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Test answers for Bookkeeping 2016

(162) Last updated: May 15
Elance • Fin. & Mgt.
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162 Answered Test Questions:

1. The ability of a firm to pay its current maturing obligations on time is known as ...?

Answers:

• Saleability

• Solvency

• Sustainability

• Maturity

• Profitability

2. What happen to an asset when it is depreciated?

Answers:

• it decreases in value

• it increases in value

• it remains as is

3. The books of original entry are known as the ......?

Answers:

• Ledgers

• Financial statements

• Source documents

• Journals

• Bank deposit books

4. True or False? An accrual occurs before a payment or receipt. A deferral occurs after a payment or receipt.

Answers:

• True

• False

5. Which of the following transactions is primarily identified in the bank reconciliation process?

Answers:

• cash sales

• accounting fees

• bank charges

• advertising expenses

• sales commission fees

6. For every financial transaction entered in the bookkeeping system, the total of the debits must equal the total of the credits?

Answers:

• True

• False

7. When an owner contributes additional money to a business, the equity ....?

Answers:

• Decreases

• Increases

• Is unaffected

8. That part of the equity that the owner invests in the business is known as ...?

Answers:

• Drawings

• Current earnings

• Loans

• Capital

• Retained earnings

9. True or False: Recording a business transaction always requires at least a debit to one account and a credit to a different account.

Answers:

• False

• True

10. Net profit is always greater than Gross Profit.

Answers:

• True

• False

11. If Assets totaled $55,000 and Liabilities totaled $25,000, Equity would be ....?

Answers:

• impossible to calculate

• $30,000

• $80,000

• $55,000

• $25,000

12. Loan funds owed to a bank would belong to which account group?

Answers:

• Equity

• Expenses

• Assets

• Revenue

• Liabilities

13. Under what section is the Accounts Receivable account reported in the Balance Sheet?

Answers:

• Equity

• Non current liabilities

• Non current assets

• Liabilities

• Current assets

14. "Amounts owed by the business and expected to be paid out within one year" is the description of which account group?

Answers:

• Expenses

• Debtors

• Current assets

• Current liabilities

• Non-current liabilities

15. A _______ entry is entered on the left side of an account.

Answers:

• list

• increased

• debit

• decreased

• credit

16. Assets that will be converted to cash within one year will be reported under what category in the Balance Sheet?

Answers:

• Long term Liabilities

• Fixed Assets

• Capital

• Current Liabilities

• Current Assets

17. Which of the following does NOT form part of the bank reconciliation process?

Answers:

• Direct deposits from customers

• Bank charges

• Outstanding checks

• Aged debtors

• Outstanding deposits

18. Income that has been earned within a financial period but has not yet been received in cash, is known as ...?

Answers:

• accrued expenses

• revenue in advance

• accounts payable

• extraordinary income

• accrued revenue

19. Which term in accounting means that every transaction affects two or more accounts?

Answers:

• multiple entry

• triple entry

• double entry

• single entry

20. An adjustment being made for an error relating to transactions posted to the wrong expense account would be recorded in which journal?

Answers:

• sales

• cash receipts

• cash payments

• general

• purchases

21. Which of the following is a capital expenditure?

Answers:

• Purchase of stationery

• Payment for services rendered

• Purchase of merchandise

• Salaries paid

• Purchase of equipment

22. Which of the following general ledger accounts would NOT generally have a subsidiary ledger?

Answers:

• Inventory

• Accounts payable

• Fixed assets

• Goodwill

• Accounts receivable

23. Which principle/guideline requires the company's financial statements to have footnotes containing information that is important to users of the financial statements?

Answers:

• Matching Principle

• Full disclosure

• Going Concern

• Conservatism

• Materiality

24. The golden rule of accounting says that, for every debit entry, there must be...

Answers:

• a cash sale entry

• a corresponding credit entry

• a credit sale entry

• an asset purchase

25. Interest paid by a business on a bank loan  is ...?

Answers:

• owner's drawings

• an asset

• revenue

• a liability

• an expense

26. Which of the following items would be accounted for as an expense?

Answers:

• Payment of the current period's rent

• The purchase of land

• Repayment of a bank loan

• Dividends to stockholders

27. What three sections make up the Balance Sheet?

Answers:

• assets, liabilities and equity

• income, liabilities and equity

• revenue, expenses and equity

• revenue, liabilities and equity

• assets, liabilities and revenue

28. There are two accounting methods for recording financial transactions, the cash method and the:

Answers:

