Financial Accounting 1. Obligation of business that represents the claims of these against the assets of the less cash is called? A. Asset B. An expense (WA) C. Revenue D. An equity E. Liability 2. Net income results when A. Assets > liability B. Revenue = expenses C. Revenue > expenses D. Revenue < expenses E. None 3. Resources owned by a business are referred to as A. Stockholders equity B. Liability C. Assets D. Revenue (WA) E. None 4. Expenses are incurred A. Only one rare occasion (WA) B. To produce asset (WA) C. To produce liability (WA)
D. To generate revenue E. None. 5. Which is NOT an accounting assumption A. Integrity B. Going concern C. Time period D. Economic entitle E. None. 6. Susana metro invested $ 7,009. 87 now, and will receive $20,000 at the end of 11 years. What annual arte of investment will she be earning on her investments? Fixed cost of $ 11Factor 7% 11 years2. 105 8% 11 years2. 332 9% 11 years2. 580 10% 11 years2. 853 A. 8 % (WA) B. 7 % C. 9 % D. 10 % E. None 7. Under the accurate basis of accounting? A. Cash must be received before revenue us recognized
B. Net income is calculated by matching cash outflows against cash flow C. Events that change a company’s financial statements are recognized in the periods they occur rather than in the period in which cash flow is paid or received. D. The ledge account must be adjusted to reflect a cash basis of accounting before final statements are prepared under general accepted accounting principle. E. None 8. 550 950 1,500 B. (WA) 9. What type of activity is the following “sold $ 120,000 worth of product? A. Operating activities
B. Financial activities C. Investing activities D. Non cash transaction (WA) E. None 10. If the single amount of $1,400 is to be received in 2 years and discount at 12% its present value? Present value $1 0. 797 Future value $1 1,254 Present value annuity 1. 690 Future value annuity 2,120 A. $502 B. 312 C. 676 D. 331 (WA) E. None 11. What is amount of working capital? Account payable 31,000 Accounts Receivable 57,000 Cash15,000 Intangible asset50,000 Inventory69,000 Long-Term Investment80,000
Long Liabilities 100,000 Market Scarcity 40,000 Notes payable (Short-term) 28,000 Land build and equipment670,000 Prepaid expenses 1,000 A. 123,000 (WA) B. 151,000 C. 203,000 D. 53,000 E. None 12. Company A current liability equal 500,000, working capital 120,000. Company B same amount of working capital, but total current liability of 30,000. The company with the better working capital position is? A. They both has exact the same working capital B. Company B C. Company A D. Don’t determined with the information given E. None 13.
Company used Strait-Line depreciation for an item that cost 12,000 had a salvage value of 2,000 and a 5 year useful life After depreciating the assets for 3 complete years, the salvage value was reduced to 1,200 and its total useful life was increased from 5 years to 6 years. Determine the amount of depreciation to be changed against the machine during each of the remaining years of its useful life. A 1,000 B. 1,800 C. 1,467 (WA) D. 1,600 E. 2,160 16. Obsolescence A. Occurs when as asset is at the end of its useful life B.
Refers to a condition where plant asset is no longer useful in producing and services. C. Refers to a condition where the capacity of a company’s plant assets is too small to meet the company’s productive demand. (WA) D. Occurs when as assets salvage value is less than its replacement cost E. Does not affect plant asset. 15. B. 16,000 16,000 16. The accumulated depreciation account is a (an) A. Contra assets B. Liability C. Assets (WA) D. Operating expanse E. none of the listed 17. Operating cycle of a company is the average time that is require to go from cash to A. Sales (WA) B. Cash
C. Inventory D. Accounts Receivable E. None 18. Jan. 1st, 20X1 William corporation machine cost is 45,000, estimate life is 5 years and salvage value is 3,000, depreciation expense for the first 2 tears. Use straight line method. A. 8,400 : 8,400 B. 9,000 : 9,000 C. 9,600 : 9,600 D. 9,000 : 8,500 (WA) E. None 19. In the annual report, where would a financial statement reader find out if the company’s financial statements give a fair depiction of its financial position and operating results? A. Management discussion and analysis section B. Notes to the financial statements C. An auditor report
D. Survey information for the key executive E. None. 20. Y during accounting period the asset increases by 5,000 equity increased by 1,000. How did liability damage? A. Increase by 6,000 (WA) B. Increase by 4,000 C. Decrease by 4,000 D. Decrease by 6,000 E. Decrease by 1,000 21. If ending inventory is over stead what effect will there be on cost of good and net income? A. CGS will overstated and Net income overstate B. CGS will overstated and Net income understated (WA) C. CGS will understated and Net income overstate D. CGS will understated and Net income understate E. None. 22.
