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Upwork Finance and Accounting

Accounts Payable Test 2016

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1. What level of detail should invoices contain?

Answers:

  1. Summary, only the total due
  2. Totals by item
  3. Totals by date
  4. Specific details – dates, quantities, individual pricing

2. Why do companies require deposits & advances?

Answers:

  1. They don’t trust the customers to pay
  2. It improves cash flow, especially for long duration projects
  3. They want to make sure customers have money to pay

3. Tax Accounting Services pays off $200 on account. To record this transaction for Tax Accounting Services, the cash account is credited. Which account is debited?

Answers:

  1. Accounts Receivable
  2. Service Revenue
  3. Cash
  4. Accounts Payable

4. A company receives an advance payment for special order goods that are to be manufactured and delivered within 6 months. The advance payment should be reported in the company’s balance sheet as a

Answers:

  1. deferred charge.
  2. contra asset account.
  3. current liability.
  4. non-current liability.

5. On December 31, 2007, special insurance costs incurred but unpaid were not recorded. If these insurance costs were related to work-in-process, what will be the effect of the omission on accrued liabilities and retained earnings in the December 31, 2007 balance sheet?
Accrued liabilities Retained Earnings

Answers:

  1. No effect No effect
  2. No effect Overstated
  3. Understated No effect
  4. Understated Overstated

6. Rush checks may also be called _____

Answers:

  1. emergency checks
  2. ASAP checks
  3. quick checks
  4. All of the above.

7. Who is to be covered by VAT (Value Added Tax)?

Answers:

  1. All business transactions carried on within a State by individuals
  2. All business transactions carried on within a State by partnerships
  3. All business transactions carried on within a State by Companies
  4. All of the above

8. What steps are taken before approving an invoice for payment?

Answers:

  1. Validating the invoice once it is matched for checking
  2. If workflow is implemented, initiating approval for the invoice
  3. Creating accounting after approval of invoice
  4. Both a and b
  5. a, b, and c

9. Who typically calculates the tax liability to be paid?

Answers:

  1. The State government, which informs the company what is owed
  2. The Accounts Payable staff
  3. The CFO
  4. The General or Tax Accountant within the company

10. Among the items reported on Cord, Inc.’s income statement for the year ended December 31, 2007 were the following:
Amortization of goodwill acquired in 1992 $10,000
Insurance premium on the life of an officer. $5,000
Cord is the owner and beneficiary.
Temporary differences amount to:

Answers:

  1. $0
  2. $5,000
  3. $10,000
  4. $15,000

11. When are sales & use taxes due?

Answers:

  1. The date varies from State to State
  2. On the15th of every month
  3. Annually, on the same date as federal taxes
  4. Quarterly, on the 15th of the following month

12. Lime & Co.’s payroll for the month ended January 31,2007 is summarized as follows: Total wages $10000 Federal income tax withheld $1200 All wages paid were subject to FICA. FICA tax rates were 7% each for the employees and the employer. The company remits payroll taxes on the 15th of the following month. In its financial statements for the month ended January 31, 2007, what amounts should it report as total payroll tax liability and as payroll tax expense?

Answers:

  1. $1200 $1400
  2. $1900 $1400
  3. $1900 $700
  4. $2600 $700

13. The correct journal entry to record a purchase of inventory on credit using a perpetual inventory system includes:

Answers:

  1. debit Cost of Goods Sold, credit Inventory
  2. debit Accounts Payable, credit Inventory
  3. debit Accounts Receivable, credit Sales Revenue
  4. debit Inventory, credit Accounts Payable

14. Of the following, which is a typical situation involving a deposit?

Answers:

  1. The company uses a recruiting firm to find key employees
  2. In order to buy office supplies, the company has to put a deposit down
  3. The business has leased a new location and is required to put a deposit for the last month’s rent
  4. Federal taxes for the upcoming year

15. If a prepaid expense is expiring (the final month is expensed), and the company has not received an invoice for the upcoming prepaid period, the accounting should:

Answers:

  1. Continue to book the monthly expense in the upcoming month and contact the company to find if an invoice will be issued for the coming year
  2. Do not book the monthly expense and assume your company is no longer in business with the company
  3. Send an email to the CFO
  4. Delete the line from Excel and assume no further expense

16. A bill is a form on which you record details of _________ .

Answers:

  1. the sales made
  2. the expenses incurred
  3. a purchase made by a vendor to whom the Company owe money
  4. the income accrued

17. Streamlined Sales Tax is a national effort by which of the following?

Answers:

  1. The State Government
  2. The Local Government
  3. The private sector to simplify and modernize sales and use tax collection
  4. All of the above

18. How will you track the deposits that clients pay to the vendors?

Answers:

  1. Track deposits as negative balances in Accounts Payable
  2. Record the deposit in the Enter Bills window
  3. Neither of the above

19. When are invoices treated as having been paid short?

Answers:

  1. If any discount for early payment is allowed
  2. If there are any damaged goods
  3. If there are any prior credits
  4. All of the above.

20. What is the difference between Accounts Payable and Accounts Receivable?

Answers:

  1. Accounts receivable are amounts owed by the suppliers on account whereas the Accounts Payable are amounts owed to the customers on account.
  2. Accounts receivable are amounts owed by the customers on account whereas the Accounts Payable are amounts owed to the suppliers on account.
  3. Accounts receivable are amounts owed by the customers on account whereas the Accounts Payable are amounts owed to the bankers on account.
  4. None of the above

21. What is the report generated to find the net purchases from each vendor regardless of how payments were recorded called?

Answers:

  1. Inventory valuation summary
  2. Expenses by vendor summary
  3. Unpaid bills details
  4. Purchases by vendor summary

22. Which of the following methods can be used to value inventory in QuickBooks?

Answers:

  1. Double declining balance
  2. Last in, first out (LIFO)
  3. First in, first out (FIFO)
  4. Average cost

23. When clients have customers who are also vendors, what is the best way to offset Accounts Payable against Accounts Receivable?

Answers:

  1. Use the QuickBooks trade-off feature
  2. Create a bank account through which you can clear the Payables and the Receivables
  3. Use a single journal entry
  4. Use multiple journal entries

24. Accrual Basis means __________.

Answers:

  1. the most commonly used accounting method which reports income when earned and expenses when incurred,
  2. the accounting method which reports income when received and expenses when paid.
  3. the accounting method which reports income when earned and expenses when incurred.
  4. All of the above

25. A good example of a typical prepaid expense is:

Answers:

  1. Rent
  2. Dividends
  3. Insurance
  4. Wages

26. Orleans & Co., a cash-basis taxpayer, prepares accrual-basis financial statements. In the current year balance sheet, Orleans’s deferred income tax liabilities increased in comparison with those reported for the previous year. Which of the following changes would cause this increase in deferred income tax liabilities?

