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WorksheetsCA Midterm Review 2026
Total questions: 88
Worksheet time: 55mins
Accounting is the information system that
measures business activities
communicates the results to decision makers
processes information into reports
All of the above
Which of the following is not an external user of a business's financial information?
Taxing authorities
Customers
Employees
Investors
Generally Accepted Accounting Principles (GAAP) are currently formulated by the
Financial Accounting Standards Board (FASB)
Securities and Exchange Commission (SEC)
Institute of Management Accountants
(IMA)
American Institute of Certified Public Accountants (AICPA)
Which type of business organization is owned by only one owner?
Corporation
Partnership
Sole Proprietorship
All of the above
Which best describes a corporation
Business with a single owner
Not taxed
Stockholders not personally liable
Not a separate taxable entity
Which requires that accounting information be complete, neutral and free from error?
Faithful respresentation concept
Cost principle
Economic entity assumption
Going concern assumption
At the end of the year, Global Cleaning had total assets of $3,630 and equity of $2,280. How much were Global Cleaning's liabilities?
$5,910
$3,630
$1,350
$2,280
Global Cleaning sold and performed services on account for $6,400 and paid expenses totalling $2,500. What is Global Cleaning's net income or net loss?
Net income of $3,900
Net loss of $3,900
Net income of $6,400
Net income of $8,900
Global Cleaning performed cleaning services for a department store on account for $180. What is the impact on the accounting equation?
Increase both assets and liabilities by $180
Increase both assets and equity by $180
Increase both liabilities and equities by $180
Decrease liabilities by $180 and increase equity by $180
The balance sheet reports the
Financial position on a specific date
The results of operations on a specific date
Financial position for a specific period
Results of operations for a specific period
Assume Global Cleaning had net income of $570 for the year. Its beginning and ending assets were $4,520 and $4,180, respectively. What was its ROA?
12.6%
13.6%
13.1%
7.63%
An investor would use
financial accounting
managerial accounting
A banker would use
financial accounting
managerial accounting
The IRS (Internal Revenue Service) would use
financial accounting
managerial accounting
A controller would use
financial accounting
managerial accounting
A stockholder would use
financial accounting
managerial accounting
A human resources director would use
financial accounting
managerial accounting
A creditor would use
financial accounting
managerial accounting
Accounts Payable would be classified as
Asset
Liability
Equity
Cash would be classified as
Asset
Liability
Equity
Common Stock would be classified as
Asset
Liability
Equity
Accounts Receivable would be classified as
Asset
Liability
Equity
Rent Expense would be classified as
Asset
Liability
Equity
Service Revenue would be classified as
Asset
Liability
Equity
Office Supplies would be classified as
Asset
Liability
Equity
Dividends would be classified as
Asset
Liability
Equity
Land would be classified as
Asset
Liability
Equity
Salaries Expense would be classified as
Asset
Liability
Equity
ROA is net income divided by
Total Owners Equity at the end of the year
Total Assets at th end of the year
The average of Total Assets at the beginning and end of year
Current Assets at the end of the year
The income statement provides information about
credit worthiness
the cash balance
total economic resources
profitability
The cash flow statement has each of the following sections except
Cash flow from Sales Activities
Cash flow from Financing Activities
Cash flow from Operating Activities
Cash flow from Investing Activities
Which section of the cash flow statement relates to cash inflows and outflows from investors and creditors
Cash flow from Operating Activities
Cash flow from Investing Activities
Cash flow from Financing Activities
Cash flow from Sales Activities
The cash flow can reveal information about
economic resources of the firm
debt levels
net worth
annual profitability
This accounting principle assumes that an entity will remain in operation for the foreseeable future
Economic Entity Assumption
Cost Principle
Going Concern Assumption
Monetary Unit Assumption
This accounting principle requires that an organization be a separate economic unit
Economic Entity Assumption
Cost Principle
Going Concern Assumption
Monetary Unit Assumption
The following are ROA figures for 4 different companies. Based on this information alone, which company had the strongest performance in terms of net income for every dollar of assets?
