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WorksheetsUnit 6 Review
Total questions: 45
Worksheet time: 23mins
Name
Class
Date
1.
A creditor is most likely to examine a business’s financial accounting records if the business is
a)
applying for a bank loan.
b)
selecting a new market.
c)
using cash accounting.
d)
complying with regulations.
2.
Which of the following is a Liability?
a)
Rent Payable
b)
Cash
c)
Capital
d)
Rent Receivable
3.
Which of the following financial reports provides estimates of when, where, and how much money will come into and out of a business next year:
a)
Balance sheet
b)
Cash flow statement
c)
Income statement
d)
Bank statement
4.
A chronological record of the transactions, showing an explanation of each transaction, the accounts affected, whether those accounts are increased or decreased, and by what amount are the
a)
Accounting System
b)
General Journal
c)
Accounting Process
d)
Transaction Process
5.
Also known as stockholders’ (or shareholders’) equity, book value, and net worth.
a)
Assets
b)
Liabilities
c)
Equity
d)
Net Worth
6.
The process of keeping the financial records of a business is known as
a)
accounting
b)
controlling
c)
financing
d)
bookeeping
7.
A bank denies a business owner’s application for credit saying, “We feel that you would be un-able to make the monthly payments because of your other debts.” What financial report did the bank review?
a)
Budget
b)
Balance sheet
c)
Income statement
d)
Operating budget
8.
Accounting records for a business show that the week’s total sales revenues were $125,000. Cash sales accounted for $50,000 and credit sales, $75,000. This is an example of
a)
classifying financial information
b)
the cash accounting method
c)
an income statement.
d)
the accrual method of accounting.
9.
In the Accounting Equation which of the following statements are true
a)
A debit in Assets increases while a debit Liabilities increases
b)
A debit in Assets increases while a debit Liabilities decrease
c)
A credit in Assets decreases while a credit in Owner’s Equity decreases.
d)
A credit in Assets increases while a credit in Owner’s Equity increases.
10.
An accounting device used to analyze transactions is called
a)
T Account
b)
Account System
c)
Account Equation
d)
Transactions
11.
A business has $57,500 in Liabilities and $20,000 in Owner’s Equity, how much are there in Assets?
a)
$35,500
b)
$77,500
c)
$7,500
d)
$82,500
12.
Which of the following is an Asset?
a)
Rent Payable
b)
Cash
c)
Capital
d)
Bank Loan
13.
For an accounting system to be useful to the business, the accounting information it contains must be
a)
accurate and up to date.
b)
approved by the chief executive officer.
c)
posted by an accountant.
d)
recorded using the accrual method.
14.
What type of accounting method would most likely be used by a large business that has a large number of outstanding loans and customer charge accounts?
a)
Check method
b)
COD method
c)
Cash method
d)
Accrual method
15.
Which of the following groups makes regular use of a business’s managerial accounting information:
a)
Managers
b)
Creditors
c)
Customers
d)
Investors
16.
Why are accurate accounting records important to a business?
a)
They prevent any financial losses
b)
They show the business how it is doing
c)
They increase the return on investments.
d)
They give the business an image of success.
17.
Which of the following is a true statement:
a)
Bookkeeping is the same as accounting.
b)
Bookkeeping does not use computers.
c)
Bookkeeping is limited to information on sales.
d)
Bookkeeping records business transactions.
18.
Two employees used a business’s computerized accounting system to change some records. They were able to steal $50,000 from the business because the accounting system lacked which of the following:
a)
Protection from theft and fraud
b)
An affordable price
c)
A manual system as backup
d)
Printed financial statements
19.
Which of the following categories of information are found on a balance sheet:
a)
Income, expenditures, profit
b)
Assets, liabilities, owner’s equity
c)
Assets, liabilities, margin
d)
Revenues, expenses, profit
20.
What accounting record would summarize a business’s profit or loss for a previous year?
a)
Bank statement
b)
Inventory record
c)
Income statement
d)
Balance sheet
21.
The formula for the Accounting Equation is
a)
Assets + Liabilities = Owners’ Equity
b)
Assets + Liabilities + Owners’ Equity
c)
Assets = Liabilities + Owners’ Equity
d)
Assets = Liabilities - Owners’ Equity
22.
The overall purpose of accounting is to
a)
maintain accurate reports
b)
keep track of sales
c)
compile the business’s expenses
d)
control the finances of the business.
23.