I.An increase in prepaid insurance premium
II.An increase in rent receivable
III.An increase in warranty obligations

Answers:

  1. I only
  2. I and II only
  3. II and III only
  4. III only

27. What is the difference between billable and non-billable expenses?

Answers:

  1. Billable expenses are the expenses incurred by you in carrying out your own business / performing your own duties and responsibilities and Non-billable expenses are the expenses incurred by you on behalf of your customer in performing duties / rendering services and supplying goods
  2. Billable expenses are the expenses incurred by you on behalf of your customer in performing duties / rendering services and supplying goodsand Non-billable expenses are the expenses incurred by you in carrying out your own business / duties and performing your own responsibilities.
  3. Neither of the above

28. From the Accounts Payable point of view, what are the main problems that arise between Accounts Payable and Purchasing?

Answers:

  1. Missing information on Purchase Orders
  2. Missing information about discounts
  3. Delays
  4. All of the above.

29. Debit memos are required for_______.

Answers:

  1. the payment deductions taken on invoices.
  2. the payments made on Purchase Orders
  3. the payments received on Sales Orders
  4. Both b and c

30. Tax Accounting Services pays off $200 on account. To record this transaction for Tax Accounting Services, the Cash account is credited and the __________ account is debited.

Answers:

  1. Cash
  2. Accounts Payable
  3. Service Revenue
  4. Accounts Receivable

31. In its 2007 income statement, Cere & Co. has reported an income of $300,000 before income taxes. Cere estimated that, because of permanent differences, taxable income for 2007 would be $280,000. During 2007, Cere made estimated tax payments of $50,000, which were debited to income tax expense; Cere is subject to a 30% tax rate. What amount should Cere report as income tax expense?

Answers:

  1. $34,000
  2. $50,000
  3. $84,000
  4. $90,000

32. Which of the following accounts has a debit balance?

Answers:

  1. Accounts Payable account
  2. Accrued taxes account
  3. Accumulated depreciation account
  4. Bad debt expense account

33. What is Accounts Payable Turnover Ratio?

Answers:

  1. Net profit / Accounts Receivable
  2. Cost of Goods Sold / Accounts Payable
  3. 365 days / Accounts Payable Turnover
  4. Total sales / Networth

34. How often should Payables be entered in the accounting system?

Answers:

  1. Once a week
  2. As soon as the invoices are brought to the AP department
  3. Daily
  4. As and when they are due

35. Which form is used to reimburse an individual for Travel and Entertainment expenses?

Answers:

  1. Form W4
  2. Expense Voucher
  3. Form 1099Misc
  4. Form 941

36. An Invoice statement is provided __________________

Answers:

  1. for payment purposes
  2. to ensure that the IRS department has received all the invoices sent
  3. to check for outstanding credits.
  4. to know the expenditure of the company for the particular month

37. What are the debit memo & the credit memo in Payables?

Answers:

  1. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the supplier to the Company and the credit memo is raised by the Company to the supplier stating we are due to him. Both have positive amounts
  2. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the supplier to the Company and the credit memo is raised by the Company to the supplier stating we are due to him. Both have negative amounts.
  3. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the supplier to the Company and the credit memo is raised by the Company to the supplier stating we are due to him. Both may have positive and negative amounts
  4. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the Company to the supplier and the credit memo is raised by the supplier to the Company stating we are due to him. Both have negative amounts

38. When an invoice is presented for payment, most companies match it against a purchase order and a receiving document, and if all three match, the invoice is paid on or after its due date. This is referred to as —————- .

Answers:

  1. the two-way match
  2. the three-way match
  3. invoice cleared
  4. invoice paid

39. Accounts Payable is _________.

Answers:

  1. a file or an account that contains details of money that a person or company owes to its suppliers.
  2. details of money or money’s worth that a person or company owns.
  3. an expense account
  4. a file or an account that contains details of money that a person or company owes to its customers

40. What is VAT?

Answers:

  1. VAT is a tax calculated on the income earned
  2. VAT is a consumer-oriented tax imposed on goods and services sold.
  3. VAT is an item
  4. VAT is a Credit card fee

41. Where do you record the payment terms for the money that a client owes to a vendor?

Answers:

  1. In Sales Orders
  2. In Checks
  3. In Purchase Orders
  4. In Bills

42. Using the following information, compute total liabilities.
Notes Receivable $30,000, Accounts Payable $20,000, Wages Payable $8,000 and Rent Expenses $40,000.

Answers:

  1. $20,000
  2. $28,000
  3. $68,000
  4. $98,000

43. How are prepaid expenses typically tracked?

Answers:

  1. In an excel spreadsheet, with a monthly journal entry made to reflect the current month expenses
  2. The procedure is fully automated in the accounting system; no one needs to do anything from month to month
  3. The CFO will tell the accountant what needs to be booked
  4. The auditors of the company do it

44. What is the Journal Entry for “The Company purchased $6,000 worth of merchandise on credit”?

Answers:

  1. Dr Accounts Payable and Cr Merchandise
  2. Dr Merchandise and Cr Accounts Payable
  3. Dr Bank and Cr Accounts Payable
  4. None of the above

45. An open credit is __________.

Answers:

  1. money owed to the company
  2. money owed by the company
  3. money owed to the investors
  4. None of the above

46. Accounts payable refer to the current _________.

Answers:

  1. income of a business or an organization
  2. assets of a business or an organization
  3. expenses of a business or an organization
  4. liabilities of a business or an organization

47. When an employer makes an end-of-period adjusting entry with a debit to the Supplies Expense, the credit entry is made to:

Answers:

  1. Accounts Payable.
  2. Supplies.
  3. Cash.
  4. Retained Earnings.

48. Can you collect and remit tax for a state even if not required to do so?

Answers:

  1. No
  2. Yes, the State Government will send you the amount without your getting registered with the state prior to collecting the tax.
  3. Yes, you can voluntarily register to collect and remit tax. But, you must register with the state prior to collecting the tax.

49. What is the last date for filing claims for VAT refunds in all countries?

Answers:

  1. December 31st of every year
  2. January 31st of every year
  3. There is no deadline for filing claims for VAT refunds
  4. June 30th of every year

50. How are the A/P journal entries typically created?

Answers:

  1. Hand written by the A/P staff and entered into the system by the accountant
  2. The A/P staff is responsible for making journal entries
  3. Entries are created and entered by a CPA
  4. A/P software will generate journal entries based on preset coding

51. Buck & Co. receives deposits from its customers to protect itself against non-payments for future services. These deposits should be classified by the company as

Answers:

  1. a liability
  2. revenue
  3. a deferred credit deducted from Accounts Receivable.
  4. a contra account.

