Accounting 101 - 20 multiple choice questions

1) Each cell in a spreadsheet is defined by:
A) a row number and a label B) a formula and a column number
C) formulas and labels D) a row number and a column letter

2) The __________ indicates a cell is active in a computerized spreadsheet.
A) grid B) program C) module D) cursor

3) Posting the entries in the sales journal to the accounts receivable subsidiary ledger should be done:
A) on a weekly basis B) only at the end of the accounting period
C) on a daily basis D) at the end of each month

4) Customers' individual accounts are included in a subsidiary ledger referred to as the:
A) general ledger B) controlling ledger
C) accounts receivable ledger D) accounts payable ledger

5) Which of the following is recorded in the sales journal?
A) sale of merchandise on account
B) sale of merchandise for cash
C) return of merchandise purchased for cash
D) return of merchandise purchased on account

6) The total of the customer accounts receivable ledger at the end of the accounting period must equal
A) total of the accounts receivable credit column in the cash receipts journal
B) total of the accounts receivable account in the general ledger
C) total of the creditors' accounts payable ledger
D) total of the accounts payable account in the general ledger

7) Assuming the use of special journals, the sale of equipment in exchange for a promissory note
would be recorded in the:
A) cash receipts journal B) sales journal
C) general journal D) cash payments journal
Debit: notes receivable; credit: sales

8) Garner Enterprises received payment within the discount period from a customer who had purchased merchandise on account. The sales invoice was for $2,000, and credit terms were 3/15, n/30. In the cash receipts journal, $1,940 will appear under the:
A) accounts receivable credit column B) sales revenue credit column
C) cash debit column D) cash credit column
Note: sales is still $2000

9) Jets Company records returns and allowances in the general journal. On August 16, Jets issued a
$150 credit memo to Celtics Company for merchandise sold on credit on August 1. What entry does Jets make?
A) no entry is required by Jets Company
B) Sales Returns and Allowances 150
Accounts Receivable-Celtic Company 150
C) Accounts Receivable-Celtics Company 150
Sales Returns and Allowances 150
D) Accounts Payable-Celtics Company 150
Inventory 150

10) Ruby Company purchased inventory from Diamond Company, and received a credit memo from
Diamond Company. Diamond Company had charged Ruby Company $3.85 rather than $3.58 for each of the 100 items ordered. What entry will Diamond Company make?
A) Sales Returns and Allowances 27
Inventory 27
B) Inventory 27
Accounts Payable-Ruby Company 27
C) Accounts Payable-Ruby Company 27
Inventory 27
D) Sales Returns and Allowances 27
Accounts Receivable-Ruby Company 27

11) The following data are available for Wonder Boutique for October:
Book balance, October 31 $5,575
Outstanding checks 584
Deposits in transit 2,500
Service charges 75
Interest revenue 25
What is the adjusted book balance on October 31 for Wonder Boutique based on the above data?
A) $5,550 B) $5,525 C) $5,500 D) $7,466
= balance - service charge+ interest = 5575 -75+25

12) The following data are available for Cline Paper Company for March:
Book balance, March 31 $3,620
Service charges 50
Interest revenue 35
Note collected by bank 1,500
Check returned marked NSF 700
What is Cline's adjusted book balance on March 31 from the above data?
A) $2,905 B) $3,620 C) $4,505 D) $4,405
= balance - service charge+ interest -check returned = 3620-700-50+35

13) A check for the cash purchase of supplies for $329 was recorded on the books as $239. On a bank reconciliation, this will appear as a(n):
A) addition to the bank balance B) deduction from the bank balance
C) addition to the book balance D) deduction from the book balance

14) After preparing the bank reconciliation, journal entries must be prepared for:
A) only for outstanding checks
B) any errors made on the books revealed by the bank reconciliation
C) all items on the bank's side
D) any errors made by the bank revealed by the bank reconciliation

15) Internal control over cash receipts is demonstrated by:
A) a mailroom employee sending all customer checks to the treasurer who makes the bank deposit
B) a mailroom employee sending remittance advices to the treasurer
C) a mailroom employee depositing all customer checks at the bank
D) all the above

16) All of the following are controls over petty cash except:
A) supporting all fund disbursements with a petty cash ticket
B) keeping an unlimited amount of cash on hand
C) replenishing the fund through normal cash disbursement procedures
D) designating one employee to administer the fund

17) Certified public accountants are expected to maintain higher standards than society in general:
A) only if they are certifying the financial statements of a company whose stock is listed on a national exchange
B) because they are required to by federal law
C) as long as they are working for themselves
D) because their ability to attract business depends entirely upon their reputation

18) Another dimension to most ethical issues is:
A) external controls B) the possible consequences
C) internal controls D) the individuals involved

19) Accountants who are members of the Institute of Management Accountants must abide by the:
A) AICPA Code of Professional Conduct
B) Standards of Ethical Conduct for Management Accountants
C) both A and B
D) neither A nor B

Certified Management Accountant is awarded by the Institute of Certified Management Accountants (ICMA) to management accountants who pass a four-part exam, meet certain work requirements, comply with the ICMA's Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management and who are members of the Institute of Management Accountants (IMA).

20) Banks may require customers to keep a(n) _____ on deposit in order to borrow from the bank.
A) compensating balance B) accounts receivable
C) cash equivalent D) note receivable

An excess balance that is left in a bank to provide indirect compensation for loans extended or services provided