Last in first – out method A. 250,000 B. 228,750 C. 234,875 (WA) D. 225,550 E. None 23. 8 % 10 Years Present Value $ 1 0. 463 Future Value $ 1 2. 159 Present Value of annuity 6. 710 Future Value of annuity 14. 487 A. 46,320 B. 67,107 (WA) C. 100,000 D. 144,870 E. 215,890 24 A. 72,100 B. 113,000 C. 147, 200 D. 84,240 E. 200,000 25. Gross Profit A. 21 B. 23 C. 64 D. none 26. Pricing earning ratio 30. 00 27. Not been earn (WA) 28. stockholders equity can be described as claims on answer: owners on total liabilities 29. n the balance sheet, which financial statement is prepared firstanswer: income statement 30. The rules adopted by the accounting profession as guides in measuring, recording, and reporting the financial affairs and activities of a business are: a. Both broad and specific principles. b. Known as geberally accepted accounting principles. c. Abbreviated as GAAP. d. Both b and c. e. All of the above. 31. The primary objective of financial accounting is: a. To help organizations keep track of financing activities b. To provide financial statements to help users analyze an organization’s activities c.
To help an organization define its ideas, goals, and actions. d. To help an organization keep track of its buying and selling of resources. 32. which 1 of the following is not qualitative characteristic. =(Relevance, reliability, comparability, consistency. answer: chaptism 33. a 20,000 machine is purchased by paying 5000 cash and signing a note payable for the remainder answer: the journal entry should involve a CREDIT on note payable 34. type of activity is the following “sold 2000 shares of a company own common stock for cash answer: financing activity 35. n accounts receivable previously written off as uncollectible is finally collectedanswer: cash 500 36. which statement is false regarding the lower cost of market (LCM) method of inventory? answer: Don’t Know 37. interest = 8 , PV = 10000, N = 10, FIND FV=? answer: 21589 38. a dress shop makes a large sale for 1000 on nov 30, sent statement on dec 5, check received by shop on dec 10 answer: Dec 10 39. company A = Current Lia = 500000, Work Capital = 20000, company B = current Lia = 30,000 WC = 20000, which is betteranswer: company B is better 0. which of the following accounts is used in the calculation of working capital? Answer; mechanize income 41. depreciation by Straight line method ==( Look at chapter 11 42. an obligation of a business that claims of others against the assets of the business is calledanswer: liability 43. Assets = Liabilities + Equity 44. the common characteristic possessed by all assets is answer: future economic benefit 45. the relevant measure of a value of the assets of a company that is going out of business is thereanswer;: current market value 46. ccounting info should be verifiable in order to enhanceanswer: reliability 47. what is retained earnings? 48. if throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called unearned legal fees, the end of the period adjusting entry is to record is DON”T KNOW 49. FV = 400, I= 12%, N= 2 years, answer: 319 50. the book value of the plant asset is the difference between thea. replacement cost of the asset + history b. cost of the asset + depreciation c. cost of the asset – accumulated depreciation d. proceeds received from the sale of the asset 1. truck costing 12000, 9000 of accumulated depreciation has been recorded was discarded as having no value. The entry to record in this event would include a a. gain of 3000 b. loss of 3000 c. credit accumulated depreciation for 9000 d. credit accumulated depreciation for 120000 52. The Accounting equals b. — Asset= Liabilities+Equity 53. Expenses are incurred c. to produce liabilities—-WRONG 54. The cost principle requires that when assets are acquire recorded. b. the amount paid for them. RIGHT 55. ———————- d. overstated 130, understated 130. WRONG 56. 75,000 liability to IRS . Financing Activity—WRONG 57. —————- c. decrease in net income decrease in total assets—WRONG 58. Unearned legal fees c. debit unearned legal fees and credit legal fees earned—-CORRECT 59. 5000$ in saving 4% after 5 years b. 6000 ——WRONG 60. 5%, 6000$, for your tuition for3 years college a. 5100 ——WRONG 61. August 5 mails the payment Aug. 6 he received. When should Jim show that the received re was earned. d. Aug 6——WRONG 62. Profit margin? b. Net income/Sales—CORRECT 63. Which of the following accounts is used in the calculate of working capital a. etained earnings—WRONG b. sales c. merchandize income d. common stock e. long term debt 64. 15000 $ truck, 3000 salvage value 4 year life a. 4000 b. 4500 c. 3750 d. 3000——-WRONG e. None 65. Intangible asset a. research and development costs b. copyrights c. organization cost d. goodwill—–WRONG e. none 66. The income statement reports except b. expenses incurred by a business——WRONG 67. The common characteristic posed by all assets. b. future economic profit 68. On October 29. Company concluded a cost’s 4,400 account receivable was uncollectible and that a acet should be written off.
What affect will this write off have on this company’s Net Income and Total Assets assuming the allowing method is used to account for bad debts. A. Decrease Net income, no effect on Total assets B. No effect on Net income, no effect on Total assets C. Decrease in Net income, decrease in Total assets. D. Increase in Net income, no effect on Total Assets. (WA) E. No effect on Net income, Decrease in Total Assets. 69. liability of a company are owned to D) creditor 70. balance sheet Assets, liabilities and stock equity 71. prime object of a business is to increase equity Acquiring assets 72. mortize provides following benefit To …assets users that financial statement and it will 73. ending inventory is over stated… the overall cost of goods sold… COGS will be under estimated and Net Income will be over estimated 74. A financial statement that reports accounting data a specific date is the Balance sheet 75. The FASB ……. IRS (WA) 76. The principle entry business to be accounted for separating distinction from it owner or owners what principle would it be. Business entry principle 77. the going concern asset that the business Will remain in operation for the section future 78. 79.
Balance of 8,000 in Accounts Receivable and 4,000 credit balance in Contra account the customer account of 500 is ……, net reliable upon on the account receivable 75,500 (WA) 76,000 76,500 79,500 None 79. a method of estimating bad debt that in owns cash of outstanding debt and …. Direct write off(WA) 80. A corporation borrowed 180,000 on March 1,2001 and 10% went to notes payable to Star Bank. What is the ending entry on December 31,2001 Debit to interest payable of 18,000(WA) 81. Net sales300,000 COGS230,000 Gross Profit 70,000 Owner’s equity 25,000 Net Income450,000 What is the gross profit margin (gross profit/ net sales) 3% 82. A non current intangible asset Amortization 83. Depreciation is the process? Value on an asset at it from market value (WA) 84. a corporation is investing on a expected return 350,000 in 4 yrs. Interest is 12% |12 % 4 years | | |Present value |. 636 | |Future value |1. 74 | |Present value of annuity |3. 037 | |Future value of annuity |4. 780 | 265,764(WA) 55,600137,687 222,600 350,000 85. 20,000 semi annually 5 yrs 12% | | | |12% 5yrs |3. 05 | |12% 10 yrs |5. 650 | |6% 10yrs |7. 360 | |6% 5 yrs |4. 212 | Not more than 84,240 (WA) 72,100 113,000 147,200 200,000