52. Which of the following is not an important step before approving a payment?

Answers:

  1. Refer to the terms and conditions for making the payment (any credit period)
  2. Check the bank balance before approving the invoice for payment.
  3. Refer to the Sales Order issued.
  4. Refer to the Goods / Services Received Note for having received goods / services as mentioned in the purchase order

53. Barnel Corp. owns and manages 19 apartment complexes. On signing a lease, each tenant has to pay the first and the last month’s rent and a $500 refundable security deposit. The security deposits are rarely refunded in total because cleaning costs of $150 per apartment are almost always deducted. About 30% of the time, the tenants are also charged for damages to the apartment, which typically costs $100 to repair. If a one year lease deed is signed on a $900 per month apartment, what amount would the company report as refundable security deposit?

Answers:

  1. $1,400
  2. 4500
  3. $350
  4. $320

54. The correct journal entry to record a return of inventory purchased on credit basis using a perpetual inventory system includes:

Answers:

  1. debit Inventory, credit Accounts Payable
  2. debit Cost of Goods Sold, credit Inventory
  3. debit Accounts Receivable, credit Sales Revenue
  4. debit Accounts Payable, credit Inventory

55. Hudson Hotels collects 15 % as city sales tax on room rentals, in addition to $2 per room, per night, as occupancy tax. Sales tax for each month is due at the end of the following month, and occupancy tax are due 15 days after the end of each calendar quarter. On January 3, 2008, Hudson paid its November 2007 sales tax and occupancy tax for the fourth quarter of 2007. Additional information pertaining to Hudson’s operations is as follows:

2007 Room Rentals Room Nights
October $100,000 $1,100
November $110,000 $1,200
December $150,000 $1,800

What amounts should Hudson report as sales tax payable and occupancy tax payable in its December 31, 2007 balance sheet?

Sales Tax Occupancy Taxes

Answers:

  1. $39,000 $6,000
  2. $39,000 $8,200
  3. $54,000 $6,000
  4. $54,000 $8,200

56. Why do companies use the government listed mileage rate for the reimbursement of traveling expenses rather than paying actualexpenses?

Answers:

  1. It is cheaper than paying people for gas
  2. It is simpler for the employer and fairly reimburses the employees for the expenditure on gas and the wear and tear of the vehicle
  3. It is required by the tax law
  4. It limits the company’s liability if the person is involved in an accident while driving for work purposes

57. Ross & Co. pays all salaried employees on Monday for the 5-day work week ended the previous Friday. The last payroll recorded for the year ended December 31, 2004 was for the week ended December 25, 2004. The payroll for the week ended January 1, 2005 included regular weekly salaries of $80000 and vacation pay of $ 25000 for the vacation time earned in 2004 but not taken by December 31, 2004. Ross had an accrued liability of $20000 for vacation pay as on December 31, 2003. In its December 31, 2004 balance sheet, what amount should Ross report as accrued salary and vacation pay?

Answers:

  1. $64000
  2. $69000
  3. $84000
  4. $89000

58. What is the best way to reimburse Travel and Entertainment to the employees who do not wish to use the electronic form of reimbursement?

Answers:

  1. The reimbursement should be included in the normal paycheck.
  2. The reimbursement should be ignored
  3. The reimbursement should be made by cash
  4. All of the above

59. On July 1, 2006, Ran County issued reality tax assessments for its fiscal year ended June 30, 2007. The assessments were to be paid in two equal installments. On September 1, 2006, Day & Co. purchased a warehouse in Ran County. The purchase price was reduced by a credit for accrued realty taxes. The company did not record the entire year’s real estate tax obligations, but instead records tax expenses at the end of each month by adjusting prepaid real estate taxes payable, as appropriate. On November 1, 2006, it paid the first installment of $12000 for realty taxes. What amount of this payment should it record as a debit to real estate taxes payable?

Answers:

  1. $4,000
  2. $8,000
  3. $10,000
  4. $12,000

60. What does the acronym EFT stand for?

Answers:

  1. Electronic File Transfer
  2. Electronic Funds Transfer
  3. Both a and b
  4. Electronic Fund Tour

61. When a deposit is used as payment, what is the journal entry from the customer’s (the person who made the deposit) perspective?

Answers:

  1. Debit Cash, credit Service Expense
  2. Debit Accounts Payable, credit Cash
  3. Debit Service Expense, credit Cash
  4. Debit Service Expense, credit Other Advances

62. Under which head does VAT reflect in the Balance Sheet?

Answers:

  1. Equity
  2. Creditors
  3. Fixed Asset
  4. Current Asset

63. SFAS 109 establishes standards of financial accounting and reporting for income taxes that are currently payable and for

Answers:

  1. the tax consequences of revenues and expenses included in taxable income in a different year from the year in which they are recognized for financial reporting purposes.
  2. the method of accounting for the US Federal investment tax credit.
  3. the discounting of income taxes.
  4. the accounting for income taxes in general in interim periods.

64. Recording expenditure made, but not yet paid, to a vendor is an example of:

Answers:

  1. a prepaid income transaction
  2. an unearned expense transaction
  3. an accrued liability transaction
  4. an accrued payable transaction

65. Receipts from cash sales of $7,500 were recorded incorrectly as $5,700. What entry is required in the depositor’s accounts?

Answers:

  1. Debit Cash: Credit Accounts Receivable
  2. Debit Sales: Credit Cash
  3. Debit Accounts Receivable: Credit Cash
  4. Debit Cash: Credit Cash Sales

66. What is the mode of making payment to the employees for reimbursing travel and entertainment expenses?

Answers:

  1. Check
  2. Automated Clearing House (ACH)
  3. Direct deposit
  4. All of the above

67. Accounts Payable affect net income.

Answers:

  1. True
  2. False

68. What is nexus?

Answers:

  1. Nexus is the sales tax collected from Hotels
  2. Nexus is the determining factor of whether an out-of-state business selling products in a state is liable for collecting the tax on sales in the state.
  3. Nexus is the sales tax collected on the traveling expenditure incurred in the same state
  4. Nexus is the determining factor of whether a state business selling goods in the state is liable for collecting the tax on sales in the state.

69. Which of the following will not result in the recognition of a deferred tax asset?

Answers:

  1. An operating loss carry forward.
  2. Immediate expensing of organizational costs.
  3. Subscriptions revenue received in advance.
  4. Receipt of municipal bond interest.

70. Excess payment made to the supplier will appear as a _____.

Answers:

  1. debit balance in the supplier’s account.
  2. credit balance in the supplier’s account.
  3. debit balance in the customer’s account
  4. credit balance in the customer’s account.

71. At what stage in the Accounts Payable process is cash affected?

Answers:

  1. When an invoice is entered into the accounting system
  2. When a credit memo is generated
  3. When checks are printed
  4. Accounts Payable never handles cash

72. $1,000 worth of supplies are purchased on account. What is the Journal Entry to be posted?

