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WorksheetsAccounting 1 Objective Test FBLA
Total questions: 100
Worksheet time: 50mins
The excess of issue price over par of common stock is termed a(n)
premium
income
discount
deficit
When goods are sold for cash, the journal entry is
debit Cash, credit Sales
debit Sales, credit Cash
debit Merchandise Inventory, credit Accounts Payable
debit Merchandise Inventory, credit Accounts Receivable
What is the third step in the closing process?
Close income summary to owner's capital account
Close debit balances in expense accounts to income summary
Close credit balances in revenue accounts to income summary
Close withdrawals to the owner's capital account
Which of the following accounts would require a closing entry at the end of the fiscal period?
Accounts Receivable
Capital
Equipment
Income Summary
To prove a journal:
the total of all the debit columns should equal the total of all the credit columns
draw a double line below the amount columns
all answers are correct
draw a single line just below the last transaction and enter the column totals
The two types of journal entries needed to change general ledger account balances at the end of the fiscal period are:
closing and correcting entries
adjusting and correcting entries
adjusting and closing entries
closing and revenue entries
The entry to record receipt of cash from owner as an investment is:
debit Cash, credit Capital
debit Capital, credit Cash
debit Drawing, credit Cash
debit Cash, credit Accounts Payable
Assume the sales for the month were $5,000 and that total expenses were $3,000. Net income is $2,000. Using these figures, what is the closing entry to close out the expenses located in the general ledger?
debit the various expenses $3,000; credit Income Summary $3,000
debit Capital $3,000; credit the various expenses $3,000
debit Income Summary $3,000; credit the various expense $3,000
debit Capital $3,000; credit Income Summary $3,000
To record the sale of merchandise on account, including sales tax,
debit Sales and Sales Tax Payable, credit Accounts Receivable
debit Accounts Receivable, credit Merchandise Inventory and Sales Tax Payable
debit Accounts Receivable, credit Sales and Sales Tax Payable
debit Sales, credit Accounts Receivable and Sales Tax Payable
Assume the ZZ Corporation paid cash at maturity on a $5,000, 6-month note at 6% interest. What is the journal entry that was recorded when the loan was obtained?
debit Notes Payable, $5,000, and Interest Expense, $150; credit Cash, $5,150
debit Notes Payable, $5,000; credit Cash, $5,000
debit Cash, $5,000; credit Notes Payable, $5,000
debit Notes Payable, $5,150; credit Cash, $5,150
Which one of the following could not be considered income?
winnings from the lottery
interest received from a savings account
interest paid on a loan
a paycheck
Closing entries result in the transfer of net income or net loss into the:
owner's capital account
income summary account
cash account
paid-in capital
When merchandise is sold on account and sales tax is also collected what happens?
Sales is debited for the price of the goods
the accounts receivable account balance is increased
the sales tax is not reported
Accounts Receivable is credited for the total sale and sales tax
DC Enterprises returned $567 worth of merchandise purchased one week before and received credit on their account. In which journal is the transaction recorded?
Cash Payments Journal
Cash Receipts Journal
General Journal
Purchases Journal
Supplies purchased on account were incorrectly recorded as Office Equipment. The correcting entry would be
Supplies, debit; Accounts Payable, credit
Accounts Receivable, debit; Supplies, credit
Office Equipment, debit; Supplies, credit
Supplies, debit; Office Equipment, credit
A retailer purchases merchandise with a catalog list price of $10,000. The retailer receives a 25 percent trade discount and credit terms of 2/10, n/30. What amount should the retailer debit to the Merchandise Inventory account?
$7,500
$9,800
$10,000
$7,350
What is the first step in the closing process?
close debit balances in expense accounts to income summary
close income summary to the owner's capital account
close credit balances in revenue accounts to income summary
close withdrawals to the owner's capital account
The journal entry to close Income Summary when there is a net loss is:
debit owner's capital account; credit Sales
debit Income Summary; credit owner's capital
debit Sales; credit Income Summary
debit owner's capital; credit Income Summary
The difference between the budgeted amount and the actual amount that you spend is
budget variance
gross pay
net pay
the amount you save
What is the term for proving the equality (debits=credits) of the totals of columns in a journal?
double-checking
footing
cross-footing
auditing
Which one of the following is not an asset account?
cash
sales
office equipment
supplies
Which of the following describes the classification and normal balance of J. Schuyler, Drawing?
