Accounting 201 Final Test Questions
and Answers All Correct
An assumption about cost flow is necessary
a. because it is required by the income tax regulation.
b. even when there is no change in the purchase price on inventory.
c. only when the flow of goods cannot be determined.
d. because prices usually change, and tracking which units have been sold is difficult. -
Answer-D
Inventory costing methods place primary reliance on assumptions about the flow of: -
Answer-Costs.
An error in the physical count of goods on hand at the end of a period resulted in a
$10,000 overstatement of the ending inventory. The effect of this error in the current
period is
Cost of Goods Sold Net Income
a. Understated Understated
b. Overstated Overstated
c. Understated Overstated
d. Overstated Understated - Answer-C.
A write off of a specific accounts receivable under the allowance method
a. increases bad debt expense for the accounting period.
b. should occur on the last day of the accounting period.
c. decreases the cash realizable value of accounts receivable.
d. should be formally approved by an authorized employee. - Answer-D.
Under the allowance method of accounting for bad debts, why must uncollectible
accounts receivable be estimated at the end of the accounting period?
a. To allow the collection department to schedule work for the next accounting period.
b. To determine the gross realizable value of accounts receivable.
c. The IRS rules require the company to make the estimate.
d. To match bad debt expense to the period in which the revenues were earned. -
Answer-D.
Three parts to the fraud triangle? - Answer-opportunity, pressure, rationalization
What goes up in debits and down in credits? - Answer-Dividends, Assets, Expenses.
, What goes down in debits and up in credits? - Answer-Liabilities, Stockholders Equity,
Commonstock, Revenue, Retained Earnings
What is the payout ratio formula? - Answer-Cash dividends/net income
What is the return on equity formula? - Answer-Net Income/ average stockholders
equity
What is the Revenue Recognition Principle? - Answer-Recognizing Revenue regardless
of when it is paid.
What is a normal balance? - Answer-whatever increases the account
An architecture firm earned $2,000 for architecture services provided with the fee to be
paid in the future. No entry was made at the time the service was provided. If the fee
has not been paid by the end of the accounting period and no adjusting entry is made,
this would cause: - Answer-revenues will be understated
If a company fails to adjust for accrued revenues: - Answer-assets will be understated
and revenues will be understated.
A law firm received $2,000 cash for legal services to be rendered in the future. The full
amount was credited to the liability account Unearned Service Revenue. If the legal
services have been rendered at the end of the accounting period and no adjusting entry
is made, this would cause - Answer-revenues will be understated
Which of the following is a true statement about closing the books of a corporation?
a. Expenses are closed to the Expense Summary account.
b. Only revenues are closed to the Income Summary account.
c. Revenues and expenses are closed to the Income Summary account.
d. Revenues, expenses, and the Dividends account are closed to the Income Summary
account. - Answer-C.
The adjusted trial balance of McCoy Company included the following selected accounts:
Debit Credit
Sales Revenue $645,000
Sales Returns and Allowances $ 50,000
Sales Discounts 9,500
Cost of Goods Sold 396,000
Freight-Out 2,000
Advertising Expense 15,000
Interest Expense 19,000
Salaries and Wages Expense 84,000
Utilities Expense 23,000
Depreciation Expense 3,500
and Answers All Correct
An assumption about cost flow is necessary
a. because it is required by the income tax regulation.
b. even when there is no change in the purchase price on inventory.
c. only when the flow of goods cannot be determined.
d. because prices usually change, and tracking which units have been sold is difficult. -
Answer-D
Inventory costing methods place primary reliance on assumptions about the flow of: -
Answer-Costs.
An error in the physical count of goods on hand at the end of a period resulted in a
$10,000 overstatement of the ending inventory. The effect of this error in the current
period is
Cost of Goods Sold Net Income
a. Understated Understated
b. Overstated Overstated
c. Understated Overstated
d. Overstated Understated - Answer-C.
A write off of a specific accounts receivable under the allowance method
a. increases bad debt expense for the accounting period.
b. should occur on the last day of the accounting period.
c. decreases the cash realizable value of accounts receivable.
d. should be formally approved by an authorized employee. - Answer-D.
Under the allowance method of accounting for bad debts, why must uncollectible
accounts receivable be estimated at the end of the accounting period?
a. To allow the collection department to schedule work for the next accounting period.
b. To determine the gross realizable value of accounts receivable.
c. The IRS rules require the company to make the estimate.
d. To match bad debt expense to the period in which the revenues were earned. -
Answer-D.
Three parts to the fraud triangle? - Answer-opportunity, pressure, rationalization
What goes up in debits and down in credits? - Answer-Dividends, Assets, Expenses.
, What goes down in debits and up in credits? - Answer-Liabilities, Stockholders Equity,
Commonstock, Revenue, Retained Earnings
What is the payout ratio formula? - Answer-Cash dividends/net income
What is the return on equity formula? - Answer-Net Income/ average stockholders
equity
What is the Revenue Recognition Principle? - Answer-Recognizing Revenue regardless
of when it is paid.
What is a normal balance? - Answer-whatever increases the account
An architecture firm earned $2,000 for architecture services provided with the fee to be
paid in the future. No entry was made at the time the service was provided. If the fee
has not been paid by the end of the accounting period and no adjusting entry is made,
this would cause: - Answer-revenues will be understated
If a company fails to adjust for accrued revenues: - Answer-assets will be understated
and revenues will be understated.
A law firm received $2,000 cash for legal services to be rendered in the future. The full
amount was credited to the liability account Unearned Service Revenue. If the legal
services have been rendered at the end of the accounting period and no adjusting entry
is made, this would cause - Answer-revenues will be understated
Which of the following is a true statement about closing the books of a corporation?
a. Expenses are closed to the Expense Summary account.
b. Only revenues are closed to the Income Summary account.
c. Revenues and expenses are closed to the Income Summary account.
d. Revenues, expenses, and the Dividends account are closed to the Income Summary
account. - Answer-C.
The adjusted trial balance of McCoy Company included the following selected accounts:
Debit Credit
Sales Revenue $645,000
Sales Returns and Allowances $ 50,000
Sales Discounts 9,500
Cost of Goods Sold 396,000
Freight-Out 2,000
Advertising Expense 15,000
Interest Expense 19,000
Salaries and Wages Expense 84,000
Utilities Expense 23,000
Depreciation Expense 3,500