Answers:

  1. Dr A/P account and Cr Supplies account
  2. Dr Purchase account and Cr A/P account
  3. Dr Supplies account and Cr A/P account
  4. Dr A/P account and Cr Purchase account

73. Under generally accepted accounting principles, which approach is used to determine income tax expense?

Answers:

  1. Asset and liability approach.
  2. “With and Without” approach.
  3. Net-of-tax approach.
  4. Deferred approach.

74. Under the state law, Acme may pay 3% of eligible gross wages or it may reimburse the state directly for actual unemployment claims. The Company believes that actual unemployment claims will be 2% of the eligible gross wages and has chosen to reimburse the state. Eligible gross wages are defined as the first $10000 of the gross wages paid to each employee. The Company had five employees, each of whom earned $20000 during 2007. In its December 31, 2007 balance sheet, what amount should it report as accrued liability for unemployment claims?

Answers:

  1. $1000
  2. $1500
  3. $2000<>
  4. $3000

75. On December 31, 2007, Deal Inc. failed to accrue the December 2007 sales salaries that were payable on January 6,2008. What will be the effect of the failure to accrue sales salaries on the working capital and cash flows from operating activities in Deal’s 2007 financial statements?

Working Capital Cash Flows from Operating Activities

Answers:

  1. Overstated No effect
  2. Overstated Overstated
  3. No effect Overstated
  4. No effect No effect

76. What are the steps involved in setting up QuickBooks to track 1099 information?

Answers:

  1. Turn on the Tax: 1099 preference
  2. Link 1099 categories to QuickBooks accounts
  3. Designate which vendors should receive 1099s
  4. All of the above

77. What is the use of an Accounts Payable ledger?

Answers:

  1. An Accounts Payable ledger helps you to control your expenditures and payables
  2. An Accounts Payable ledger helps you to know the income earned
  3. An Accounts Payable ledger shows the amount to be paid to the employees
  4. None of the above

78. What should be submitted to the VAT authorities to obtain a refund of VAT?

Answers:

  1. The original invoice, together with an application form and other supporting documents relating to the expenditure incurred must be submitted.
  2. The original purchase order together with an application form and other supporting documents relating to the expenditure incurred must be submitted.
  3. The original Receipt together with an application form and other supporting documents relating to the expenditure incurred must be submitted
  4. Both the original purchase order and the invoice should be submitted

79. Making insurance payments in advance is an example of:

Answers:

  1. an accrued receivable transaction.
  2. an accrued liability transaction.
  3. an unearned revenue transaction.
  4. a prepaid expense transaction

80. Is a sales tax return required to be filed even if the sales are equal to zero?

Answers:

  1. Yes
  2. No
  3. Depends on the expenditure made
  4. Varies from state to state.

81. What is Accounts Payable aging report?

Answers:

  1. Sorting of a company’s Accounts Payable by the bill date.
  2. Sorting of a company’s Accounts Payable by the due date.
  3. Sorting of a company’s Accounts Payable by the posted date.
  4. None of the above.

82. What is the standard method used for the employees to submit an account of the travel expenses incurred by them?

Answers:

  1. They needn’t as they are given a company credit card for the purpose
  2. They have to submit a written and signed letter stating the total expenses to be reimbursed
  3. They submit an envelope containing the receipts of the expenses incurred
  4. They have to submit a report of the expenses approved by the employees’ supervisor

83. Payments for expenses incurred on corporate cards should be made directly to_____.

Answers:

  1. the EFT
  2. the IRS
  3. the state Taxes
  4. the credit card company

84. The ratio derived by dividing Cost of Goods Sold by Account Payable is known as _______.

Answers:

  1. the Current Ratio
  2. the Quick Ratio
  3. the Networth Ratio
  4. the Accounts Payable Turnover Ratio

85. Why are per diem’s used in lieu of having employees detail all actual spending for meals?

Answers:

  1. Companys like to treat their employees while they travel for the company
  2. Reasonable amounts are fixed and it limits the amount the company will have to spend
  3. Employees always lose receipts and that makes the process of reimbursement tough
  4. It saves on paperwork

86. The Provisions of SFAS 109, Accounting for Income Taxes, are applicable to:

Answers:

  1. all foreign, state, and local taxes.
  2. domestic Federal income taxes.
  3. an enterprise’s foreign operations accounted for by the cost method.
  4. financial statements of foreign enterprises required to pay US. Federal income taxes.

87. What type of people does the Accounts Payable interface with most often?

Answers:

  1. Customers
  2. Vendors
  3. Other employees
  4. IRS

88. Who can use a company’s Travel & Entertainment Cards, though the liability lies with the employees?

Answers:

  1. Vendors
  2. Customers
  3. Employees
  4. All of the above

89. On February 1, Royal Company Ltd. purchased $2,000 worth of merchandise, terms 2/10, n/30. The company uses the gross method of recording purchases. Payment for the Accounts Payable was made on February 26. Which of the following journal entries is appropriate for the February 26 transaction?

Answers:

  1. Debit Purchases a/c… $2,000 and credit Account Payable a/c… $2,000
  2. Debit Accounts Payable a/c… $1960 and credit Cash a/c… $1,960
  3. Debit Accounts Payable a/c… $2,000 and credit Cash a/c… $2,000
  4. Debit Accounts Payable & Purchase Discount a/c for $1,960 & $40 and credit Cash a/c for $2,000

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Upwork Finance and Accounting

Accounting Skills Test (Cash Flow) 2016

Published by:

1. Which of the following would be included in the investing section of a cash flow statement?

Answers:

  1. Proceeds from sale of equipment
  2. Proceeds from sale of long-term investments
  3. Proceeds from sale of marketable securities
  4. All of the above would be included in the investing section.

2. In 2007, XYZ Company had a net loss of $160,000 and reported the following:

Dividends paid: $40,000
Depreciation expense: $30,000
Increase in accounts payable: $15,000
Issuance of stock: $100,000
Retirement of debt: $50,000

Given this data, the amount of cash flow from operations was ______________.

Answers:

  1. ($115,000)
  2. $205,000
  3. ($75,000)
  4. $65,000

3. Equity in the undistributed earnings of a recognized affiliate would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

4. Dividends paid for the year would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

5. Equity income from an affiliate would be shown _____________________.

Answers:

  1. as an add-back to net income in the operations section
  2. as a deduction from net income in the operations section
  3. in the investing section
  4. None of the above

6. Issuing ten-year bonds will cause cash to ______________ .

Answers:

  1. increase
  2. decrease
  3. show no change

The effect on cash cannot be determined based on given information.

7. A cash flow statement is typically prepared _____________________.

Answers:

  1. before the balance sheet is prepared
  2. after the balance sheet is prepared but before the income statement is prepared
  3. after the income statement is prepared but before the balance sheet is prepared
  4. after both the balance sheet and the income statement are prepared

8. Which of the following would be shown in the investing section of a cash flow statement?

Answers:

  1. Retirement of long-term debt
  2. Retirement of preferred stock
  3. Acquisition of treasury stock
  4. None of the above

9. The sale of equipment for cash with a recognized loss would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

10. An increase in the accounts payable balance would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement

11. Pre-paying a one-year insurance policy will cause cash to ______________ .

Answers:

  1. increase
  2. decrease
  3. show no change
  4. The effect on cash cannot be determined based on given information.

