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27 MCQs for Midterm Exam - Basic Accounting Skills | BUS, Exams of Financial Accounting

Indiana University Bloomington (IU)Financial Accounting

Material Type: Exam; Class: BASIC ACCOUNTING SKILLS; Subject: Business; University: Indiana University - Bloomington; Term: Unknown 1989;

Typology: Exams

2009/2010

Uploaded on 05/09/2010

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bg1
1. Cost of goods sold is:
A) a revenue account.
B) an expense account.
C) an asset account.
D) an equity account.
E) a liability account.
2. Which of the following is not a Big 4 accounting firm?
A) E&Y
B) PWC
c) P&G
D) KPMG
E) Deloifte
ha/&7
3. The equation that represents the balance sheet may be shown as:
A) assets + liabilities = stockholders'equity.
B) liabilities = assets - stockholders'equity.
C) assets = liabilities - stockholders' equity.
D) assets = stockholders' equity - liabilities.
E) assets + stockholders'equity = liabilities.
4. GAAP is an abbreviation for:
A) generally applied accounting procedures.
B) generally approved auditing practices.
C) generally authorized accounting procedures.
D) generally accepted accounting principles.
E) generally approved accounting practices.
5. Retained earnings is:
A) the cash management withholds to reinvest in the business.
B) the part of stockholders' equity that was earned and not yet distributed as dividends.
C) the cash avaihble to pay dividends.
D) an asset account on the balance sheet.
E) net income plus revenues minus deferrals.
6. On April 1 2005, Fox Run Leasing Company received $6,000 cash for 12 months rent. The payment was
for lhe lease of a building from April 1 2005 until March 31 2006. Fox Run's April 30 2005 annual
financial statements would show:
Stmt. Of Cash Flows
A) + $5,500 under "investing"
B) + $6,000 under "investing"
C) + $5,500 under "operating"
D) + $6,000 under "operating"
E) + $6,000 under "operating"
Balance Sheet
prepaid rent = $6,000
uneamedrevenue=$ 0
prepaid rent = $5,500
unearned revenue = $6,000
a liability = $5,500
lncome Statement
revenue = $ 500
revenue = $6,000
revenue = $ S00
revenue = $ 0
revenue = $ 500
7. Splice Cable Company purchased inventory on account. The inventory costs $2,000 and is expected to
sell for $3,000. Splices financial statements would show:
Balance Sheet lncome Statement
A)
B)
c)
D)
E)
inventory = $2,000, uneamed revenue = $3,000
inventory = $3,000
inventory = $3,000
inventory = $2,000
inventory = $ 0
$0
revenue = gl ,000
$o
$0
revenue = $3,000
pf3
pf4

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Download 27 MCQs for Midterm Exam - Basic Accounting Skills | BUS and more Exams Financial Accounting in PDF only on Docsity!

  1. Cost of goods sold is:

A) a revenue account.

B) an expense account.

C) an asset account.

D) an equity account.

E) a liability account.

  1. Which of the following is^ not a Big 4 accounting firm?

A) E&Y

B) PWC

c) P&G

D) KPMG

E) Deloifte

ha/&

  1. The equation that represents the balance sheet may be shown^ as:

A) assets + liabilities = stockholders'equity.

B) liabilities = assets -^ stockholders'equity.

C) assets = liabilities -^ stockholders'^ equity.

D) assets = stockholders' equity -^ liabilities.

E) assets +^ stockholders'equity^ = liabilities.

  1. GAAP is an abbreviation for:

A) generally applied accounting procedures.

B) generally approved auditing practices.

C) generally^ authorized accounting procedures.

D) generally^ accepted accounting principles.

E) generally^ approved accounting practices.

  1. Retained earnings is:

A) the cash management withholds^ to^ reinvest^ in^ the^ business.

B) the part of stockholders' equity that was earned^ and^ not^ yet^ distributed as dividends.

C) the cash avaihble to^ pay dividends.

D) an asset account on^ the^ balance sheet.

E) net income plus revenues minus deferrals.

6. On April 1 2005, Fox Run^ Leasing^ Company received $6,000 cash^ for^ 12 months^ rent.^ The^ payment^ was

for lhe lease of a building^ from April^1 2005 until March^31 2006.^ Fox^ Run's^ April^30 2005 annual

financial statements would show:

Stmt. Of^ Cash^ Flows

A) + $5,500 under "investing"

B) + $6,000 under "investing"

C) +^ $5,500 under "operating"

D) + $6,000 under "operating"

E) + $6,000 under "operating"

Balance Sheet

prepaid rent = $6,

uneamedrevenue=$ 0

prepaid rent = $5,

unearned revenue = $6, a liability = $5,

lncome Statement revenue (^) = $ 500 revenue (^) = $6, revenue = $ S

revenue = $ 0

revenue = $ 500

7. Splice Cable Company purchased^ inventory^ on^ account.^ The inventory costs $2,000 and is expected^ to

sell for $3,000. Splices financial statements^ would^ show:

Balance Sheet lncome Statement A) B) c) D) E)

inventory (^) = $2,000, uneamed revenue = $3, inventory = $3, inventory (^) = $3, inventory = $2,

inventory = $ 0

revenue = gl^ ,

$o

revenue = $3,

  1. Retained earnings at the end of the year is determined by retained eamings at the beginning of the year:

A) plus accruals minus deferrals.

