Mr. Ronald Smith is the owner of several small businesses. He has decided to save money during his initial years of operation by not hiring a professional accountant. He has one journal and logging book where he intermingles the transactions of all of his businesses to find the net effect of his entrepreneurship. Which qualitative characteristic, constraint or assumption does this violate?

C. Relevance Qualitative Characteristic

D. Reliability Qualitative Characteristic

The Chart of Accounts is:

C. a listing of all accounts used to record the business transactions.

A. a listing of all open accounts and their balances.

B. expected to be in balance at all times.

D. not necessary to record transactions.

A. a record of all changes in an asset, liability or shareholder’s equity during a period.

B. an event that has an economic impact on the business.

C. always expected to have a debit balance.

The double entry accounting process:

A. requires that every transaction effect at least two accounts.

B. mandates that the dollar sum of the debits equal that of the credits for each transaction.

Posting is the process of:

B. transferring the data from the journal to the ledger.

A. transferring the data from the ledger to the journal.

C. transferring the information from the trial balance to the balance sheet.

D. recording the data in the journal.

In recording a transaction in the journal:

A. the debits are recorded prior to the credits.

B. the credits are recorded prior to the debits.

C. there is no need to know the debit and credit rules.

D. it is not necessary to record accounts with normal debit balances.

D. is the increase in shareholder’s equity as a result of providing a good or service.

A. is the increase in liabilities as a result of providing a good or service.

C. has the same normal balance as all asset accounts.

A. becomes a liability of the period.

B. is recorded during the adjusting entry process.

The revenue recognition principle mandates that revenue be recorded:

B. when it is earned even if the cash has not been received.

A. when it is earned and the cash is received.

C. only when the cash is received.

The Robinson Company is to record depreciation on its machinery in the amount of $10,000. The entry to record the depreciation:

C. would include a debit to the Depreciation Expense, Machinery account.

A. would include a debit to Accumulated Depreciation, Machinery.

B. would include a debit to the Machinery account.

D. would include a credit to the Machinery account.

In preparing the closing entries:

C. all temporary accounts are reduced to a zero balance.

A. all permanent accounts are reduced to a zero balance.

B. all asset and liability accounts are reduced to a zero balance.

D. all accounts are reduced to a zero balance.

In adhering to the matching principle:

A. revenue is recorded in the period it is earned.

B. expenses are recorded in the period they are actually used.

C. current expenses are subtracted from the current revenue to determine net income.

Which of the following statements about annual reports is false?

C. Styles of annual report should be used as a basis for deciding whether to invest or not.

A. Annual reports are used to project and share a vision about the company.

B. Annual reports are available in hardcopy and softcopy (on the corporate website).

An entity shall present:

D. A complete set of financial information at least annually.

A. Explanation of applying policies that do not comply with the accounting standards in the notes to the accounts

B. All financial statements on cash basis

C. Assets and liabilities on the balance sheet after offsetting them

Which of the following is not typically a current asset?

B. Property, Plant and Equipment

The Statement of Comprehensive Income:

A. Can be presented in a single statement or two separate statements.

B. May display expenses by nature

C. May display expenses by function.

Which of the following changes do not require a retrospective restatement of comparative amounts?

B. Changes due to new accounting standards

A. Change in accounting estimate

C. Change in accounting policies

Which of the following errors are likely to be material?

B. A misstatement of depreciation expense by $50,000. Net profit for the year amounts to $200,000.

A. A misstatement of supplies expense by $150. Total revenues for the year amount to $1 million.

C. A misstatement of cash by $200. Total cash on balance sheet is $1.5 million.

The information that must be provided to properly identify each component of a set of financial statements excludes:

C. The country in which the entity operates.

A. The presentation currency and level of rounding used.

B. The date of the end of the reporting period or the period covered by the financial statements.

D. The name of the reporting entity.

Arya Limited has the following liabilities: Accounts payable $10,000, Accrued salary $3,000, Tax payable $7,000, Long-term note payable $8,000 (half of which is due in the coming financial period). What are the amounts of current and non-current liabilities?

A. Current: $24,000. Non-current: $4,000

B. Current: $20,000. Non-current $8,000

C. Current: $$17,000, Non-current: $11,000

D. Current: $14,000, Non-current: $14,000

Materiality depends on:

A. The size of the omission or mis-statement

B. The nature of the omission or mis-statement

D. The higher of 10% of total assets and 10% of total revenues.

Which method of writing off an uncollectible account does not violate the expense recognition principle?

