Understanding the Basics of Financial Accounting, Quizzes of Finance

Download Understanding the Basics of Financial Accounting and more Quizzes Finance in PDF only on Docsity! ACC101 – Fundamental of Accounting Principles Quiz Test 1: Name of Student: 1. Accounting is an information and measurement system that: A. Identifies business activities. B. Records business activities. C. Communicates business activities. D. Helps people make better decisions. E. All of these. Ans: 2. The primary objective of financial accounting is: A. To serve the decision-making needs of internal users. B. To provide financial statements to help external users analyze an organization's activities. C. To monitor and control company activities. D. To provide information on both the costs and benefits of looking after products and services. E. To know what, when, and how much to produce. Ans: 3. Internal users of accounting information include: A. Shareholders. B. Managers. C. Lenders. D. Suppliers. E. Customers. Ans: 4. Ethical behavior requires: A. That auditors' pay not depend on the figures in the client's reports. B. Auditors to invest in businesses they audit. C. Analysts to report information favorable to their companies. D. Managers to use accounting information to benefit themselves. E. All of these. Ans: 5. Ethics: A. Are beliefs that separate right from wrong. B. And law often coincide. C. Help to prevent conflicts of interest. D. Are critical in accounting. E. All of these. Ans: 6. The rules adopted by the accounting profession as guides in preparing financial statements are: A. Comprised of both general and specific principles. B. Known as generally accepted accounting principles. C. Abbreviated as GAAP. D. Intended to make information in financial statements relevant, reliable, and comparable. E. All of these. Ans: 7. The accounting assumption that requires every business to be accounted for separately from other business entities, including its owner or owners is known as the: A. Objectivity principle. B. Business entity assumption. C. Going-concern assumption. D. Revenue recognition principle. E. Cost principle. Ans: 8. If a parcel of land that was originally acquired for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000, the land should be recorded in the purchaser's books at: A. $95,000. B. $137,000. C. $138,500. D. $140,000. E. $150,000. Ans: 9. The rule that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash, and (3) measures the amount of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services, is called the: A. Going-concern principle. B. Cost principle. C. Revenue recognition principle. D. Objectivity principle. E. Business entity principle Ans: 10. According to generally accepted accounting principles, a company's balance sheet should show the company's assets at: A. The cash equivalent value of what was given up or received. B. The current market value of the asset received in all cases. C. The cash paid only, even if something other than cash was given in the exchange. D. The best estimate of a certified internal auditor. E. The objective value to external users. Ans: 22. The general journal provides a place for recording: A. The transaction dates. B. The names of the accounts involved. C. The amount of each debit and credit. D. An explanation of the transaction. E. All of these. Ans: 23. 120. An accountant has debited an account for $3,500 and credited a liability account for $2,000. Which of the following would be an incorrect way to complete the recording of this transaction: A. Credit another asset account for $1,500. B. Credit another liability account for $1,500. C. Credit an expense account for $1,500. D. Credit the owner's capital account for $1,500. E. Debit another asset account for $1,500. Ans: 24. 121. A report that lists accounts and their balances, in which the total debit balances should equal the total credit balances, is called a(n): A. Account balance. B. Trial balance. C. Ledger. D. Chart of accounts. E. General Journal. Ans: 25. 124. A $15 credit to Sales was posted as a $150 credit. By what amount is Sales in error? A. $150 understated. B. $135 overstated. C. $150 overstated. D. $15 understated. E. $135 understated. Ans: 26. 131. Which of the following groups of accounts are not balance sheet accounts? A. Assets. B. Liabilities. C. Revenues. D. Equity accounts. E. All of these are balance sheet accounts. Ans: 27. Unearned revenues are: A. Revenues that have been earned and received in cash. B. Revenues that have been earned but not yet collected in cash. C. Liabilities created when a customer pays in advance for products or services before the revenue is earned. D. Recorded as an asset in the accounting records. E. Increases to owners' capital. Ans: 28. Prepaid expenses are: A. Payments made for products and services that do not ever expire. B. Classified as liabilities on the balance sheet. C. Decreases in equity. D. Assets that represent prepayments of future expenses. E. Promises of payments by customers. Ans: 29. A collection of all accounts and their balances used by a business is called a: A. Journal. B. Book of original entry. C. General Journal. D. Balance column journal. E. Ledger. Ans: 30. A list of all accounts and the identification number assigned to each account used by a company is called a: A. Source document. B. Journal. C. Trial balance. D. Chart of accounts. E. General Journal. Ans: ANSWERS: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30