Owner's Equity, debit
Liability, credit
Expense, debit
Asset, debit
The type of account and normal balance of Accumulated Depreciation is
asset, debit
contra asset, debit
asset, credit
contra asset, credit
Sales Tax Payable is classified as a(n)
liability account
asset account
owner's equity account
revenue account
Cash investments made by the owner to the business on the statement of cash flows in the
supplemental statement
investing activities section
financing activities section
operating activities
The business entity concept means that
an entity is organized according to the rules set by the FASB
an entity is organized according to state or federal statutes
the entity is an individual economic unit for which data are recorded, analyzed, and reported
the owner is part of the business entity
The balance side of an owner's capital account is:
none of the answers are correct
the left side
the debit side
the credit side
The first digit in the account number 120 means that the account is in the
Liability division of the general ledger
Expense division on the general ledger
Asset division on the general ledger
Revenue division on the general ledger
A new account between accounts 530 and 540 will be assigned the number:
539
535
537
531
A business has the following expense accounts: 510, Advertising Expense; 520, Miscellaneous Expense; 530, Repair Expense. A new account titled Utilities Expense is added. The account number for this new account is:
540
550
515
525
Which of the following represents costs that will expire over time or through the use of assets?
Rent Revenue
Supplies
Income Taxes Payable
Unearned Revenue
Which one of the following best describes Accounts Receivable?
amounts to be collected that will provide economic benefit in the future
cash to be collected in the future
amounts owed by customers for services rendered or merchandise sold
an asset
Which category of accounts is listed second in the General Ledger?
Revenue
Expenses
Liabilities
Assets
Notes Receivable are classified as:
other revenue
current assets
current liabilities
other expense
What are the main differences between long-term and short-term financial goals?
short-term goals must be accomplished within one work day; long-term goals take more than one work day but less than the average work week
short-term goals take less than a month to achieve; long-term goals take more than a month but less than one year to achieve
short-term goals take one year or less to achieve; long-term goals take more than 5 years to achieve
short-term goals take less than $10,000 to achieve; long-term goals take more than $10,000 to achieve
Which government agency has the authority to set acceptable accounting methods in the United States?
SEC
EEOC
Federal Reserve
FTC
Companies listed on the stock exchanges must file financial statements with the:
Securities and Exchanges Commission
Internal Revenue Service
American Institute of Certified Public Accountants
Financial Accounting Standards Board
All of the following items would appear on the balance sheet except:
accounts receivable
the owner's capital account
withdrawals
patents
The correct order of the three stages of accounting is:
Processing, measurement, and communication
Measurement, processing, and communication
Measurement, communication, and processing
Communication, processing, and measurement
Those who lend money or deliver goods and services before being paid are called:
underwriters
debtors
creditors
investors
In the accounting cycle, the last step is
journalizing and posting the closing entries
preparing a post-closing trial balance
journalizing and posting the adjusting entries
preparing the financial statements
Recording revenue and the expenses associated with earning that revenue in the same accounting period is referred to as
the allowance method
matching management
the adjustment concept
the matching principle
The beginning of the year balances for Shaw Industries were: Assets $122,000, Liabilities $69,000, and Equity $53,000. If the company purchased equipment costing $56,000 with $6,000 cash and incurred a note payable for the balance, by what amount did the equity section of the Balance Sheet change as a result of this purchase?
$6,000
$-0-
$56,000
$50,000
The beginning of the year balances for Shaw Industries were: Assets $122,000, Liabilities $69,000, and Equity $53,000. If the company purchased equipment costing $56,000 with $6,000 cash and incurred a note payable for the balance, what is the balance in the assets section of the Balance Sheet directly after the purchase?
$116,000
$178,000
$172,000
$66,000
Amounts owed by a business are referred to as
liabilities
equities
assets
capital
Under the perpetual inventory system, all purchases of merchandise are debited to the account entitled
Cost of Merchandise Available for Sale
Purchases
Cost of Merchandise Sold
Merchandise Inventory
The accounts receivable turnover ratio is how often accounts receivable is collected. Which one of the following is correct?
annually
monthly
quarterly
weekly
An example of a permanent account is
accounts payable
rent expense
fees revenue
withdrawals
A drawing account has a normal
credit balance and is decreased by a credit
debit balance and is increased by a debit
debit balance and is increased by a credit
credit balance and is decreased by a credit
Inflation is
a general decline in the price level
a general rise in the price level
an increase in new products and services
a decrease in new products and services
The financial statement that reports whether the business earned a profit and also lists the types and amounts of the revenues and expenses is called
a statement of owner's equity
a balance sheet
an income statement
a statement of cash flows
The financial statement that details the revenues and expenses and the profit or loss for a business is called a(n)
balance sheet
statement of owner's equity
statement of cash flows
income statement
Information to prepare the revenue section of the Income Statement is obtained from the
Income Statement Debit column on the work sheet
Trial Balance Debit column on the work sheet
Trial Balance Credit column on the work sheet
Income Statement Credit column on the work sheet
When an amount on an income statement is written in parenthesis, the amount is a(n)
negative amount
none of the answers are correct
estimate
possible error
The financial statement that reports revenues and expenses for a specific period of time is the
statement of cash flows
adjusted trial balance
balance sheets
income statement
What is the proper adjusting entry at June 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $15,500, and unexpired amounts per analysis of policies, $4,500?