D. Expense recognition does not apply to uncollectible account expense.

When an accounts receivable account has been determined to be uncollectible the entry to record the write off using the allowance method would include a:

D. debit to Allowance for Uncollectible Accounts.

A. debit to Accounts Receivable.

B. debit to Uncollectible Account Expense.

The numerator in the quick ratio includes:

C. Cash plus short-term investments

On May 4, Rudd Sales Co. sold a $6,100 machine to a customer. The customer signed a 60-day, 4% note. What entry does Rudd make on May 4?

C. DR Notes Receivable 6,100 CR Sales Revenue 6,100

A. DR Accounts Receivable 6,140 CR Sales Revenue 6,100 CR Interest Revenue 40

B. DR Sales Revenue 6,100 CR Accounts Receivable 6,100

D. DR Cash 6,344 CR Notes Receivable 6,100 CR Interest Revenue 244

The formula to calculate days’ sales outstanding (DSO) is:

C. 365 / Accounts receivable turnover

A. Net credit sales / Average net accounts receivable

B. Average net accounts receivable / 365

D. Accounts receivable turnover / Net credit sales

Traylor Corporation reports net income for the year of $565,000. An uncollectible account of $125 is written off. Which of these is/are true?

A. Net income will decrease by $125.

C. Net accounts receivable will decrease.

The periodic inventory system:

d. is based on a physical count of the units.

a. keeps a continuous record for each inventory item.

b. is not used very often by business that have a large sales volume.

c. is not used in assigning the total cost to the ending inventory.

The formula for the multiple step income statement used by a merchandiser is:

c. Revenue – Cost of Goods Sold = Gross Profit – Operating Expenses = Net Income.

a. Revenue – Expenses = Net income.

b. Revenue – Freight-in + Purchases = Net Income.

d. Revenue + Cost of Goods Sold – Operating Expenses = Net Income.

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Easy

Adam Łożyński

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70 questions

Show all answers

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

The Accounting Equation is:

Assets + Liabilities = Owner’s Equity.

Assets = Liabilities – Owner’s Equity.

Assets = Liabilities + Owner’s Equity.

Assets = Liabilities x Owner’s Equity.

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

Which item is not an asset?

Cash

Accounts Payable

Accounts Receivable

Supplies

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

Given that total liabilities decreased by $75,000 and total owner’s equity increased by $90,000
during the same accounting time period what is the net effect on total assets during this period?

$15,000 increase

$15,000 decrease

$90,000 increase

$90,000 decrease

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

Which of the following qualitative characteristic mandates provided below is complete, free from material error or bias and prudent?

Understandability

Comparability

Relevance

Reliability

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

Which financial statement formula is the same as the accounting equation?

Balance Sheet

Income Statement

Statement of Changes in Equity

Statement of Cash Flow

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

The Accrual Basis Assumption allows one to:

Recognize revenue only when cash is received

Accrue expenses only when cash is paid

Recognize revenue and accrue expenses based on cash transactions

both Recognize revenue only when cash is received and Accrue expenses only when cash is paid

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

Which financial statement reports on the revenues and expenses during a specified period of time?

A. Income Statement

B. Statement of Changes in Equity

C. Balance Sheet

D. Statement of Cash Flows

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FARIC ALL CHAPTERS

70 questions

The Accounting Equation is:

Which item is not an asset?

Given that total liabilities decreased by $75,000 and total owner’s equity increased by $90,000
during the same accounting time period what is the net effect on total assets during this period?

Which of the following qualitative characteristic mandates provided below is complete, free from material error or bias and prudent?

Which financial statement formula is the same as the accounting equation?

The Accrual Basis Assumption allows one to:

Which financial statement reports on the revenues and expenses during a specified period of time?

Listed below are the account balances of the Arthur Frank entity:
Total Assets are:

Listed below are the account balances of the Arthur Frank entity:
The Net Income is:

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FARIC ALL CHAPTERS

70 questions

The Accounting Equation is:

Which item is not an asset?

Given that total liabilities decreased by $75,000 and total owner’s equity increased by $90,000during the same accounting time period what is the net effect on total assets during this period?

Which of the following qualitative characteristic mandates provided below is complete, free from material error or bias and prudent?

Which financial statement formula is the same as the accounting equation?

The Accrual Basis Assumption allows one to:

Which financial statement reports on the revenues and expenses during a specified period of time?

Listed below are the account balances of the Arthur Frank entity:Total Assets are:

Listed below are the account balances of the Arthur Frank entity:The Net Income is:

Create a free account and access millions of resources

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Popular Resources on Wayground

Discover more resources for Business

Given that total liabilities decreased by $75,000 and total owner’s equity increased by $90,000
during the same accounting time period what is the net effect on total assets during this period?

Listed below are the account balances of the Arthur Frank entity:
Total Assets are:

Listed below are the account balances of the Arthur Frank entity:
The Net Income is: