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Multiple Choice

Can anyone assist with these review questions so that I can bounce them off your experience? Thanks!

1. Coca-Cola's Latin American segment had revenues of $2,089 million, operating income of $1,033 million, and average assets of $1,443 millions. The Latin American segment return on assets is:

A. 49.4%
B. 69.0%
C. 71.6%
D. 139.7%
E. 144.8%

2. Assume that a company uses a sales journal, a purchases journal, a cash receipts journal, a cash disbursements journal, and a general journal. A sales return for credit on account would be recorded in the:

A. Sales journal.
B. General journal.
C. Cash receipts journal.
D. Accounts receivable ledger.
E. Cash disbursements journal.

3. The accounts receivable ledger:

A. Is for storing transaction data for customers.
B. Is for storing transaction data for individual customers.
C. Is for storing transaction data for individual creditors.
D. Is for storing transaction date for creditors.
E. Is also the controlling account

4. Cash equivalents:

A. Include savings accounts.
B. Include checking accounts.
C. Are short-term investments sufficiently close to their maturity date that their value is not sensitive to interest rate changes.
D. Include time deposits.
E. Have no immediate value.

5. The control principle for accounting information systems requires that the:

A. Benefits from an activity outweigh the costs of the activity.
B. System report useful, understandable, timely, and pertinent information for effective decision making.
C. System aid managers in controlling and monitoring business activities.
D. System adapt to changes in the company, business environment, and needs of decision makers.
E. System conform with a company's activities, personnel, and structure.

6. A bank statement includes:

A. A list of outstanding checks.
B. A list of petty cash amounts.
C. The beginning and the ending balance of the depositor's checking account.
D. A listing of deposits in transit.
E. All of the above.

7. The main difference in the sales journal under the perpetual and periodic inventory system is:

A. The column to record cost of goods sold and inventory amounts sold that is used under the perpetual system but not the periodic.
B. The sales tax receivable column that is used under the perpetual system but not the periodic.
C. The sales tax payable column that is used under the perpetual system but not the periodic.
D. The accounts receivable column that is used under the perpetual system but not the periodic.
E. The column for recording cash that is used under the perpetual system but not the periodic.

8. A company that uses the net method of recording invoices made a purchase of $400 with terms of 2/10, n/30. The entry to record the purchase would include:

A. A debit to Merchandise Inventory for $392.
B. A credit to Discounts Lost for $8.
C. A credit to Cash for $392.
D. A debit to Discounts Lost for $8.
E. A debit to Cash for $392.

9. The number of days' sales uncollected is calculated by:

A. Dividing accounts receivable by net sales.
B. Dividing accounts receivable by net sales and multiplying this quotient by 365.
C. Dividing net sales by accounts receivable.
D. Dividing net sales by accounts receivable and multiplying this quotient by 365.
E. Multiplying net sales by accounts receivable and dividing the result by 365.

10. When originally purchased, a vehicle had an estimated useful life of 8 years. The vehicle cost $23,000 and its estimated salvage value is $1,500. After 4 years of straight-line depreciation, the asset's total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value. The depreciation expense in year 5 equals:

A. $ 5,375.00.
B. $ 2,687.50.
C. $ 5,543.75.
D. $10,750.00.
E. $ 2,856.25.

11. Thomas Enterprises purchased a depreciable asset on October 1, 2007 at a cost of $100,000. The asset is expected to have a salvage value of $15,000 at the end of its five-year useful life. If the asset is depreciated on the double-declining-balance method, the asset's book value on December 31, 2009 will be:

A. $27,540
B. $21,600
C. $32,400
D. $18,360
E. $90,000

12. A company has net sales of $900,000 and average accounts receivable of $300,000. What is its accounts receivable turnover for the period?

A. 0.20.
B. 5.00
C. 20.0
D. 73.0
E. 3.0

13. An accounting procedure that (1) estimates and reports bad debts expense from credit sales during the period of the sales, and (2) reports accounts receivable at the amount of cash to be collected is the:

A. Allowance method of accounting for bad debts.
B. Aging of notes receivable.
C. Adjustment method for uncollectible debts.
D. Direct write-off method of accounting for bad debts.
E. Cash basis method of accounting for bad debts

Solution Preview

1. Coca-Cola's Latin American segment had revenues of $2,089 million, operating income of $1,033 million, and average assets of $1,443 millions. The Latin American segment return on assets is:

A. 49.4%
B. 69.0%
C. 71.6%
D. 139.7%
E. 144.8%

Return on Assets = Operating Income/Average Assets = 1,033/1,443 = 71.6%

2. Assume that a company uses a sales journal, a purchases journal, a cash receipts journal, a cash disbursements journal, and a general journal. A sales return for credit on account would be recorded in the:

A. Sales journal.
B. General journal.
C. Cash receipts journal.
D. Accounts receivable ledger.
E. Cash disbursements journal.

B. General Journal

3. The accounts receivable ledger:

A. Is for storing transaction data for customers.
B. Is for storing transaction data for individual customers.
C. Is for storing transaction data for individual creditors.
D. Is for storing transaction date for creditors.
E. Is also the controlling account

B. Is for storing transaction data for individual customers

4. Cash equivalents:

A. Include savings accounts.
B. Include checking accounts.
C. Are short-term investments sufficiently close to their maturity date that their value is not sensitive to interest rate changes.
D. Include time deposits.
E. Have no immediate value.

C. Are short-term investments sufficiently close to their maturity date that their value is not sensitive to interest rate changes.

5. The control principle for accounting information systems requires that the:

A. Benefits from an activity ...

Solution Summary

The solution explains various multiple choice questions relating to accounting

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