12. Warranties payable that increased during the year would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

13. The acquisition of a building and/or land by entering into a lease that meets the capital lease criteria would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

14. Depreciation recorded on equipment would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

15. Which of the following would be shown in the investing section of a cash flow statement?

Answers:

  1. Acquisition of equipment through a capital lease
  2. Acquisition of treasury stock
  3. Retirement of long-term debt
  4. None of the above

16. Cash borrowed from a bank by issuing a short-term note payable would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

17. Collecting receivables will cause cash to ______________ .

Answers:

  1. increase
  2. decrease
  3. show no change
  4. The effect on cash cannot be determined based on given information.

18. In 2007, XYZ Company had a net income of $150,000 and reported the following:

Depreciation expense: $21,000
Issuance of debt: $120,000
Loss on sale of equipment: $23,000
Purchase of building: $110,000
Increase in inventory: $12,000

Given this data, the amount of cash flow from operations was ______________.

Answers:

  1. $182,000
  2. $171,000
  3. $159,000
  4. $138,000

19. Preferred stock issued for cash would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

20. The most popular method of presenting cash from operations in a cash flow statement is the _________________.

Answers:

  1. direct method
  2. operations method
  3. indirect method
  4. funds method

21. The amortization of a recorded patent would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

22. Preferred stock converted into common stock would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

23. An amortization of a bond discount would be shown __________________.

Answers:

  1. as an add-back to net income when determining cash flow from operations
  2. as a deduction from net income when determining cash flow from operations
  3. in the financing section
  4. None of the above

24. When determining cash flow from operations, which of the following would NOT be deducted from net income?

Answers:

  1. Increase in accounts receivable
  2. Loss on sale of equipment
  3. Amortization of bond premium
  4. Decrease in accounts payable

25. Which of the following statements about depreciation expense is true?

Answers:

  1. Depreciation expense increases the expense for a period but does not use cash.
  2. When determining funds from operations, depreciation expense that had originally been subtracted in computing net income is added back to net income, but it is not a use of cash.
  3. Depreciation expense is not a source of funds.
  4. All of the above statements are true.

26. Which of the following transactions would be shown on a cash flow statement, but does not affect cash?

Answers:

  1. Sale of bonds for cash
  2. Exchange of land for stock
  3. Collection of customer accounts
  4. Payment of dividends to owners

27. When determining cash flow from operations, which of the following would NOT be deducted from net income?

Answers:

  1. Gain on sale of a building
  2. Gain on sale of equipment
  3. Gain on sale of marketable securities
  4. All of the above

28. An investment in the stock of another company would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

29. Which of the following typically happens during the maturation phase of a product’s life cycle?

Answers:

  1. Cash outflow exceeds cash inflow from operations.
  2. Cash outflow exceeds cash inflow from investing activities.
  3. Cash inflow exceeds cash outflow from financing activities.
  4. All of the above

30. Paying previously declared dividends will cause cash to ______________ .

Answers:

  1. increase
  2. decrease
  3. show no change
  4. The effect on cash cannot be determined based on given information.

31. Treasury stock purchased for cash would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

32. The use of a bond sinking fund to retire a long-term debt at maturity would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

33. When determining cash flow from operations, which of the following would be added back to net income?

Answers:

  1. Depreciation expense
  2. Amortization of patent
  3. Loss on sale of marketable securities
  4. All of the above

34. XYZ reported balances in the Accumulated Depreciation account of $130,000 on 01/01/07 and $120,000 on 12/31/07. During 2007, an asset costing $100,000 (with an accumulated depreciation of $80,000) was sold for $20,000.

Given this data, the depreciation expense for 2007 was _____________.

Answers:

  1. $10,000
  2. $90,000
  3. $110,000
  4. $70,000

35. A payment made from accounts payable will cause cash to ______________ .

Answers:

  1. increase
  2. decrease
  3. show no change
  4. The effect on cash cannot be determined based on given information.

36. Cash paid for land would be shown as ________________.

Answers:

  1. cash flow from operations
  2. cash flow from investing
  3. cash flow from financing
  4. a non-cash transaction

37. Declaring dividends will cause cash to ______________ .

Answers:

  1. increase
  2. decrease
  3. show no change
  4. The effect on cash cannot be determined based on given information.

38. Amortized discount on bonds payable would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

39. In 2007, XYZ Company had a net income of $100,000 and reported the following account changes on its balance sheet:

Accounts Receivable: $6,000 increase
Accounts Payable: $2,000 increase
Building: $8,000 decrease
Accumulated Depreciation: $3,000 increase
Bonds Payable: $16,000 increase

Given this data, the amount of cash flow from operations was ______________.

Answers:

  1. $100,000
  2. $99,000
  3. $119,000
  4. $103,000

40. At the beginning and end of 2007, XYZ Company reported the following balances for Bonds Payable:

Jan 1: $100,000
Dec 31: $140,000
In addition, $60,000 In bonds was retired In 2007.

Given the above data, the amount of Bonds Payable issued during the year was ______________.

Answers:

  1. $100,000
  2. $20,000
  3. $160,000
  4. $180,000

41. Deferred income tax payable that increased during the year would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

42. Recording a depreciation expense will cause cash to ______________ .

Answers:

  1. increase
  2. decrease
  3. show no change
  4. The effect on cash cannot be determined based on given information.

43. A cash payment for land acquisition would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

44. Which of the following typically happens during the growth phase of a product’s life cycle?

Answers:

  1. Cash outflow exceeds cash inflow from operations.
  2. Cash outflow exceeds cash inflow from investing activities.
  3. Cash inflow exceeds cash outflow from financing activities.
  4. All of the above

45. When determining cash flow from operations, which of the following would be a deduction from net income?

Answers:

  1. Depreciation expense
  2. Increased accounts receivable
  3. Decreased accounts receivable
  4. Increased accounts payable

46. Which of the following would be shown in the financing section of a cash flow statement?

Answers:

  1. Long-term bonds payable issued
  2. Long-term notes payable issued
  3. Short-term notes payable issued
  4. All of the above

47. Salaries paid during the year would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

48. Long-term investments sold for cash with a recognized gain would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

49. In most countries, the preparation of a __________________ is a common practice.

Answers:

  1. cash flow statement<>/span<
  2. financing activities statement
  3. investing activities statement
  4. statement of sources and uses of funds

50. On their income statement, XYZ Company reported $600,000 in sales, $320,000 in depreciation expense, $60,000 in income taxes, and $100,000 in other expenses. In addition, $80,000 of common stock was issued for cash during the year. Assuming that the company’s non-cash working capital balances did not change during the year, the total amount of cash from operations was ____________.