Debit Insurance Expense, $15,500; Credit Prepaid Insurance, $15,500
Debit Insurance Expense $4,500; Credit Prepaid Insurance, $4,500
Debit Prepaid Insurance, $11,500; Credit Insurance Expense, $11,500
Debit Insurance Expense, $11,000; Credit Prepaid Insurance $11,000
The journal entry a company records for the issuance of bonds when the contract rate is less than the market rate would be
debit Cash and Discount on Bonds Payable, credit Bonds Payable
debit Cash, credit Premium on Bonds Payable and Bonds Payable
debit Bonds Payable, credit Cash
debit Cash, credit Bonds Payable
When a journal entry is posted to the general ledger, the date recorded in the general ledger account is
the date of the journal entry
the date on which the posting is completed
the current date
the date of the transaction
Assume the following for XYZ Delivery Service: Net Income for the fiscal period, $10,000; Beginning Owner's Equity, $35,000; Owner's Withdrawals for the fiscal period, $5,000. What is the return on owner's equity for the fiscal period?
33.3%
16.67%
20%
50%
When the owner withdraws cash, the owner's drawing account is
decreased by a debit
increased by a credit
increased by a debit
decreased by a credit
When comparing a retail business to a service business, the financial statement that changes the most is the
Income Statement
Statement of Cash Flow
Balance Sheet
Statement of Owner's Equity
What Balance Sheet category does the following belong to?
Petty Cash = $800.00
Assets
Liabilities
Equities
A balance sheet
itemizes the revenue and expenses for a specified period of time
reports the changes in owner's equity for the fiscal period
itemizes the assets and liabilities of a business
provides the source of information for preparing the income statement
The information used to prepare the balance sheet can be obtained from the
Balance Sheet columns on the work sheet
Trial Balance columns on the work sheet
journal
general ledger
Owner's equity is
listed on the right side of the balance sheet
listed on both sides of the balance sheet
not listed on the balance sheet
listed on the left side of the balance sheet
A working paper used to summarize the general ledger information needed to prepare financial statements is called a
worksheet
source document
journal
ledger account form
Which one of the following accounts is not extended into the Balance Sheet section on the work sheet?
Capital
Office Equipment
Cash in Bank
Rent Expense
On a worksheet, the balance of cash is extended to the
Balance Sheet Debit column
Balance Sheet Credit column
Income Statement Credit column
Income Statement Debit column
The following information is available for the Deeds Travel Agency:
Total Revenues . . . . $125,000; Total Expenses . . . . $60,000; J.T. Deeds, Capital . . . . $80,000; J.T. Deeds, Withdrawals . . . . $15,000
After these closing entries are completed, what will be the balance in the J.T. Deeds, Capital account?
$145,000
$80,000
$130,000
$65,000
The worksheet at the end of September has $4,000 in the Balance Sheet credit column for Accumulated Depreciation. The worksheet at the end of October has $4,750 in the Balance Sheet credit column for Accumulated Depreciation. What was the amount of the depreciation expense adjustment for the month of October?
$4,750
$750
$4,000
The amount cannot be determined
If the bank statement balance and the checkbook balance are different, it is because
outstanding checks
bank service charges
all answers are correct
outstanding deposits
Checks that have been written but not yet presented to the bank for payment are called
outstanding checks
bounced checks
NSF checks
ETF (electronic transfer funds)
A bank service charge would be journalized as
Cash debit and Charge Expense credit
Cash credit and Miscellaneous Expense debit
Cash credit and Sales debit
Cash credit and Charge Expense debit
An endorsement on the back of a check consisting only of a signature is a
special endorsement
signature endorsement
restrictive endorsement
blank endorsement
When performing a bank reconciliation, which would not require a journal entry or adjusting entry?
check printing charges
outstanding checks
fee for NSF check
bank error
Which of the following is not an analysis used in assessing solvency?
