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WorksheetsAccounting 1 Final Review
Total questions: 58
Worksheet time: 29mins
While auditing a company, you find that several of its employees are not satisfied with their jobs. You decide not to write this in the report because of which of the following reasons?
It is not significant to the management
It is not part of your job duties
It is not material information to describe the financial health of the company
It is juicy gossip you’ll send in an email
Accountants record expenses in the same time period in which they occurred. This is called:
The economic entity assumption
The King Kong principle
The matching principle
The cost principle
Which of the following pieces of legislation is the result of the Enron scandal?
Family Leave Act
Truth in Advertising
Sarbanes-Oxly Act
Fair Trade Act
While creating a disaster plan, Accounting decides that it needs off-site data storage. Which of the following would they use to store the information?
Encryption
Investors
Flashdrive
Cloud storage
Where will you find the total amount that is owed to your business by customers?
Under accounts receivable on the income statement
Under accounts receivable on the cash flow statement
Under accounts receivable on the statement of equity
Under accounts receivable on the balance sheet
You have invested $30,000 of your money into your company. In what part of the financial statements would you find this information?
On the balance sheet under liabilities
On the income statement under current Expenses
On the balance sheet under equity
On the income statement under assets
Who is LEAST likely to use accounting reports for decision making?
Investors
Senior management
Banks
Customers
Which of the following is part of the accounting process?
Organizing data
Interpreting data
Collecting information
All are part of the accounting process
Who investigated Arthur Andersen and Enron?
IFSB (International Financial Systems Board)
SEC (Securities & Exchange Commission)
GAAP (Government Administrative Action Protocol)
FASB (Financial Administration System Board)
Ethics are defined as:
The discipline dealing with what is good and bad and with moral duty and obligation
The ability to define legal guidelines for your company
Established code for particular business practices
The discipline that deals with decision making
What was the accounting firm that made unethical choices in the Enron Scandal?
Arthur Andersen
Bob Lüli
Jeffrey Skilling
Sarbanes-Oxley
Which of the following is an example of external users of accounting information?
Owners
Employees
Bank Analyst
Manager
Adam wants to find out the assets and liabilities of a company. Which financial statement should Adam read to find out this information?
Balance sheet
Income statement
Statement of profit and loss
Statement of retained earnings
Dan's organization stores their software applications and other information on a group of external computers known as virtual network servers. Employees often refer to this storage space as the ____.
Virtual private network
Hub
Virtual machine
Cloud
In our ever-evolving world, there have been many advances that have made accounting processes easier to complete. Which of the following is an example of man-made technology that has impacted the accounting industry throughout history?
All of these are examples of technology that have improved the accounting industry
Pencils
Computers
Ink
Which of the following is NOT a financial statement?
Balance sheet
Statement of cash flows
Income statement
Accounting cycle
What does ALOE stand for?
Accounts, Ledgers and Owner’s Expenses
Accounts, Liabilities and Owner’s Equity
Assets, Ledgers and Owner’s Equity
Assets, Liabilities and Owner’s Equity
What is the formula for the basic accounting equation?
Assets + Liabilities + Owner’s Equity
Assets = Liabilities X Owner’s Equity
Assets = Liabilities + Owner’s Equity
Owner’s Equity = Assets + Owner’s Equity
Which company, listed on the New York Stock Exchange, would definitely be in breach of the Going Concern Principle?
Company C, which shows a net cash outflow its statement of cash flows.
Company B, which has made a net loss this financial year.
Company A, which has decided to issue new shares to foreign nationals.
Company D, which has run out of cash and is not able to pay its creditors.
Monica reads in the newspaper that in the year ending on December 31, 2023, Two Inc. made $1 million profit. Monica wants to confirm for herself that this is really the case. Which financial statement of Profit For Two Inc. should Monica read to confirm the newspaper report?
Income statement
Balance sheet
Statement of cash flows
Statement of retained earnings
What has technology done to the accounting process?
Made it harder
Eliminated it
Had no effect
Simplified it
The chart of accounts is ____?
Something that shows how much money a business made
Where each transaction is entered
A list of all asset, liability and owners’ equity accounts
Where transactions are totaled
Which is not an asset of Brenda’s Bake Shoppe?
Cash on hand
Accounts receivable from customers
Inventory for sale
Payroll expense
Cal paid $500 cash to his supplier today to purchase bike accessories he will sell to customers. Which two accounts are affected and how?
Cash decreases and inventory increases
Accounts payable decreases and inventory increases
Accounts payable increases and inventory decreases
Cash decreases and sales increases
Sarah paid $500 cash to her supplier today to purchase office supplies for her business. Which two accounts are affected today and how?
Accounts Payable increases and Supplies Inventory decreases
Cash decreases and Supplies Inventory increases
Cash decreases and Accounts Receivable increases
Cash decreases and Prepaid Insurance increases
Alex paid $300 cash to settle a utility bill for the month. Which two accounts are affected today and how?
Cash increases and Utilities Expenses increases
Accounts Payable decreases and Utilities Expense increases
Cash decreases and Utilities Expense increases
Cash decreases and Supplies Inventory increases
Cal’s Cycle Sales has an inventory of $10,000 worth of bikes. He still owes $3,000 on some of them. He has $1,500 in his business bank account and $8,500 in owners’ equity on his books. Using the basic accounting equation of Assets = Liabilities + Owner’s Equity, are his finances balanced?