Answers:

  1. $20,000
  2. $100,000
  3. $420,000
  4. $440,000

51. Accounts receivable that increased during the year would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

52. Unearned revenue that had been reduced during the year would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

53. In determining cash flow from operations, which of the following would be an add-back to net income?

Answers:

  1. Gain on sale of building
  2. Loss on sale of building
  3. Decrease in inventories
  4. All of the above

54. Accruing an income tax liability will cause cash to ______________ .

Answers:

  1. increase
  2. decrease
  3. show no change
  4. The effect on cash cannot be determined based on given information.

55. Prepaid rent that increased during the year would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

56. Cash received from sale of investment would be shown on a cash flow statement as ___________.

Answers:

  1. cash flow from operations
  2. cash flow from investing
  3. cash flow from financing
  4. a non-cash transaction

57. During 2007, XYZ Company experienced the following changes:

Current liabilities: $75,000 increase
Non-current liabilities: $45,000 decrease
Owners’ equity: $51,000 decrease
Non-current assets: $42,000 increase
Current assets (other than Cash): $18,000 increase

Given the above data, the change in cash for 2007 was ____________.

Answers:

  1. ($57,000)
  2. $30,000
  3. $39,000
  4. ($81,000)

58. The acquisition of a patent would be shown __________________.

Answers:

  1. as an add-back to net income in the operations section
  2. as a deduction from net income in the operations section
  3. in the investing section
  4. None of the above

59. Land acquired by issuing preferred stock would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

60. When determining cash flow from operations, which of the following would NOT be added back to net income?

Answers:

  1. Loss on sale of equipment
  2. Equity in affiliate’s losses
  3. Amortization of bond premium
  4. All of the above

61. Which of the following is NOT a characteristic of growing firms?

Answers:

  1. Significant increase in inventories
  2. Reporting in the cash flow statement a deduction adjustment to net income for change in deferred taxes
  3. Significant increase in accounts receivable
  4. All of the above

62. Which of the following typically happens during the introduction phase of a product’s life cycle?

Answers:

  1. Cash outflow exceeds cash inflow from operations.
  2. Cash outflow exceeds cash inflow from investing activities.
  3. Cash inflow exceeds cash outflow from financing activities.
  4. All of the above

63. On a cash flow statement, depreciation expense ________________.

Answers:

  1. provides cash from operations
  2. should be added to net income when determining cash provided by operations
  3. should be deducted from net income when determining cash provided by operations
  4. is an example of cash expense

64. The major components of a cash flow statement are ________________________.

Answers:

  1. cash flow from operations, cash flow from investing, and cash flow from financing
  2. cash flow from operations, other sources of cash, and other uses of cash
  3. sources of cash from investments, application of cash for financing activities, and other cash transactions
  4. cash received from customers, cash paid to customers, and other sources of cash

65. Which of the following statements does NOT illustrate a proper interpretation of information in a cash flow statement?

Answers:

  1. Capital-intensive firms would likely show a substantially smaller add-back to net income for depreciation than service firms would show.
  2. The product life cycle concept provides useful insights into the relation between cash flows from operating, investing, and financing activities.
  3. The adjustments for changes in operating working capital accounts depend in part on a firm’s rate of growth.
  4. All of the above

66. Paying cash to retire preferred stock will cause cash to ______________ .

Answers:

  1. increase
  2. decrease
  3. show no change
  4. The effect on cash cannot be determined based on given information.

67. When preparing cash flow statements, the practice of presenting cash from operations by listing all cash-generating revenues followed by all cash expenses is called the ______________.

Answers:

  1. direct method
  2. operations method
  3. indirect method
  4. funds method

68. In determining cash flow from operations, which of the following would be added to net income?

Answers:

  1. Increased accounts receivable
  2. Increased merchandise inventory
  3. Increased accounts payable
  4. Decreased notes payable to suppliers

69. In 2007, XYZ Company had a net loss of $160,000 and reported the following:

Dividends paid: $40,000
Depreciation expense: $30,000
Increase in accounts payable: $15,000
Issuance of stock: $100,000
Retirement of debt: $50,000

Given this data, the net change in cash for 2007 was ______________.

Answers:

  1. ($105,000)
  2. $10,000
  3. $215,000
  4. ($165,000)

70. Which of the following would NOT be shown in the investing section of a cash flow statement?

Answers:

  1. Acquisition of equipment
  2. Acquisition of a building
  3. Proceeds from sale of equipment
  4. All of the above are shown in the investing section of a cash flow statement

71. Treasury stock sold for an amount greater than its repurchase price would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

72. Which of the following transactions would be shown as a cash flow from financing?

Answers:

  1. Cash paid for investments acquisition
  2. Cash received from sale of property, plant, and equipment
  3. Cash received from customers
  4. Cash paid for dividends

73. Acquisition of treasury stock would be shown _____________________.

Answers:

  1. as an adjustment to net income for the difference in price paid versus the original issue price
  2. in the financing section
  3. in the investing section
  4. None of the above

74. Which of the following statements expresses the objective of a cash flow statement?

Answers:

  1. To report the amount of cash flow from a firm’s operating activities
  2. To report the principal inflows and outflows of cash from investing activities
  3. To report the principal inflows and outflows of cash from financing activities
  4. All of the above

75. New equipment purchased by issuing a long-term note payable would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

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Upwork Finance and Accounting

Accounting Principles Test 2016

Published by:

1. Which of the following is a method of timing business transactions or choosing accounting principles so that the firm reports smaller variations in income from year to year than it would otherwise?

Answers:

  1. Conservatism
  2. Income Smoothing
  3. Profit Maximization
  4. Least and Latest Rule

2. What is the accounting objective which best relates to the percentage of completion method?

Answers:

  1. Conservatism
  2. Accurate Presentation
  3. Tax Minimization
  4. Income Smoothing

3. What entry would a donor make when giving a cash donation to a charity, where the donor retains the right to revoke the contribution?

Answers:

  1. Dr: Cash, Cr: Refundable Advance to Charity
  2. Dr: Refundable Advance to Charity, Cr: Cash
  3. Dr: Expense, Cr: Cash
  4. Dr: Revenue, Cr: Expense

4. Companies of what size have been impacted the most by the SOX from a cost perspective?

Answers:

  1. Mid-sized companies feel the impact the most
  2. There is no correlation between company size and the cost of implementing the provisions of the Act
  3. The larger companies as the larger the company, the more it has to pay to implement the provisions of the Act
  4. The smaller companies as the cost of implementing the provisions of the Act does not decrease proportionally with the size of the company

5. What is the acronym for the agency authorized by the U.S. Congress to regulate, among other things, the financial reporting practices of most public corporations?

Answers:

  1. SEC
  2. IASC
  3. FASB
  4. GAAP

6. What is the accounting objective which best relates to the MACRS method?

Answers:

  1. Income Smoothing
  2. Profit Maximization
  3. Tax Minimization
  4. None of the above

7. What is the phrase with no agreement on meaning which implies to most analysts that earnings quality increase with the likelihood of recurrence?

