Author: Christine Farr


1. When total expenses exceed total revenues, the result is a: (Points : 6)

net profit.
net earnings.
net loss.

Question 2. 2. The balance sheet lists: (Points : 6)

revenues and expenses.
assets, liabilities, revenues and expenses.
assets, liabilities and stockholders' equity.
the changes in retained earnings.

Question 3. 3. Which of the following is a limitation of internal control? (Points : 6)

Safeguarding company assets
Operational efficiency
Employee collusion
Accurate and reliable accounting records

Question 4. 4. In a bank reconciliation, outstanding checks would be added to the book balance. (Points : 6)


Question 5. 5. When preparing a bank reconciliation, which of the following items should be subtracted from the bank balance? (Points : 6)

Outstanding checks
Bank service charges
Deposits in transit
EFT cash receipts

Question 6. 6. Which account shows the amount of accounts receivable that the business does NOT expect to collect? (Points : 6)

Unearned Accounts Receivable
Allowance for Uncollectible Accounts
Sales Returns and Allowances
Uncollectible Accounts Expense

Question 7. 7. Net accounts receivable is calculated as: (Points : 6)

accounts receivable plus allowance for uncollectible accounts.
accounts receivable less allowance for uncollectible accounts.
sales less sales returns and allowances.
accounts payable plus allowance for uncollectible accounts.

Question 8. 8. Under the allowance method, the entry to reinstate an account previously written off: (Points : 6)

decreases net income and increases total assets.
increases net income and increases total assets.
has no effect on net income or total assets.
increases total assets.

Question 9. 9. Under the aging-of-accounts-receivable method, the balance in: (Points : 6)

Allowance for Uncollectible Accounts prior to adjustment must be considered.
Accounts Receivable prior to adjustment must be considered.
Allowance for Uncollectible Accounts prior to adjustment is ignored.
Uncollectible-Account Expense prior to adjustment must be considered.

Question 10. 10. The cost of inventory includes the: (Points : 6)

purchase price, delivery costs and sales commissions.
purchases price, freight-in and sales taxes paid on the purchase.
purchase price, advertising costs and insurance while in transit.
purchase price, advertising costs and sales commissions.

Question 11. 11. The choice of an inventory costing method will affect: (Points : 6)

none of these.
the ending inventory and cost of goods sold.
the ending inventory.
the cost of goods sold.

Question 12. 12. The inventory costing method by which the first costs into inventory are the first costs out to cost of goods sold is the: (Points : 6)

average-cost method.
LIFO method.
FIFO method.
specific-identification method.

Question 13. 13. The economic resources of a business that are expected to produce a benefit in the future are: (Points : 6)

owners' equity.

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