Inventory analysis
Ratio of net sales to assets
Number of times interest charges are earned
Current position analysis
Sara earns $10 per hour. One week, she worked 42 hours. Her gross earnings for this pay week are
$460
$430
$450
$420
Until the amounts withheld from employee salaries are paid by the employer, they are recorded as
revenue
assets
salary expense
liabilities
The amount charged to the Salaries Expense account is equal to the total
net pay
deductions in the payroll register
gross earnings
amount of withholding taxes
The amount of money withheld for federal and state taxes from an employee's paycheck is recorded as
expenses for the employer
liabilities for the employee
liabilities for the employer
expenses for the employee
A business owned by two or more persons is a
sole proprietorship
corporation
partnership
charter corporation
A business owned by one person is known as a
revenue account
partnership
drawing account
sole proprietorship
Assume that Tim's Store sold merchandise on account to Teen Town Tots. The sales invoice indicates a sale of $1,800 with a sales tax rate of 6.5% that must be collected. What is the appropriate journal entry for this transaction?
debit Accounts Receivable and Teen Town Tots for $1,917; credit Sales for $1,800 and credit Sales Tax Payable for $117.
debit Accounts Receivable and Teen Town Tots for $1,800; credit Sales for $1,800
debit Accounts Receivable and Teen Town Tots for $1,800; credit Sales for $1,800 and credit Sales tax Payable for $117
debit Accounts Receivable and Teen Town Tots for $1,800 and debit Sales Tax Payable for $117; credit Sales for $1,917
Which one of the following types of business ownerships is characterized by the positive aspects of being able to make all business decisions without consulting others, being able to set your own working hours, and being your own boss?
proprietorship
partnership
franchise
corporation
Which one of the following is a potential disadvantage for being classified as a corporation?
limited liability for the owners
ease in transferring ownership
ease of raising additional capital
double taxation
Onxy Manufacturing Inc. purchases a new machine for $80,000 that will be depreciated using the units of production method. As bookkeeper you find that the useful life of this machine is 720,000 units and the salvage value is $8,000. The first year 105,000 units are completed on this machine. What is the depreciation for year one
$105,000
$10,500
$105
$1,050
When you calculate depreciation on an asset used in your business, the cost of the asset means the total cost, including shipping and installation if the asset is equipment. Find the depreciable value of an oven in your father's bakery which costs $28,000 but still has a $1,000 value at the end of its life, if it has a useful life in the bakery of 5 years.
$27,000 depreciable value
$28,000 depreciable value
$27,300 depreciable value
$5,400 depreciable value
The adjusting entry for depreciation is
debit Depreciation Expense and credit Cash
debit Cash and credit Depreciation Expense
debit Accumulated Depreciation and credit Depreciation Expense
debit Depreciation Expense and credit Accumulated Deprecaition
The original cost of a plant asset minus accumulated depreciation is called the
salvage value of a plant asset
useful life of a plant asset
depreciable value of a plant asset
book value of a plant asset
The following depreciation method is not an accelerated method
straight-line
units of activity
declining balance
units of production
Which of the following statements is false concerning an automated accounting system?
Automated accounting aids in following the trails of information needed to analyze and correct errors.
There is very little need to learn how to process transactions manually before learning how to enter the information into an automated accounting system.
Once accounting principles have been learned by entering transactions on paper, students are better able to understand the functions of an automated system.
There are many different kinds of automated systems available for use in the business world and a business owner should choose the one that best suits the needs of his/her business.
An example of automated account output is
special journal entries
file maintenance
financial reports
automatic posting
The primary advantage(s) of a computerized accounting system is
the tax deduction available for the first year of conversion
the 100 percent accuracy of the accounting records
electronically handling payroll for employees
efficiency and speed
What would not be an advantage for using a computerized accounting system
automatic ledger entries
training costs for employees to use the system
accounts always in balance
customized reporting capabilities
The first stage of a computerized accounting system is
General Ledger Transactions (GLT)
Trial Balance Worksheet (TBW)
Reversal and Journalizing Transactions (RJE)
Transaction Processing System (TPS)
Ethical behavior requires
auditors to invest in businesses they audit
managers to use accounting information to benefit themselves
that auditors' pay not depend on the figures in their client's report
analysts to report information favorable of their companies
Which one of the following questions is not a part of the checklist that can be used as a guide when making ethical business decisions?
Does the action I an about to take violate company or professional standards?
Does the action I am about to take make a profit for my business?
Does the action I am about to take violate any laws?
Who is affected, and how, by the action I am about to take?
Which best describes responsibility?
caring deeply about people
the ability to overcome fear
acknowledging and appreciating your work
being dependable and taking positive actions
The principle that requires an accountant to protect information learned in the course of work is called
competence
integrity
confidentiality
objectivity
Which is not one of the principles underlying the accountant's code of professional ethics?
integrity
loyalty
objectivity
independence