Answers:

  1. Quality of financial position
  2. Quality of earnings
  3. Conservatism objective
  4. None of the above

8. What entry would a donor make when giving a cash donation to a charity?

Answers:

  1. Dr: Revenue, Cr: Cash
  2. Dr: Expense – Cash, Cr: Cash
  3. Dr: Liability, Cr: Cash
  4. Dr: Expense – Contributions, Cr: Cash

9. What is the accounting objective which best relates to the double declining balance method?

Answers:

  1. Conservatism
  2. Income Smoothing
  3. Profit Maximization
  4. Tax Minimization

10. What is the effect of the SOX on public companies?

Answers:

  1. It has made regulations more strict
  2. It has added accountability to the upper management
  3. It has forced companies to look at their internal controls
  4. All of the above

11. Which of the following accounts may appear on a company’s balance sheet when the incomes for financial and tax reporting are different?

Answers:

  1. Income tax expenses
  2. Deferred income tax liability
  3. Sales tax expenses
  4. All of the above

12. What is the accounting objective which best relates to the Lower of Cost or Market Price method?

Answers:

  1. Accurate Presentation
  2. Tax Minimization
  3. Profit Maximization
  4. Conservatism

13. Which of the following is a method of accounting for the exploration costs of a mineral resource that would best attain the objective of income tax accounting?

Answers:

  1. Expense in total when incurred
  2. Capitalize only the costs related to mineral deposits
  3. Capitalize all costs associated with productive as well as non-productive mineral deposits
  4. None of the above

14. What is the accounting objective which best relates to the straight line method?

Answers:

  1. Profit Maximization
  2. Conservatism
  3. Tax Minimization
  4. None of the above

15. How is an unconditional promise to give a donation to a charity accounted for by the charity?

Answers:

  1. Not recorded at all until 100% contribution is received
  2. Never recorded even after receipt
  3. As revenue only when the donation is made
  4. As revenue when the promise is made

16. What is the acronym for the independent board responsible, since 1973, for establishing generally accepted accounting principles?

Answers:

  1. GAAP
  2. IASC
  3. SEC
  4. FASB

17. What is form 8-K?

Answers:

  1. Monthly filing with the SEC reporting director salaries
  2. As needed filing to disclose any significant issues or changes
  3. Quarterly financial reports filed with the SEC
  4. Annual financial reports filed with the SEC

18. What is the acronym for an independent board responsible, since 1973, for establishing generally accepted accounting principles?

Answers:

  1. SEC
  2. IASC
  3. FASB
  4. None of the above

19. Who can review the filings made by public companies with the SEC?

Answers:

  1. Only company executives
  2. Anyone using the EDGAR system
  3. Only law enforcement officials
  4. Only the staff of the SEC and the company executives

20. What change was made in regarding the penalization of the whistleblowers (people who alert the authorities about the illegal activities in a corporation) by the companies?

Answers:

  1. They are now themselves subject to fraud charges for uncovering the crimes
  2. They are put under witness protection
  3. They are offered a transfer to a new department
  4. They are now protected against retaliation by the company in order to encourage employees to bring the wrong doings of the companies to light

21. Which of the following courses of action should a firm take in order to minimize the present value of income tax payments?

Answers:

  1. Use the LIFO inventory method instead of FIFO durating periods of rising prices
  2. Depreciate fixed assets on the straight-line method rather than the MACRS method
  3. Capitalize exploration costs instead of expensing them
  4. All of the above

22. What kind of organization issuing securities would NOT have to register them with the SEC?

Answers:

  1. A private IT firm
  2. The government
  3. A publicly traded book publisher
  4. A firm with no revenue

23. What factors affect the balance sheet, given the articulation of the income statement with the balance sheet and the factors that imply high or low quality of earnings?

Answers:

  1. Quality of Financial Position
  2. Profit Maximization
  3. Quality of Earnings
  4. Conceptual Framework

24. What is the phrase which, though there is no agreement on its meaning, implies to most analysts that the quality of earnings improves with the likelihood of recurrence?

Answers:

  1. Quality of Financial Position
  2. Quality of Earnings
  3. Least and Latest Rule
  4. Accurate Presentation

25. What is the accounting objective which best relates to the disclosing of the cost of employee stock options (not expensing)?

Answers:

  1. Conservatism
  2. Profit Maximization
  3. Income Smoothing
  4. Tax Minimization

26. What is the purpose of a Registration Statement?

Answers:

  1. To offer securities to the public
  2. To disclose the operations during the first year
  3. To provide information to the public about a company before it is traded publicly
  4. Financial records for the company from inception to date

27. Which of the following is true of the Sarbanes Oxley Act?

Answers:

  1. It has bolstered investor confidence
  2. It has increased all stock prices
  3. It has increased the number of foreign corporations registering in the US
  4. It has created more work for corporate accounting departments

28. For which of the following accounts would the use of ‘the lower of cost or market price’ principle be acceptable?

Answers:

  1. Inventory
  2. Land
  3. Prepaid rent
  4. All of the above

29. Which of the following is a valid criticism of the SOX?

Answers:

  1. It has made regulations more strict
  2. It has made foreign companies reluctant to register on US stock exchanges due to the burden of SOX reporting
  3. It allows for looser corporate standards
  4. It makes a few people accountable for the misdeeds of a corporation

30. Which of the following must generally be used for financial reporting if it is used for income tax reporting?

Answers:

  1. FIFO
  2. LIFO
  3. NIFO
  4. Installment sales method

31. What is the reporting objective that calls for the anticipation of all losses incurred but defers the recognition of gains or profits until they are realized in arm’s length transactions?

Answers:

  1. Conservatism
  2. Materialism
  3. Matching
  4. Smoothing

32. Which of the following is used by the FASB in the selection of acceptable accounting principles?

Answers:

  1. Conservatism
  2. Matching
  3. Materialism
  4. Conceptual Framework

33. What value should a contribution be accounted for at?

Answers:

  1. Historical value
  2. Fair value
  3. Market value
  4. Value determined by auditors

34. What is the qualitative accounting objective suggesting that information reported in a financial statement should correspond as precisely as possible to the economic effects underlying transactions and events?