The foundation for accounting; represents the relationship between assets, liabilities, and owners’ equity, is known as the
a)
Accounting Equation
b)
Earnings
c)
Balance Statement
d)
Worth
24.
All monies owed to a firm by its customers are
a)
Income
b)
Net Worth
c)
Accounts Receivable
d)
Accounts Payable
25.
What type of accounting method would most likely be used by a small business owner who does not offer credit?
a)
Check method
b)
Cash method
c)
COD method
d)
Accrual method
26.
Which of the following is a requirement for a good accounting system:
a)
It should be replaced every two or three years.
b)
It should eliminate the need for an accountant.
c)
It should be updated annually.
d)
It should provide needed information quickly.
27.
What is one of the main reasons why businesses need to keep accurate accounting records?
a)
to regulate taxes
b)
to eliminate risks
c)
to control expenses
d)
to follow procedures
28.
Riley is an employee of the federal government who studies the financial reports of major busi-nesses in a specific industry. The government’s purpose in assigning this task to Riley is to
a)
identify trends in the industry.
b)
analyze employment statistics.
c)
calculate the businesses’ income taxes.
d)
verify compliance with laws.
29.
Checks, receipts, invoices, and purchase orders are examples of
a)
financial statements
b)
department ledgers
c)
source documents.
d)
accounting standards.
30.
Businesses use the information collected through the accounting process to prepare accurate:
a)
balance sheets.
b)
purchase orders.
c)
promissory notes.
d)
inventory forms.
31.
Businesses would not be able to determine if they are meeting their financial goals without accurate:
a)
production plans.
b)
accounting systems.
c)
distribution systems.
d)
marketing plans.
32.
Which of the following presents the first three steps in the accounting cycle in the correct order:
a)
Post, journalize, and analyze
b)
Analyze, journalize, and post
c)
Analyze, post, and journalize
d)
Post, analyze, and journalize
33.
Which of the following makes comparisons of the financial conditions at multiple organizations possible:
a)
Accounting standards
b)
Bookkeeping
c)
Source documents
d)
Trial balance
34.
What is the Working Capital Ratio, if Current Assets are $350,000 and Current Liabilities are $275,000 and what is does the indicator represent?
a)
1.27 ratio and is desirable
b)
1.27 ratio and is insufficient
c)
.78 ratio and is desirable
d)
.78 ratio and is insufficient
35.
Cash Conversion Cycle is most effective with
a)
Retail-type companies
b)
Software companies
c)
Consulting businesses
d)
Insurance companies
36.
Which measures how fast a company can convert cash on hand into even more cash on hand
a)
Return on Capital
b)
Cash Conversion Cycle
c)
Working Capital
d)
Finance
37.
The role of finance in business often involves:
a)
obtaining funds.
b)
buying supplies.
c)
monitoring expenses.
d)
paying employees.
38.
Assets a company already owns and can use to finance a new venture are called:
a)
accounts payable.
b)
dividends.
c)
return on capital.
d)
equity.
39.
When businesses invest funds to expand, they are involved in the process of:
a)
selling.
b)
depreciation.
c)
finance.
d)
capitalism.
40.
Which of the following is a requirement for a good accounting system:
a)
It should be updated annually.
b)
It should provide needed information quickly.
c)
It should eliminate the need for an accountant.
d)
It should be replaced every two or three years.
41.
Which of the following groups makes regular use of a business’s managerial accounting information:
a)
Managers
b)
Customers
c)
Creditors
d)
Investors
42.
On an Income State if the Total Expenses were greater than the Cost of Goods Sold the outcome would be a
a)
Net Income
b)
Net Loss
c)
Revenue
d)
Net Profit
43.
Which of the following is true
a)
Capital = Assets
b)
Net Income = Revenue
c)
Net Worth = Owner's Equity
d)
Gross Sales = Gross Profit
44.
If DIO = 182.5 days, DSO = 3.9 days, and DPO = 103.4 days, what is the Cash Conversion Cycle?
a)
CCC = 182.5 - 3.9 + 103.4 = 282 days
b)
CCC = 182.5 + 3.9 - 103.4 = 83 days
c)
CCC = 182.5 + 3.9 + 103.4 = 289.8 days
d)
CCC = 182.5 - 3.9 - 103.4 = 75.2 days
45.
In any accounting document, the phrase “Less” means to
a)
Total
b)
Deduct
c)
Do Not Equate
d)
Invest
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