Accounting Basics: GAAP, Financial Statements & Accounts

1. 1Which of the following organization is responsible for the creation and governance of accounting standards in the United States?

   1. AFinancial Accounting Standards Board
   2. BInstitute of Management Accountants
   3. CAmerican Institute of Certified Public Accountants
   4. DSecurities and Exchange Commission
2. 2GAAP are the rules that govern accounting in the United States. The acronym GAAP in this statement refers to:

   1. AGlobally Accepted and Accurate Policies
   2. BGlobal Accommodation Accounting Principles
   3. CGenerally Accredited Accounting Policies
   4. DGenerally Accepted Accounting Principles
3. 3A debt that a business owes to an outside party is called:

   1. Aan asset
   2. Ba liability
   3. Cstockholders' equity
   4. Drevenue
4. 4The owner's claim to the assets of the business is called:

   1. Areturn on assets
   2. Bexpenses
   3. Cowner's equity
   4. Ddebt
5. 5The economic resources of a business such as furniture, building, and land are its:

   1. Aliabilities
   2. Brevenues
   3. Cassets
   4. Dwithdrawals
6. 6Which of the following is the correct accounting equation?

   1. AAssets + Liabilities = Equity
   2. BAssets = Liabilities + Equity
   3. CAssets + Revenues = Equity
   4. DAssets + Revenues = Liabilities + Expenses
7. 7Financial statements are prepared after an entity's transactions are analyzed and recorded. Which of the following reports is one of the required financial statements?

   1. AStatement of cash flows
   2. BStatement of return on assets
   3. CStatement of withdrawals
   4. DExpense Statement
8. 8Which of the following financial statements lists the entity's assets, liabilities, and owner's equity as of a specific date?

   1. Abalance sheet
   2. Bstatement of owner's equity
   3. Cincome statement
   4. Dstatement of cash flows
9. 9Generally Accepted Accounting Principles (GAAP are formulated by the:

   1. AAmerican Institute of Certified Public Accountants (AICPA)
   2. BFinancial Accounting Standards Board (FASB)
   3. CInternational Accounting Standards Board (FASB)
   4. DSecurities and Exchange Commission (SEC)
10. 10Which of the following is the correct order of preparation of financial statements?

    1. Aincome statement- statement of owner's equity - balance sheet- statement of cash flows
    2. Bstatement of owner's equity - balance sheet - income statement - statement of cash flows
    3. Cbalance sheet - statement of owner's equity - income statement - statement of cash flows
    4. Dbalance sheet- income statement - statement of owner's equity - statement of cash flows.

11. 11Which of the following financial statements lists the entity's assets, liabilities, and owner's equity as of a specific date?

    1. Abalance sheet
    2. Bstatement of owner's equity
    3. Cincome statement
    4. Dstatement of cash flows
12. 12A debt that a business owes to an outside party is called:

    1. Aan asset
    2. Ba liability
    3. Cstockholders' equity
    4. Drevenue
13. 13The owner's claim to the assets of the business is called:

    1. Areturn on assets
    2. Bexpenses
    3. Cowner's equity
    4. Ddebt
14. 14Which of the following is an asset account?

    1. ASalaries Expense
    2. BAccounts Payable
    3. CService Revenue
    4. DPrepaid Expense
15. 15Which of the following is a liability account?

    1. AAccounts Payable
    2. BPrepaid Expense
    3. CSalaries Expense
    4. DService Revenue
16. 16Which type of account is Owner's Capital?

    1. Aequity
    2. Basset
    3. Cliability
    4. Drevenue
17. 17Which of the following groups of accounts normally have a credit balance?

    1. Aassets and liabilities
    2. Bcapital and assets
    3. Cliabilities and owner's equity
    4. Dassets and expenses
18. 18The financial statement that reports assets, liabilities, and owner's equity as of the last day of the period is called the:

    1. Aincome statement
    2. Bstatement of owner's equity
    3. Cbalance sheet
    4. Dunadjusted trial balance
19. 19Which of the following accounts are included in an income statement?

