Explore BrainMass
Share

Multi choice questions - Accounting Concepts

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

1. The balance sheet of the Hico Company contained the following accounts and balances:

Based on the above information only, the amount or balance for Land must be
A. $500
B. $950
C. $450
D. $550

2. Which of the following could represent the effects of an asset source transaction on a company's financial statements?

Assets = Liab + Equity Rev. - Exp. = Net Inc Cash Flow
+ = NA + + NA - NA = NA +OA
+ = + + NA NA - + = + +IA
+ = NA + + + - NA = + +OA

None of these could represent the effects of an asset source transaction

3. At the end of 2008, retained earnings for the Jasper Company was $1,750. Revenue earned by the company in 2008 was $2,000, expenses paid during the period were $1,100, and dividends paid during the period were $500. Based on this information alone, retained earnings at the beginning of 2008 was

A. $850.
B. $2,150.
C. $1,350.
D. $4,000.

4. The total equity of Bane Company at the beginning of 2008 amounted to $2,500. During 2008 the company reported net income of $1,200 and paid a $500 dividend. If retained earnings at the end of 2008 is $1,100, what was beginning contributed capital?

A. $1,200
B. $2,100
C. $400
D. $1,800

Pair Company began operations on January 1, 2007. During 2007, the company engaged in the following cash transactions:
1) issued stock for $30,000
2) borrowed $23,000 from its bank
3) sold merchandise for $28,000
4) paid back $10,000 of the bank loan
5) paid rent expense for $2,000
6) purchased equipment costing $5,000
7) paid $3,000 dividends to stockholders
8) paid employees' salaries, $11,000

5. What is the net cash flow from operating activities?

A. Inflow of $57,000
B. Inflow of $10,000
C. Inflow of $20,000
D. Inflow of $15,000

6. Ware Company borrowed $10,000 on September 1, 2007 from the National Bank. Ware agreed to pay interest annually at the rate of 6% per year. The note issued by Ware carried an 18-month term. Based on this information the amount of interest expense appearing on Ware's 2007 income statement would be

A. $-0-.
B. $200.
C. $60.
D. $150.

7. Which of the following accounts would not appear on a balance sheet?

A. Certificate of Deposit.
B. Interest Payable.
C. Interest Revenue.
D. Retained Earnings.

8. Recognition of an expense may result in which of the following?

A. a decrease in liabilities.
B. a decrease in assets.
C. a decrease in revenue.
D. an increase in Retained Earnings.

9. Knoll Co. made the adjusting entry for the amount of supplies consumed during the accounting period. Which of the following choices reflects how this event would affect the company's financial statements?

Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash Flow
+- = NA + NA NA - + = - NA
- = NA + - NA - + = - NA
+ = + + NA NA - NA = NA +OA
- = - + NA NA - NA = NA NA

10. If the Pallet Company purchased land for $12,000 cash and sold it two years later for $14,000 cash, the sale transaction would involve which of the following?

A. Decrease in Land, increase in Cash, increase in equity.
B. Increase in Land, increase in Cash, decrease in equity.
C. Decrease in Land, increase in Cash, decrease in equity.
D. Decrease in Land, increase in Cash, no other effects on the financial statements.

Bangor Company was started on January 1, 2007 when $8,500 cash was acquired by issuing stock to investors. Also, on January 1, 2007, the company purchased office equipment for cash at a cost of $5,200. The equipment had a five year useful life and a $1,000 salvage value. Bangor earned $1,500 cash revenue during 2007 and $1,500 in cash revenue during 2008.

11. Determine the amount of cash flow from operating activities on the 2007 financial statements.

A. $1,500
B. $660
C. ($5,200)
D. ($3,700)

12. Leland Industries purchased a truck for $20,000 that was estimated to have a 5-year life and $2,000 salvage value. How much of the truck's cost will be expensed over its life?

A. $4,000
B. $20,000
C. $3,600
D. $18,000

13. The Healey Company began the period with $950 in the office supplies account. During the year, Healey acquired $1,200 of supplies for cash. At the end of the year, the company determined that there was $500 of supplies on hand. The amounts of expense and cash outflow to be reported on Healey's financial statements are

SUPPLIES CASH OUTFLOWS FROM
EXPENSE OPERATING ACTIVITIES

A. $850 $1200
B. $850 $1550
C. $1500 $1200
D. $1650 $1200

14. Hunt Corporation recorded a business event using T-accounts as follows:

Rent Expense Prepaid Rent
1,000 1,000

Which of the following reflects how this event affects the company's financial statements?

Assets = Liab. + Equity Rev. - Exp. = Net Inc Cash Flows
+ = + + NA NA - NA = NA +FA
- = NA + - NA - + = - NA
+ = NA + + + - NA = + +OA
- = - + NA NA - + = - -OA

15. The closing entry for the Dividends account would involve which of the following?

A. a debit to Retained Earnings
B. a debit to Dividends
C. a credit to Common Stock
D. a credit to Cash

16. On October 1, Snyder Company made a $50,000 sale giving the customer terms of 3/10/net 30. The receivable was collected from the customer on Oct. 8. Considering the collection of cash from the receivable, what effect will the transaction have on the company's statements?

