenue
cash, service revenue, and salaries expense
cash, salaries payable, and retained earnings
45
How should you record a capital expenditure?
debit a liability
debit asset
debit capital
debit an expense
46
Which method almost always produces the most depreciation on the first year?
units-of-product
double-declining-balance
all produce the same depreciation during the first year
straight-line
47
Which requires accounting information to be complete, neutral, and free from material error?
economic entity assuption
faithful representation concept
going concern assumption
cost principle
48
what do closing entries accomplish?
bring retained earnings to the correct ending balance
all of the above
transfer revenues, expenses & dividends to retained earnings
zero out the revenues, expenses, and dividends
49
The two basic sources of corporate capital are
preferred and common
paid-in capital and retained earnings
retained earnings and dividends
assets abd equity
50
Which of the following is NOT part of the definition of internal control?
separation of duties
promote operational efficiency
safeguard assets
encourage employees to follow company porcedure
51
The two main inventory accounting systems are the...
cash and accrual
purchase ans sale
perpetual and periodic
returns and allowances
52
Generally Accepted Accounting Principles (GAAP) are currently formulated by the
Financial Accounting Standards Board (FASB)
American Institute of Certified Public Accountants (AICPA)
Institute of Management Accountants (IMA)
Securities and Exchange Commission (SEC)
53
When recording credit card or debit card sales using the net method,
cash received equals sales
cash received equals sales minus fees
cash received equals sales plus fees
54
Suppose Yummy issues common stock in exchange for a building. Yummy should record building as
its book value
the par value of the stock given
its market value
value assigned by the board of directors