Stop N Shop: 4.5%
Whole Foods: 6.0%
Target: 5.2%
North Shore Farms: 3.1%
True or False: Cash is always listed first on the balance sheet.
True
False
True or False: Office Supplies are considered a long term asset.
True
False
The Security Exchange Commission (SEC)
oversees U.S. financial markets
creates International Financial Reporting Standards
oversees the creation and governance of U.S. accounting standards
monitors the work of independent accountants who audit public companies
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
Get Fit Now gains a client who prepays $540 for a package of six physical training sessions. Get Fit Now collects the $540 in advance and will provide the training later. After four training sessions, what should Get Fit Now report on its income statement assuming it uses the accrual basis accounting method?
Service revenue of $360
Service revenue of $540
Unearned service revenue of $360
Cash of $180
The revenue recognition principle requires
time to be divided into annual periods to measure revenue properly.
revenue to be recorded only after the business has earned it.
expenses to be matched with revenue of the period.
revenue to be recorded only after the cash is received.
Adjusting the accounts is the process of
subtracting expenses from revenues to measure net income.
recording transactions as they occur during the period.
updating the accounts at the end of the period.
zeroing out account balances to prepare for the next period.
Which of the following is an example of a deferral (or prepaid) adjusting entry?
Recording the usage of office supplies during the period.
Recording salaries expense for employees not yet paid.
Recording revenue that has been earned but not yet received.
Recording interest expense incurred on a notes payable not due until next year.
Assume that the weekly payroll of In the Woods Camping Supplies is $300. December 31, end of the year, falls on Tuesday, and In the Woods will pay its employee on Friday for the full week. What adjusting entry will In the Woods make on Tuesday, December 31? (Use five days as a full workweek.)
Debit Salaries Expense for $120; Credit Salaries Payable for $120
Debit Salaries Payable for $300; Credit Salaries Expense for $300
Debit Salaries Expense for $120; Credit Cash for $120
No adjustment is needed because the company will pay the payroll on Friday
The adjusted trial balance shows
amounts that may be out of balance.
account balances after adjustments.
assets and liabilities only.
revenues and expenses only.
A & D Window Cleaning performed $450 of services but has not yet billed customers for the month. If A & D fails to record the adjusting entry, what is the impact on the financial statements?
assets understated; equity overstated; expense understated
liabilities overstated; equity understated; revenues understated
assets overstated; equity understated; expenses understated
assets understated; equity understated; revenues understated
A worksheet
is a journal used to record transactions.
is a financial statement that reports net income during the period.
is an internal document that helps summarize data for the preparation of financial
statements.
is a ledger listing the account balances and changes in those accounts.
Under accrual basis accounting, an expense is recorded only when cash is paid.
True
False
Which of the following statements is true of accrual basis accounting?
Accrual basis accounting records revenue only when cash is received.
Accrual basis accounting records expenses only when cash has been paid for them.
Accrual basis accounting is required by Generally Accepted Accounting Principles (GAAP).
Accrual basis accounting always results in greater net income than cash basis accounting.
The goal of matching is to compute an accurate net income or net loss for the time period.
True
False
Financial statements can be prepared from the unadjusted trial balance.
True
False
In a(n) ________ adjustment, the expense occurs before a cash payment is made.
depreciation
accrued
deferred
generaL
Contra asset accounts, such as Accumulated Depreciation, always have normal ____ balances
Debit
Credit
It depends
Stallings Company purchased manufacturing equipment for $10,080. It has an estimated useful life of seven years and no residual value. The company should record depreciation expense of $____ per month. (Assume that the company uses the straight-line method.)
$10,080
$1440
$120
$0
The entry to record depreciation includes a debit to the ________ account.
Equipment
Cash
Accumulated Depreciation
Depreciation Expense
A depreciable asset's cost minus accumulated depreciation is called ________.
book value
residual value
depreciable value
accrued expense
The sum of all the depreciation expense recorded to date for a depreciable asset is called ________.
book value
residual value
depreciation expense
accumulated depreciation
Murphy Company: prepaid $7,200 on October 1, 2024 for a one-year insurance premium. Coverage begins October 1. On January 1, 2025 (after December 31 adjustments), the Prepaid Insurance account will have a debit balance of ________. (Round any intermediate calculations to two decimal places, and your final answer to the nearest whole number.)