No, his liabilities + owners’ equity exceed his assets
No, he has more debts than money in the bank to pay them
No, his assets + owners' equity exceed his liabilities
Yes, his assets = his liabilities + owner’s equity
Which of the following would be considered a source document for recording the transactions of a business?
Receipts from paid bills
All of these are correct
Sales receipts
Invoices from suppliers
A credit is _____.
Made only when a liability decreases
Only made when the company credit card is used
An entry on the right side of a T account
Made only when income increases
A customer pays Brenda the balance due on a wedding cake previously purchased at her bake shop. Which two account entries will she make?
Debit cash and credit accounts receivable
Debit cash and credit cake inventory
Debit cash and accounts receivable
Credit cash and debit inventory
Brenda pays a bill to her supplier for cake decorations she had ordered previously. Which two accounts are affected and how?
Debit cash and credit accounts payable
Debit cash and credit decorations inventory
Credit cash and debit accounts payable
Credit cash and debit decorations inventory
Which of the following is a liability for Brenda’s Bake Shoppe?
Cake pans
This month’s wages to be paid employees
Cake decorating supplies
Bakery delivery truck
Rachel's Interior Design Firm has several different accounts used to track their finances, which is common in business. Rachel's Interior Design Firm receives a check from Susie Johnson for interior design work the company performed at Susie's home. In which of the accounts listed should this money be recorded?
Asset
Services Rendered
Expense
Revenue
In accounting, pieces of paper that prove a transaction occurred are called what?
Source documents
Ledgers
Balance sheets
Journals
The book that contains every single transaction that has occurred in a business and is recorded in chronological order is called a what?
Chart of accounts
advertisement
grocery list
What is the financial statement that tells how much money a company made or lost in a given time period?
Income statement
Statement of cash flows
Statement of retained earnings
Balance sheet
Which of the following is NOT an asset for a company?
Land payment
Cash
Accounts receivable
Equipment
Which of the following accounts has a balance increase when it is debited and balance decreases when it is credited?
Stockholder equity accounts
Expense accounts
Liability accounts
Revenue accounts
The double-entry accounting system states that for each and every transaction that a company has, ______ or more accounts will be affected.
1
4
3
2
What is the very first step in an accounting cycle called?
Adjusting entries
Journalizing
Transaction analysis
Accounting equation
Your plumbing company fixed the shower for Jane Smith. You have invoiced Jane for $1,000 but she has not paid yet. Using the accrual method of accounting, how much should you show as income?
$500
$1,000
One-twelfth of $1,000
$0
Your plumbing company fixed the shower for Jane Smith. You have invoiced Jane for $1,000 but she has not paid yet. Using the cash method of accounting, how much should you show as income?
$500
$1,000
$1,000 plus a late fee
$0
A balance sheet compares liabilities and equity to which of the following?
Salaries
Revenue
Assets
Debt
Which of the following is a job of an auditor?
Verify the accuracy of financial information
Create guidelines for accounting
Handle the bookkeeping for the organization
Report legal breaches to the authorities
Which method of accounting is preferred under GAAP?
Whichever the IRS uses
Accrual
Cash
Income
From a balance sheet, the assets minus the owner's liabilities will equal which of the following?
Long term debt
Equity
Accounting ratios revenue
Revenue
Which of the following are things that you own?
Liabilities
Balance sheet
Income statement
Assets
Which financial statement shows how much money that a company made was retained and reinvested in the company?
Statement of cash flows
Balance sheet
Income statement
Statement of retained earnings
The people that have invested money into a company, as well as those who are considering making an investment into the company, are called ____?
Auditors
Company Leaders
Investors
Customers
Which of the financial statements shows assets, liabilities, and owner's equity?
Balance sheet
Statement of cash flows
Statement of retained earnings
Income statement
A company has a total revenue of $20,000 for the month ending March 31. In the same time period, the company had $12,000 in expenses. What was the company's net income or net loss?
$8,000 net loss
$32,000 net income
$32,000 net loss
$8,000 net income
Explain the purpose of the income statement.
To tell how much money made in a business was retained and reinvested in the business
To list all the assets, liabilities, and owners’ equity accounts and their balances
To list all the income accounts and their balances
To tell whether or not a business made money or lost money in a given time period
If an investor wanted to see how much money was maintained and reinvested in the company, which financial statement would give that information?
Balance sheet
Statement of Retained Earnings
The Dow Jones Industrial Average
Statement of Cash Flows
Kathy wants to know whether her boutique made or lost money this month. The financial document she should view is her:
balance sheet
income statement
cash flow statement
statement of owner’s equity
Diana prepares bills and invoices for her company. Her career is in the area of
corporate finance
marketing communications.
securities and investments.
professional selling.
A(n) ____ is the financial statement that reports the final balances in all asset, liability, and owner's equity accounts at the end of the accounting period.
general ledger
statement of changes in owner's equity
income statement
balance sheet
Checks, receipts, invoices, and purchase orders are examples of
financial statements.
department ledgers.
source documents.
accounting standards.
Diana prepares bills and invoices for her company. Her career is in the area of
corporate finance
marketing communications.
securities and investments.
professional selling.
