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Accounting: Multiple choice questions.

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1. All of the following are true regarding journal entries except:
A. Journal entries show the effects of transactions.
B. Journal entries provide account balances.
C. The debited account titles are listed first.
D. Each journal entry should begin with a date.

2. Marvin's Art Inc. purchases paints, canvases and art supplies from Magic Art Co. for sale to consumers. What type of company is Marvin's Art Inc.?
A. Service
B. Wholesaler
C. Retail merchandiser
D. Manufacturer

3. A company purchased $2,000 of merchandise on November 2 with terms 2/10, n130. On November 8, it returned $500 worth of merchandise. On November 10, it paid the invoice. The amount paid on November 10 equals.
A. $1,470.
B. $1,960.
C. $2,000.
D.$1,500.

4. Sales returns refer to:
A. Merchandise that customers return to the seller after the sale.
B. Reductions in the selling price of merchandise sold to customers.
C. Cash discounts taken by customers.
D. Merchandise inventory that is marked down.

5. Which of the following accounts is not increased with a debit?
A. Sales Discounts.
B. Sales Returns and Allowances.
C. Sales Revenue.
D. Cost of goods sold

7. A _________is a list of individual accounts, usually in financial statement order, prepared as a check on the accounting system.
A. Trial balance
B.General ledger
C. Balance sheet
D. Financial statement

8. Which of the following is not true regarding the use of special journals?
A. Special journals are used to record repetitive, frequent transactions.
B. The use of the General Journal is eliminated by the use of special journals.
C. The Purchases Journal is used to record purchases or expenses on account.
D. The Revenue Journal is used only for recording revenues earned on account.

9. FOB destination means that title to goods purchases is transferred when the:
A. Goods leave the seller's shipping department.
B. Seller sends the invoice.
C. Goods reach the buyers place of business.
D. Buyer records the receipt of inventory.

10. Transactions involving customer payments are often recorded in a:
A. General Journal.
B. Cash Receipts Journal.
C. T-account.
D. Revenue Journal.

57. A debit to Sales Returns and Allowances and a credit to Accounts Receivable:
A. Is recorded when a customer pays within the discount period.
B. Recognizes that a customer returned merchandise or received an allowance.
C. Reflects an increase in the amount due from a customer.
D. Reflects a direct decrease in total sales revenue.

58. Mandy's Ice Cream Shoppe purchased $500 worth of supplies on account from ICEE Inc. In which special journal should this transaction be recorded?
A. Revenue Journal
B. Purchases Journal
C. Cash receipts Journal
D. Cash payments Journal

59. Expenses are:
A. Incurred only when cash is paid.
B. Costs incurred to generate revenues.
C. Increases to owner's equity.
D. Recorded as credits in journal entries.

60. The term "FOB Shipping Point" means
A. The buyer records transportation expense.
B. The seller pays the shipping cost.
C. The buyer pays the shipping cost.
D. The buyer does not assume ownership until the goods are received.

66. The unadjusted trial balance contains which type of accounts?
A. Income statement accounts
B. Balance sheet accounts
C. Both income statement and balance sheet accounts.
D. The final balances for all accounts.

67. The amount recorded in merchandise inventory includes all of the following except:
A. Purchase discounts
B. Freight costs paid by the buyer. C. Freight costs paid by the seller.
D. Purchase returns and allowances.

68. Terms for the left and right side of an account are known as:
A. Increase/Decrease.
B. Debit/Credit.
C. Up/Down.
D. Positive/Negative.

Use the following account numbers and corresponding account titles to answer the next two questions.
Account
No. Account Title
(1) Cash
(2) Inventory
(3) Cost of goods sold
(4) Transportation-
(5) out
(6) Dividends
(7) Common stock
(8) Selling expense

70. Which accounts would appear on the income statement?
A. Account numbers 3, 4, and 7.
B. Account numbers 2, 4, and 5.
C. Account numbers 1, 3, and 7.
D. Account numbers 2, 5, and 7.

71. Which accounts would appear on the balance sheet?
A. Account numbers 2, 4, and 5.
B. Account numbers 1, 3, and 7.
C. Account numbers 1, 2, and 6.
D. Account numbers 3, 4, and 7.
Account No.
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)

Account Title Cash
Service Revenue Accounts Receivable Salaries Expense Dividends
Common Stock Salaries Payable Retained Earnings

Service Revenue Accounts Receivable Salaries Expense Dividends
Common Stock Salaries Payable Retained Earnings

73. Select the true statement (note: an answer may be true even if it does not identify all accounts that appear on a articular statement).
Account numbers 1, 3, and 7 will appear on the balance sheet.
B. Account numbers 2, 4, and 5 will appear on the income statement.
C. Account numbers 2, 5, and 8 will appear on the statement of cash flows.
D. Account numbers 4, 5, and 6 will appear on the statement of changes in equity.

74. Select the true statement (note: an answer may be true even if it does not identify all accounts that have debit balances).
Account numbers 2, 4, and 5 normally have debit balances. B Account numbers 1, 3, and 5 normally have debit balances.
C. Account numbers 2, 5, and 8 normally have debit balances.
D. Account numbers 4, 5, and 6 normally have debit balances.