Assets = Liab. + Equity Rev. - Exp. = Net Inc Cash Flows
(1500) = NA + (1500) (1500) - NA = (1500) 48500 OA
(1500) = NA + (1500) (1500) - NA = (1500) NA
(1500) = NA + (1500) NA - (1500) = 500 1500 OA
(1500) = NA + 48500 48500 - NA = 48500 48500 OA

17. Scratch Company uses the periodic inventory method. The following balances were drawn from the accounts of Scratch Company prior to the closing process:
Sales Revenue $3000
Beginning Inventory Balance $800
Purchases $2000
Transportation-in $100
Transportation-out $150
Purchases Discounts $50
Ending Inventory Balance $900

The amount of gross margin appearing on the income statement should be:

A. $900.
B. $1,050.
C. $1,950.
D. $2,850.

© BrainMass Inc. brainmass.com October 16, 2018, 9:50 pm ad1c9bdddf
https://brainmass.com/business/discounted-cash-flows-model/multi-choice-questions-accounting-concepts-199209

Solution Preview

Please see the attached file for answers and explanations in blue

1. The balance sheet of the Hico Company contained the following accounts and balances:

Based on the above information only, the amount or balance for Land must be
A. $500
B. $950
C. $450
D. $550

Using Total Assets = Total Liabilities + Equity
500+ Land = 200 + 750
Land = 450

2. Which of the following could represent the effects of an asset source transaction on a company's financial statements?

Assets = Liab + Equity Rev. - Exp. = Net Inc Cash Flow
+ = NA + + NA - NA = NA +OA
+ = + + NA NA - + = + +IA
+ = NA + + + - NA = + +OA

None of these could represent the effects of an asset source transaction

Asset Source Transactions result in an increase in an asset account and an increase in a claims account. Examples include acquiring cash from owners, borrowing money from a bank, earning cash revenue or revenue on account, and purchasing inventory, supplies, or other assets on account.

3. At the end of 2008, retained earnings for the Jasper Company was $1,750. Revenue earned by the company in 2008 was $2,000, expenses paid during the period were $1,100, and dividends paid during the period were $500. Based on this information alone, retained earnings at the beginning of 2008 was

A. $850.
B. $2,150.
C. $1,350.
D. $4,000.

Ending retained earnings = Beginning retained earnings + revenue - expenses - dividends
1,750 = Beginning retained earnings + 2,000-1,100-500
Beginning retained earnings = 1,350

4. The total equity of Bane Company at the beginning of 2008 amounted to $2,500. During 2008 the company reported net income of $1,200 and paid a $500 dividend. If retained earnings at the end of 2008 is $1,100, what was beginning contributed capital?

A. $1,200
B. $2,100
C. $400
D. $1,800

Beginning retained earnings = 1,100-1,200+500= 400
Beginning contributed capital = 2,500-400=2,100

Pair Company began operations on January 1, 2007. During 2007, the company engaged in the following cash transactions:
1) issued stock for $30,000
2) borrowed $23,000 from its bank
3) sold merchandise for ...

Solution Summary

The solution explains various mutliple choice questions relating to accounting

$2.19
Similar Posting

Auditing Questions

1. The natural sign of an asset is a:
a. Debit
b. Credit
c. Both
d. None

2. Internal Auditors are referred to as independent auditors.
a. True
b. False
c. Neither

3. The three categories for standards for auditors as set forth by GAAS are general standards, standards of fieldwork, and standards of examination.
a. True
b. False
c. Maybe so

4. Auditing is a systematic process of obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users.
a. True
b. False
c. No way

5 Audit Risk can be composed of the following components shown in the following formula:
a. AR = Debit + Credit
b. AR = IR - CR - DR
c. AR = IR x CR x DR
d. AR = Credit Risk + Inherent Risk + Control Risk

5. Materiality can be defined as follows:
a. When the inverse relationship of rates fluctuates with risk.
b. The amount of error and/or omission that would affect the judgment of a reasonable person.
c. When Detection Risk can no longer be measured.
d. Fraud exists.

6. All of the following consists of Management's Assertions except for:
a. Existence or Occurrence
b. Completeness
c. Rights & Obligations
d. Fraud not yet committed

7. All of the following are auditing procedures for verifying the Management Assertion of Existence/Occurrence:
a. Confirmations
b. Observation, inspection and examination.
c. Preparation of Audit Engagement Letter.
d. Vouching, testing of transactions.

8. Performing Cut-Off procedures is where:
a. Writing up procedures for fraud.
b. Reviewing financial transactions to see they were posted in the proper accounting period.
c. Cutting off the audit ahead of audit schedule.

9. Basic concepts for competence of evidential matter are relevance and reliability.
a. True
b. False
c. Both

10. An Audit Engagement Letter is the same thing as a Management Representation Letter except for the Management Representation Letter is done at the beginning of the audit while the Audit Engagement Letter is done at the conclusion of the audit.
a. Neither
b. False
c. True
11. Audit tests consists of the following except:
a. Tests of controls.
b. Substantive tests
c. Preparation of financial statements.

12. There are two major audit sampling methods, statistical sampling and non-statistical sampling. Statistical sampling is where the auditors specify the sampling risk they are willing to accept and then calculate a sample size that provides the degree of reliability and results are analyzed quantitatively. In non-statistical sampling the sample size is not mathematically determined and auditors use judgment in determining samples selected with the selected samples analyzed on a judgment basis.
a. True
b. False
c. Neither

13. The following are all sampling methods except:
a. Random sampling
b. Systematic selection
c. Bolean nucleaic method
d. Haphazard selection

14. The following are all internal controls in an information technology environment except for:
a. Hardware and software
b. Organizational
c. Security and access
d. Relevance
e. Controls on system development and modification
f. Operations and data control

15. All of the following are internal controls that could be implemented in an information technology environment except for:
a. Physical access and controls
b. Segregation of duties
c. Compliance with material misstatements

View Full Posting Details