    1. ALand, Salaries Payable
    2. BOwner's Name, Capital, Owner's Contribution
    3. CFurniture, Cash
    4. DService Revenue, Utilities Expense
20. 20The worksheet helps accountants to:

    1. Amake the adjusted trial balance
    2. Bprepare the financial statements
    3. Cprepare the unadjusted trial balance
    4. Dmaintain books of accounts without a journal
21. 21An account that is not closed at the end of the period is called a(n):

    1. Aexpense account
    2. Btemporary account
    3. Cpermanent account
    4. Drevenue entry
22. 22Revenues and expenses are transferred to the _____ account before their final transfer into the owner's name, capital account

    1. Anet income
    2. Bincome summary
    3. Cwithdrawals
    4. Dassets
23. 23Which of the following categories of accounts are temporary accounts that are closed at the end of the year?

    1. AAssets, liabilities, and withdrawals
    2. BRevenues, expenses, and withdrawals
    3. CAssets, liabilities, and capital
    4. DRevenues, expenses, and capital
24. 24The process by which companies produce their financial statements for a specific period is called the:

    1. Aoperating cycle
    2. Bclosing process
    3. Copening process
    4. Daccounting cycle
25. 25Which of the following assets is the most liquid?

    1. Abuilding
    2. Bprepaid expenses
    3. Caccounts receivable
    4. Dcash
26. 26A balance sheet that lists the assets above the liabilities and owner's equity section is a(n):

    1. Areport form balance sheet
    2. Bunclassified form balance sheet
    3. Caccount form balance sheet
    4. Daudited form balance sheet
27. 27Buildings, land, and equipment are classified as:

    1. Acurrent assets
    2. Blong-term assets
    3. Ccurrent liabilities
    4. Dlong-term liabilities
28. 28Which account does a merchandiser use that a service company does not use?

    1. Asales revenue
    2. Bmerchandise inventory
    3. Ccost of goods sold
    4. Dall of the above
29. 29A perpetual inventory system

    1. Adoes not maintain as good of control over inventory as a periodic inventory system
    2. Bkeeps inventory continuously updated
    3. Cperiodically updates inventory
    4. Dnone of the above
30. 30The journal entry for the purchase of merchandise inventory on an account is?

    1. AMerchandise Inventory XXX
       Accounts Receivable XXX
    2. BMerchandise Inventory XXX
       Accounts Payable XXX
    3. CAccounts Payable XXX
       Merchandise Inventory XXX
    4. DMerchandise Inventory XXX
       Cash XXX
31. 31TX Manufacturing purchased inventory for $2500and paid a $185 freight bill. TX Manufacturing returned $350 of the goods to the seller and later took a 2% purchase discount. What is TX Manufacturing's final cost of the inventory that it kept?

    1. A$2292
    2. B$2285
    3. C$2107
    4. D$2100
32. 32Suppose Marathon Sports Gear had sales of $562,000 and sales returns of $27,000. Cost of goods sold was $280,000. How much gross profit did Marathon Sports Gear report?

    1. A$282,000
    2. B$535,000
    3. C$562,000
    4. D$255,000
33. 33Suppose Discount Dollar's purchases totaled $68,000, purchase returns totaled $5,200, purchase allowances totaled $1500, purchase discounts totaled $2800, and freight in totaled $5000. What is Discount Dollar's net purchases?

    1. A$63,500
    2. B$58,500
    3. C$55,000
    4. D$53,500
34. 34Which subtotals appear on a multi-step income statement, but do not appear on a single-step income statement?

    1. AOperating expenses and Net income
    2. BCosts of goods sold and Net income
    3. CNet sales and Costs of goods sold
    4. DGross profit and Income from operations
35. 35Assume Easy Electronics had net Sales of $100,000, and Cost of goods sold of $72,000. Average inventory was $22,000. Easy Electronics gross profit percentage for this period is?

    1. A72%
    2. B78%
    3. C28%
    4. D1.3 times

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Quiz on Untitled, created by shelbey.armstron on 11/12/2014.

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shelbey.armstron

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