B) plus net income minus dividends.

C) plus revenues minus liabilities.

D) plus^ assets minus liabilities.

E) plus revenues minus deferrals.

  1. Dave's Company reported cost of goods sold of $2,000,000 this year.^ The inventory^ account increased by

$200,000 during the year^ to^ an ending balance^ of^ $400,000.^ What was the cost^ of^ inventory that

Dave purchased during the year?

A) $1,800,000.

B) $2,200,000.

c) $1,600,000.

D) $2,400,000.

E) $2,600,000.

USE THE INFORMATION BELOWTO ANSWER PROBLEMS 1O - 13

10. What is Alpaca's net income for the yeaP

A) $132,

B) $112,

c) (^) $117, D) (^) $120, E) $135,

  1. What is the amount of Alpaca's cash at the end of the year? A) (^) $160,000. B) $170,000. c) (^) $165,000. D) $150,000. E) none of the above.

12. What is Alpaca's (net) cash ffow from operating activities?

A) $115,

B) $1 18,

c) $117,

D) $120,

E) $112,

13. Assume that Alpaca's year^ one net income was $80,000. What was Alpaca's ending retained earnings?

A) $73,

B) $78,

c) (^) $80, D) $85,

E) none ofthe^ above.

14. On July 1, 2005, Bland Food Company paid $48,000 to purchase an insurance policy.^ The^ policy covers

the period from July 1 2005 through June 30 2OO7, and was recorded as "prepaid insurance" on the date it was purchased. Bland's December 31 2005 (annual) financial statements would show:

A) a current asset of$12,000, a long-term asset of$24,000, and an expense of$12,000.

B) a current asset of$36,000, and an expense of$12,000.

C) a current asset of$24,000, a long-term asset of$12,000, and an expense of$12,000.

D) a long-term asset of $36,000, and an expense of $12,000.

E) an expenseof$48,000.

Alpaca Corporation had sales revenues of $200,000 in its first year^ of operations. At year-end,^ they have not^ yet collected $20,000 from^ these^ sa/es,^ and^ still^ owe $25,000 on $70,000 of inventory^ they^ purchased. Alpaca^ also^ paid $15,000 in

sa/ar'es. The^ ampany^ has $10,000 in inventory at the end^ of^ the^ year.^ Owners^ invested^ $20,000^ in the^ business^ and

$20,000 was bonowed on^ a^ five-year^ note.^ The^ ampany^ paid^ $2,000^ in^ interest^ and paid^ $3,000^ for^ a^ one-year

insurance policy on the tirst day of business. also paid^ dividends of

USE THE INFORMATION BELOWTO^ ANSWER PROBLEMS 2'I^.

The Grait Consutting Company^ stafted business^ Jan^ uary^ 1,^ 2005,^ and^ engaged^ in the^ transactions^ listed^ below during the year. 1nr2oo* tssued 4,000 sniies if^ capnat^ stock^ for^ $20,ooO^ casn. Lease'^ biitding^ space,^ paying two^ years'^ rent ot $12,000 ($6,^ per year) (^) in advance. Purchased equipment^ at^ a^ cost^ of $7,200, paid^ in cash.^ The^ equipment^ has^ a^ 6year^ life 4/1/2005- Made sales of seruices for $12,000, and collected $10,000^ 0f^ this^ amount.. 7/12005- Paid^ two-year^ insurance^ premium^ of^ $2,400. Recoded^ sales^ on^ aoount^ of^ $3'600. 8/12,005- Paid^ employee^ wages of^ $2,400. 1pn1f2\O, Made the^ neces-sary^ adjusfmenfs to^ the aaounts^ and then published the^ financial^ statements for the^ year^ ending Dec.^ 31 2005'

  1. What amount would Grail's^ December^31 , 2OO5^ (annual) cash^ flows^ statement show^ as total^ (net) cash^ from^ investing activities?

A) $19,200.

B) $7,200.

c) $22,000.

D) $13,200.

E) none ofthe above.

22. What amount would Grail's^ December^31 ,^ 2005 (annual) cash^ flows^ statement show^ as^ totat (net) cash^ from^ operating

activities?

A) $400.

B) $800.

c) $2,400.

D) $6,800.

E) none ofthe above.

23. What amount would^ Grail's^ December 31,^2005 (annual) balance sheet show as total assets?

A) $26,000.

B) $38,000.

c) $24,800.

D) $39,200.

E) none ofthe above.

  1. Grail's December 31, 2OO5^ (annual) income statement would show net income of:

A) $6,000.

B) $7,200.

c) $4,800.

D) $12,000.

E) none ofthe above.

25. What amount would^ Grail's^ December 31, 2008 (annual) financial statements show as accumulated depreciation?

A) $4,800.

B) $1,200.

c) $3,600.

D) $5,800.

E) none ofthe above.

26. What amount would Grail's December^31 , 2005 (annual) cash^ flows^ statement show^ as total^ (net) cash^ from^ financing

activities?

A) $22,000.

B) $25,600.

c) $20,000.

D) $13,200.

E) none ofthe above.

  1. Whatamount would Grail's December^ 31 , 2OO5^ (annual) balance sheet show as accounts receivable?

A) $2,000.

B) $3,600.

c) $5,600.

D) $9,600.

E) none ofthe above.