Assume the perpetual inventory method is used.
1) The company purchased $10,000 of merchandise on account under terms 2/10, n/30.
2) The company returned $1,200 of merchandise to the supplier before payment was made
3) The liability was paid within the discount period.
4) All of the merchandise purchased was sold for $13,000 cash.

75. The amount of gross margin from the four transactions is:
A. $4,376.
B. $4,258.40.
C. $8.,800.
D. $8,624.

SECTION B
1. Below are listed several transactions that a business may enter into.
Provide services to customers on account
Purchase land by paying cash
Purchase a fire insurance policy that will provide coverage for a two-year period Acquire cash by issuing common stock
Recognize expense for amount of office supplies that had been used during the period Receive payment from a customer for services that will be provided over the next six months

Required:

a) In the table below, indicate the accounts that would be debited and credited for each of the preceding transactions.

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https://brainmass.com/business/accounting/accounting-multiple-choice-questions-316854

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Solution Summary

The question set illustrate different issues in accounting: Gross margin calculation, preparation of the income statement and balance sheet, different accounting terms etc.

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ADVANCED COST ACCOUNTING MULTIPLE CHOICE QUESTIONS

ADVANCED COST ACCOUNTING MULTIPLE CHOICE QUESTIONS

1. Absorption costing measures contribution to profit as:
A) Sales less unit- level costs spent of goods sold.
B) Sales less absorption cost of goods sold.
C) Sales less absorption cost of goods sold.
D) Sales less all costs including operating expenses.

2. In a job-order costing system, the journal entry to record depreciation on factory equipment would be recorded by a:
A) Debit to Depreciation Expense, credit to Accumulated Depreciation
B) Debit to Manufacturing Overhead, credit to Depreciation Expense
C) Debit to manufacturing Overhead, credit to Work-in-Process
D) Debit to Manufacturing Overhead, credit to Accumulated Depreciation

3. Which of the following statements regarding traditional cost accounting systems is False?
A) Products are often over or under costed in traditional cost accounting systems
B) Most traditional cost accounting systems do not trace individual costs to products.
C) The advantage of traditional cost accounting systems is their simplicity.
D) Traditional cost accounting systems can be sufficient to meet managers' cost information needs as long as the level of indirect costs is relatively high compared to the level of direct costs.

4. Which of the following indicates that a company may benefit from an Activity-Based Costing system?
A) Standard high-volume goods and services show significant profits.
B) Indirect costs are insignificant in proportion to direct costs.
C) The company loses relatively high priced bids.
D) Goods and services are complex and may require many different processes or inputs

5. Which of the following is not a planning issue in Activity-Based-Management?
A) The intended scope of the project
B) The current customer base
C) Information gathering
D) Resistance to change

6. Under what conditions will the FIFO method produce the same cost of goods manufactured as the weighted-average method?
A) When there is no ending inventory
B) When the beginning and ending inventories are both 50% complete
C) When there is no beginning inventory
D) When the beginning and ending inventories are equal

7. Which of the following is not a step needed to maximize the profits from joint products?
A) Forecasting the sales price of each final product.
B) B) Identifying alternative sets and quantities of final products possible from the joint process.
C) Determining how to allocate joint costs to the final products.
D) Estimating the costs required to further process joint products into salable products.

8. Which of the following is not a method of allocating joint costs?
A) Sales value at split-off
B) Net realizable value
C) By-product method
D) Physical-measures method

9. Which of the following statements best describes the account analysis approach to cost estimation?
A) Cost estimates are based on optimal or ideal operating conditions.
B) Discernible patterns of the past are used to predict future behavior.
C) Historical operating costs are plotted against some past operating activity.
D) Relies heavily on the accounting personnel's experience and judgment.

10. Which cost estimation method is based on both past and future data?
A) Engineering method.
B) Regression method.
C) Account analysis method.
D) All of the above.

11. Cost-volume profit (CVP) analysis is a key factor in many decisions, including choice of product lines, pricing of products, marketing strategy, and use of productive facilities. A calculation used in a CVP analysis is the break-even point. Once the break-even point has been reached, operating income will increase by the
A) contribution margin per unit for each additional unit sold
B) fixed cost per unit for each additional unit sold.
C) variable cost per unit for each additional unit sold
D) none of the above.

12. Break-even analysis assumes that:
A) total revenue is constant.
B) unit variable cost is constant.
C) unit fixed cost is constant.
D) all of the above.

13. Which of the following is typically considered fixed under traditional budgeting processes, but considered variable under activity based budgeting:
A) Set ups, inspections and purchasing
B) Material handling, designing and quality control
C) A and B
D) None of the above

14. Which of the following does not affect a material purchase price variance?
A) Increases in the demand for the firm's output
B) Need to purchase component parts with precise engineering specifications
C) Rush order requests from the production department
D) World-wide shortages of critical input materials

15. Subjective performance evaluation:
A) Compares an individual's performance to that of others.
B) Bases rewards on a performance evaluation formula.
C) Compares individual performance to set objectives or expectations.
D) Uses non-quantified criteria to evaluate individuals.

16. In a multi-product firm, activity levels for a flexible budget are based on
A) output measures
B) input measures
C) Either
D) Neither

17. Which of the following companies would most likely use a process costing system?
A) A large computer manufacturer where each computer is made to customer specifications.
B) A luxury home builder
C) A law firm
D) A manufacturer of cereals

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