Answers:

  1. Conceptual Framework
  2. Quality of Financial Position
  3. Accurate Presentation
  4. Least and Latest Rule

35. What is the accounting objective which best relates to the expensing of R&D costs?

Answers:

  1. Income Smoothing
  2. Accurate Reporting
  3. Conservatism
  4. Profit Maximization

36. What is Form 10-K?

Answers:

  1. Monthly filing with the SEC reporting salaries to the directors
  2. As needed filing to disclose any significant issues or changes
  3. Quarterly financial reports filed with the SEC
  4. Annual financial reports filed with the SEC

37. Which FASB sets the requirements for accounting for Non-Profit organizations?

Answers:

  1. FASB SFAS 999
  2. FASB SFAS 100
  3. FASB SFAS 99
  4. FASB SFAS 117

38. What two filings are required when a company wishes to list its stock?

Answers:

  1. Forms 10K and 10Q
  2. Forms S-X and S-K
  3. Forms 8K and 10Q
  4. Forms S-X and X-S

39. In which year was the Sarbanes Oxley Act passed?

Answers:

  1. 2008
  2. 1945
  3. 2002
  4. 1845

40. What is the accounting objective which best relates to the capitalization of prepaid advertising costs?

Answers:

  1. Profit Maximization
  2. Accurate Presentation
  3. Tax minimization
  4. None of the above

41. Which doctrine lays down that a firm should account for a given set of operations so as to make reported net income as large as possible?

Answers:

  1. Least and latest rule
  2. Profit maximization
  3. Income smoothing
  4. None of the above

42. For which of the following would the use of the straight-line method of amortization be acceptable?

Answers:

  1. Building
  2. Patent
  3. Goodwill
  4. All of the above

43. What are the 3 types of Health Care Organizations for accounting purposes?

Answers:

  1. Incorporated, Limited Liability, Sole Proprietor
  2. Asset based, Liability based, Expense based
  3. Investor-owned, Non-Profit, Governmental
  4. Private, Public, LLC

44. What is the accounting objective which best relates to the weighted average inventory method?

Answers:

  1. Tax Minimization
  2. Income Smoothing
  3. Profit Maximization
  4. None of the above

45. Which of the following methods is normally considered to be acceptable for financial reporting?

Answers:

  1. MACRS
  2. Lower of cost or market price for inventories
  3. Direct write off of uncollectible accounts
  4. Capitalization of R&D Costs

46. What change was made to the internal controls of the companies by the SOX?

Answers:

  1. All company processes and related internal controls now need to be documented and then tested by an outside auditing firm
  2. Companies no longer have to document their internal controls since the auditors do the job
  3. Internal controls can be more lax than before
  4. Companies have to provide for internal controls only to satisfy the auditors

47. What is the acronym for an organization that promotes the international harmonization of accounting standards?

Answers:

  1. SEC
  2. IASC
  3. FASB
  4. None of the above

48. How are third party adjustments to patient bills reflected in the financial statements?

Answers:

  1. As an addition to revenue
  2. As a deduction from revenue
  3. As a liability
  4. As an asset

49. What is the database created by the SEC for companies to file electronically?

Answers:

  1. PCAOB
  2. EDGAR
  3. SEC
  4. IRS

50. What was the purpose of the Sarbanes Oxley act, in general?

Answers:

  1. To allow for caps on management salaries
  2. To allow for price setting on the stock market
  3. To regulate employee pension funds
  4. To better regulate public and private companies in the wake of recent accounting scandals

51. What are forms 10K and 10Q referred to as?

Answers:

  1. Periodic Filings
  2. Financial Statements
  3. Information Returns
  4. Tax Returns

52. What is the acronym for the agency authorized by the U.S. Congress to regulate the financial reporting practices of most public corporations?

Answers:

  1. SEC
  2. IASC
  3. FASB
  4. None of the above

53. Which of the following methods would be employed to help accomplish the following objective: smoothing a firm’s income as a means of minimizing large fluctuations in the price of its stock.

Answers:

  1. Weighted average inventory
  2. Percentage of completion method for long term construction contracts
  3. Straight line amortization of patents
  4. All of the above

54. What is the doctrine that the firm should account for a given set of operations so as to make reported net income as large as possible known as?

Answers:

  1. Conservatism
  2. Quality of Earnings
  3. Profit Maximization
  4. Matching

55. Which of the financial accounting objectives listed below would seem to be closest to the objective of tax reporting?

Answers:

  1. Conservatism
  2. Fair Presentation
  3. Accuracy
  4. Profit Maximization

56. What is ‘paying the least amount of taxes as late as possible within the law to minimize the present value of tax payments for a given set of operations’ a description of?

Answers:

  1. Profit Maximization
  2. Least and Latest Rule
  3. Conservatism
  4. Income Smoothing

57. What is the accounting objective which best relates to the completed contract method?

Answers:

  1. Income Smoothing
  2. Profit Maximization
  3. Tax Minimization
  4. None of the above

58. What is the accounting objective which best relates to the LIFO method?

Answers:

  1. Income Smoothing
  2. Accurate Presentation
  3. Conservatism
  4. None of the above

59. How should a firm compensating its employees by granting them the option to purchase its shares report it?

Answers:

  1. Merely disclose the cost of those grants
  2. Charge that cost as expense for the period during which it makes the grant
  3. Choose either of the options a and b
  4. Neither a nor b

60. What is the accounting objective which best relates to the percentage of sales method for uncollectible accounts?

Answers:

  1. Accurate Presentation
  2. Tax Minimization
  3. Profit Maximization
  4. Conservatism

61. What is the acronym for the organization that promotes international harmonization of accounting standards?

Answers:

  1. IASB
  2. FASB
  3. SEC
  4. IRS

62. What is the accounting objective which best relates to the FIFO method?

Answers:

  1. Tax Minimization
  2. Income Smoothing
  3. Profit Maximization
  4. Accurate Reporting

63. What change was made by the Act regarding the authority competent to sign the company tax returns?

Answers:

  1. Only the CEO now has the authority to sign the company tax returns
  2. Any employee can now sign a tax return
  3. Only the firm’s CPA can sign the tax returns
  4. Only the person who has prepared the return can sign it

64. What new board was created as part of the Sarbanes Oxley Act?

Answers:

  1. SEC – Securities and Exchange Commission
  2. IRS – Internal Revenue Service
  3. PCAOB – Public Company Accounting Oversight Board
  4. GAAP – Generally Accepted Accounting Principles

65. In which years were the Securities & Exchange Acts created?

Answers:

  1. 1980 and 1981
  2. 1933 and1934
  3. 1920 and 1930
  4. 1802 and 1920

66. What is form 10-Q?

Answers:

  1. Monthly filing with the SEC reporting director salaries
  2. As needed filing to disclose any significant issues or changes
  3. Quarterly financial reports filed with the SEC
  4. Annual financial reports filed with the SEC

67. How is a donated asset accounted by a non-profit organization based on its fair market value?

Answers:

  1. Dr: Asstes, Cr: Revenue
  2. Dr: Revenue, Cr: Liability
  3. Dr: Expenses, Cr: Assets
  4. Dr: Revenue, Cr: Expenses

68. What statements are required of a Non-Profit organization?

Answers:

  1. statement of financial position, statement of cash flows, and statement of activity and changes in net assets
  2. Bank Statements
  3. Cash Flows and Income Statement
  4. Changes in retained earnings, statement of cash flows, income statement

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