South Branch Career and Technical Center
ACCOUNTING II
Directions: 1. Read each question carefully;
2. read choices a, b, c and d;
3. select the correct answer; you may enter ONLY ONE ANSWER;
4. using your mouse, place the cursor over the "option button" to the left side of the correct answer. "Left click" the cursor. The center of the option button should become green. If it does not, please ask your instructor for assistance. After the option button becomes green, you have successfully answered the question, and you may move on to the next question.
5. When you have finished the test, please re-read and check your answers. When you feel you have done your best, go to "File" in the upper left hand side of your task bar, select the "Print" option. When the print box appears, press OK. Your completed test should begin printing.
a)
Treasury stock.
b)
Reacquired
stock
c)
Common stock
d)
Preferred stock.
Question 2 ABC Corporation issued 6,000 shares of $100 par value stock at $110 per share. The amount received in excess of par value is
a)
$6,000.
b)
$60,000.
c)
$600,000.
d) $6,000,000.
Question 3 Journalizing a cash receipt transaction for cash and credit card sales requires a debit to
a)
Cash.
b)
Sales.
c) Sales Tax Payable.
d)
Credit
Card Sales.
Question 4 Spreadsheets could be used for all EXCEPT
a)
analyzing source
documents
b)
distributing partnership earnings.
c) calculating gross earnings.
d)
calculating depreciation.
Use the information below to answer Question 5.
Sales 100.0%
Cost of Goods Sold 40.0%
Gross Margin 60.0%
Operating Expenses 50.0%
New Profit Margin 8%
Question 5 If anticipated sales for the situation shown are $50,000, the estimated gross margin will be
a) $20,000.
b) $30,000.
c) $50,000.
d) $80,000.
Question 6 Promissory notes a business accepts from customers are called
a)
accounts
receivable.
b)
accounts
receivable ledger.
c)
notes receivable.
d)
general ledger
accounts.
Question 7 Schedules of Accounts Payable and Accounts Receivable are prepared from
a) General Ledger
b) Sales and Purchase Journal
c)
Accounts
Payable and Accounts Receivable Subsidiary Ledgers
d)
Worksheet
Question 8 Maintaining objectivity and integrity is a characteristic of
a)
individual
diversity
b)
unethical behavior
c)
professional
conduct
d)
ethical
dilemmas
Question 9 All of the following are causes of unethical behavior EXCEPT
a) advertising
b) excessive emphasis on
profits
c)
personal
advancement
d) unethical business environment
Question 10 The AICPA code of professional conduct addresses all of the following
a) preferences
for issuing preferred stock
b)
due professional care
c) professional competence.
d) planning and supervision
Question 11 What type of inventory is taken by weighing, measuring, or counting the items on hand?
a) analysis
b) physical
c) finished goods
d)
perpetual
Question 12 A current liability is payable within
a) 1 year
b) 3 years
c) 5 years
d) 10 years
Question 13 Which of the following is a plant asset?
a) equipment
b) cash
c)
supplies
d) prepaid
insurance
Question 14 Using the average cost of beginning inventory plus merchandise purchased during a fiscal period is which type of inventory method?
a)
lower of cost or market
b) LIFO
c) FIFO
d) weighted average
Question 15 The original cost of a plant asset less accumulated depreciation is called the
a)
salvage
value
b) depreciated value
c) book value
d) useful value
Question 16 A current liability should be paid off within
a)
a month
b)
a quarter
c)
six months
d)
a year
Question 17 An example of a long-term liability is
a)
Federal
Income Tax Payable
b) Sales Tax Payable
c) Mortgage Payable
d)
Accounts Payable
Question 18 On a purchase order, the shipping term F.O.B. destination means
a)
“first
or best” (vendor pays shipping charges).
b)
“free
on board” (vendor pays shipping charges).
c)
“freight
on board” (buyer pays shipping charges).
d)
“freight on bus” (buyer pays shipping charges).
Question 19 Calculate the depreciation using the straight-line method for an asset purchased from the ABC Company that cost $2,000, has an estimated salvage value of $175, and an estimated useful life of 5 years
a) $400
b) $ 35
c) $365
d) $435
Question 20 Which of the following factors is NOT used to calculate depreciation?
a) original cost
b) estimated salvage value
c) vendor
d) estimated useful life
Question 21 Charging an equal amount of depreciation expense for a plant asset in each year of useful life is called
a) straight-line method of
depreciation.
b)
sum-of-the-years digits method of depreciation.
c) double-declining balance method of depreciation.
d) average method of depreciation.
Question 22 A plant asset that does not depreciate in value is
a) equipment.
b) land.
c) trucks.
d) building.
Question 23 Prepaid expenses could be all of the following EXCEPT
a) bad debts.
b) supplies.
c) prepaid insurance.
d) rent.
Question 24 Which of the following statements is not necessary when using automated accounting?
a) Income Statement
b) Balance Sheet
c) Work Sheet
d) Statement of Retained Earnings
Question 25 The second line of the heading on any financial statement shows the
a)
authorizing
signature.
b) date of the statement.
c) name of the company.
d) name of the statement.