$6,000
$7,800
$7,200
$5,400
Hudson Landscaping Service bought equipment for $10,800 on January 1 of the current year. It has an estimated useful life of five years and zero residual value. Hudson uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of every month. As of June 30 of the current year, the book value of this equipment shown on its balance sheet will be ________.
$9,720
$10,800
$11,880
$10,980
At the time the transaction occurred, which of the following would result in an increase in net income under the accrual basis of accounting, but would not result in an increase in net income under the cash basis of accounting?
purchase of supplies for cash
use of supplies purchased earlier
receipt of cash for services that were performed earlier on account
performance of services on account
Assets are listed on the balance sheet in the order of their
purchase date
adjustments
liquidity
balance
Which of the following accounts would be included in the property, plant & equipment category of the classified balance sheet?
Land (held for investment purpuose)
Accumulated Depreciation
Office Supplies
Mortgage Payable
Which situation indicates a net loss within the Income Statement section of the worksheet?
Total credits exceed total debits
Total debits exceeds total credits
Total debits equals total credits
None of the above
Which of the following accounts is not closed?
Depreciation Expense
Service Revenue
Dividends
Accumulated Depreciation
What do closing entries accomplish?
Zero out the revenues, expenses and dividends
Transfer revenues, expenses and dividends to the Retained Earnings account
Bring the Retained Earnings account to its correct ending balance
All of the above
Which of the following is NOT a closing entry?
Which of the following accounts may appear on a post-closing trial balance?
Cash, Salaries Payable and Retained Earnings
Cash, Salaries Payable and Service Revenue
Cash, Service Revenue and Salaries Expense
Cash, Salaries Payable and Salaries Expense
Which of the following steps of the accounting cycle is not completed at the end of the period?
Journalize transactions as they occur
Journalize and post the closing entries
Prepare the post-closing trial balance
Prepare the financial statements
Clean Water Softener Systems has Cash of $600, Accounts Receivable of $900 and Office Supplies of $400. Clean owes $500 on Accounts Payable and has Salaries Payable of $200. Clean's current ratio is
2.71
2.50
0.63
0.37
In what category would Office Supplies appear on a classified balance sheet?
Current Assets
Property, Plant & Equipment
Current Liabilities
Owner's Equity
In what category would Copyrights appear on a classified balance sheet?
Current Assets
Property, Plant & Equipment
Long-term Investments
Intangibles
In what category would Accumulated Depreciation appear on a classified balance sheet?
Current Assets
Property, Plant & Equipment
Long-term Investments
Intangibles
In what category would Unearned Revenue appear on a classified balance sheet?
Current Assets
Current Liabilities
Long-term Liabilities
Owner's Equity
In what category would Land (held for long-term investment purpose) appear on a classified balance sheet?
Current Assets
Long-term Investments
Property, Plant & Investments
Long-term Liabilities
In what category would Land appear on a classified balance sheet?
Current Assets
Long-term Investments
Property, Plant & Investments
Long-term Liabilities
Supplies Expense is a ____ account.
Temporary
Permanent
Equipment is a ____ account.
Temporary
Permanent
Common Stock is a ____ account.
Temporary
Permanent
Dividends is a ____ account.
Temporary
Permanent
Salaries Payable is a ____ account.
Temporary
Permanent
Prepaid Rent is a ____ account.
Temporary
Permanent
Office Supplies is a ____ account.
Temporary
Permanent
Is Interest Expense included on a post closing trial balance?
Yes
No
Is Unearned Revenue included on a post closing trial balance?
Yes
No
Is Dividends included on a post closing trial balance?
Yes
No
Is Service Revenue included on a post closing trial balance?
Yes
No
Is Retained Earnings included on a post closing trial balance?
Yes
No