Question 26 A financial statement prepared for a specific date is called
a) Balance Sheet.
b) A Distribution of New Income
statement.
c) An Income Statement.
d) An Owner's Equity Statement.
Question 27 The BEST reason to analyze financial information is to determine
a) the profitability of
the company.
b) what products to sell.
c) where to place a new plant.
d)
who to hire.
Question 28 On December 31, ABC Incorporated has one note receivable outstanding. It is a 60-day, 10% note for $900 dated December 1. The amount of accrued interest recorded in the adjusting entry is
a) $15.00.
b) $7.50.
c) $30.00.
d) $3.75.
Question 29 Expenses that have been incurred but not yet paid are
a) accrued expenses.
b) incurred expenses.
c) prepaid expenses..
d) outstanding expenses.
Question 30 Failure to adjust the Prepaid Insurance account at the end of the accounting period
a) causes the insurance
company to be underpaid.
b) makes insurance expenses too high.
c) overstates the asset account.
d) makes new income too low.
Question 31 When the allowance method is used, you write off an uncollectible account balance by debiting
a) Accounts
Receivable.
b) Allowance for
Uncollectible Accounts.
c) Bad Debts Expense.
d) Sales.
Question 32 What type of business prepares a Distribution of New Income Statement?
a) corporation
b) not-profit organization
c) partnership
d) sole proprietorship
Question 33 Recommending a product or a service to an audit client for a commission would be an example of
a) ethical behavior.
b) individual diversity.
c) unprofessional conduct.
d) professional certification.
Question 34 Excel, Lotus 1-2-3, and Quattro Pro are examples of
a) word processors.
b) databases.
c) spreadsheets.
d) graphic presentations.
Question 35 The order of accounts in a general ledger is
a)
Assets, Liabilities, Capital, Sales, Expenses
b)
Assets,
Capital, Liabilities, Sales, Expenses
c) Expenses, Capital, Assets,
Liabilities, Sales
d) Liabilities, Assets, Capital, Sales, Expenses
Question 36 In both manual and automated systems, the first step in the accounting cycle is
a) adjusting entries are
journalized.
b) financial statements are
generated.
c) posting occurs.
d) business transactions occur.
Question 37 In designing both manual and automated systems, the first step is
a) creating the chart of
accounts.
b) analyzing the source documents.
c)
journalizing the transactions.
d) posting the
transactions.
Question 38 Preparing budgets requires all the following EXCEPT
a) information
gathering.
b) new product development.
c) estimating.
d) management approval.
Question 39 Total costs that remain constant regardless of change in business activity are called
a) unit costs.
b) total costs.
c) fixed costs.
d) variable costs.
Question 40 A chart of accounts for a departmentalized business would include
a) sales accounts for each
department.
b) uncollectible accounts for each department.
c) retained earnings accounts for each department.
d) federal income.
Question 41 Considering the differences between merchandising, distribution, and service businesses, a service business is generally NOT concerned with
a) earning revenue.
b) incurring expenses.
c) working under the equation,
"Assets=Equities."
d) keeping cost of merchandise sold records.
Question 42 An account that reduces a related account on a financial statement is called a(n)
a) contra account.
b) credit account.
c) subsidiary account.
d) maintenance account.
Question 43 Corporations file a federal income tax return entitled.
a) Form 1120.
b) Form 1040EZ.
c) Form 1040A.
d) Form 1040.
Question 44 A corporation operates under what period of time?
a) unlimited life.
b) an agreed upon length of
time.
c) 5 years.
d) 20 years.
Question 45 The purpose of a not-for-profit organization is to
a) Provide a good or
service without profit.
b) Provide a good or service and profit.
c) Provide jobs.
d)
Provide jobs and a profit.
Question 46 In a year of rising prices, the inventory method that yields the LOWEST possible value for ending inventory is the
a) average-cost
method.
b) FIFO method.
c) LIFO method.
d)
Most-recent-cost method.
Question 47 A financial statement that reports inflows, receipts, outflows, and payments is called a
a) Statement of
Changes in Financial Position.
b) Statement of Change in
Owner's Equity.
c) Statement of Cash Flows.
d) Income Statement.
Question 48 Owner’s equity accounts found in a corporation could include which of the following?
a) John Doe, Capital
and Retained Earnings
b) Capital Stock—Common and Retained
Earnings
c)
John Doe, Capital and John Doe, Drawing
d)
Capital Stock and Dividends Payable
Question 49 The net income of ABC Partnership is $60,000. The partnership agreement calls for the net income to be divided 60% to Partner A and 40% to Partner B. Partner A’s share of net income is
a) $18,000
b) $24,000
c) $30,000
d)
$36,000
Question 50 If merchandise inventory increases during a fiscal period, the adjusting entry will
a) debit Inventory Expense
and credit Merchandise Inventory.
b) debit Merchandise Inventory and credit
Income Summary.
c) debit Income Summary and credit Merchandise Inventory.
d)
debit Merchandise Inventory and credit Inventory Expense.