• prepaid method

• receivable method

• payable method

• accrual method

• adjustment method

29. Invoices from vendors (suppliers) which are due in 30 days should be credited to Accounts _______.

Answers:

• Cash Flow

• Receivable

• Balance Sheet

• Credit

• Payable

30. What is a listing of account numbers with account titles but without amounts called?

Answers:

• Ledgers

• Balance Sheet

• Income Statement

• Chart of Accounts

• Trial Balance

31. Under which classification would 'Merchandise Inventory' be recorded?

Answers:

• Non-current asset

• Fixed asset

• Inventments

• Intangible asset

• Current asset

32. Which amounts appear on left side of T-account?

Answers:

• debit

• credit

33. An invoice being paid that relates to insurance cover for the next accounting period should be reported in the financial statements for this accounting period as .....?

Answers:

• accrued revenue

• Revenue in advance

• Insurance expense in the current accounting period

• a prepaid expense

• accrued expense

34. On December 15, XYZ Co. hired Jane Houston as a contractor to begin working on January 3 at a monthly salary of $5,000. ABC's balance sheet of December 31 will show a liability of...

Answers:

• 1000

• No liability

• 3000

• 4000

• 5000

35. Which account group does 'Accounts Receivable' belong to?

Answers:

• Assets

• Revenue

• Expenses

• Equity

• Liabilities

36. An accounts payable ledger records which transactions?

Answers:

• Cash payments

• Sales made on credit

• Purchases made on credit

• Cash sales

• Cash purchases

37. Inventories encompass all of the following, except:

Answers:

• Materials and supplies awaiting use in the production process

• Land and other property not held for sale

• Finished goods produced

• Merchandise purchased by a retailer

38. Which of the following is NOT a correct description of the 'Debit and Credit' concept in bookkeeping?

Answers:

• it is a method for classifying financial transactions

• it records the flow of economic resources from a source to a destination

• it is a method for recording the changing values in the financial accounts of a business caused by monetary transactions

• it is a classification and recording process that keeps the accounting equation in balance

• 'Debit' is always good for the business and 'Credit' is always bad for the business.

39. The calculation for gross profit is, Sales less ...?

Answers:

• Purchases

• Cost of goods sold

• Expenses

• Opening stock

• Closing stock

40. Which of the following would NOT be considered a ???The Bottom Line??? result in financial reporting?

Answers:

• Sales

• Net Income

• Earnings

• Net profit

41. What is the typical balance of a liability account reported in the Balance Sheet?

Answers:

• credit balance

• debit balance

42. Which of the following would be reported in the financial statements as a current asset?

Answers:

• Accounts receivable

• Shares held in other companies

• Plant and equipment

• Patents

• Office furniture

43. Which of the following account groups does NOT appear on the  Balance sheet of the business?

Answers:

• Owners equity

• Fixed Assets

• Current Assets

• Current Liabilities

• Expenses

44. If a company has $50,000 in Total Assets (including $10,000 in Current Assets + $40,000 in Fixed Assets) and $20,000 in Equity, what is their Total Liability?

Answers:

• $0

• $10,000

• $30,000

• $40,000

• $20,000

45. Which of the following transactions would have NO impact on stockholders' equity?

Answers:

• Dividends paid to stockholders

• Purchase of land from the proceeds of a bank loan

• Investment of cash by stockholders

• Net loss in the current period

46. On which part of a Balance Sheet do Prepaid Expenses appear?

Answers:

• Shareholders' Equity

• Liabilities

• Prepaid Expenses do not appear on the Balance Sheet

• Assets

47. Which of the following is more an accountant's role than a bookkeeper's role?

Answers:

• reporting to governments and meeting statutory requirements

• recording the organisation???s day-to-day financial transaction

• classifing transactions into the correct ledger accounts

• ensuring that financial transactions are recorded correctly

• ensuring a balanced 'trial balance'

48. Which account group does 'Drawings' belong to?

Answers:

• Expenses

• Assets

• Owners equity

• Revenue

• Liabilities

49. In which journal do bookkeepers generally add memos or notes for  individual transactions?

Answers:

• Cash payments

• Cash receipts

• Sales

• Purchases

• General

50. 'Prepaid expenses' are classified and reported in the financial statements under which account group?

Answers:

• Owners equity

• Expenses

• Liabilities

• Revenue

• Assets

51. Which of the following is NOT a method of inventory valuation?

Answers:

• ISO

• FIFO

• LCM - Lower of cost or market

• Weighted average

• LIFO

52. Which type of balances do Expense and Asset accounts typically have?

Answers:

• negative

• credit

• debit

• nil

53. Taking the information from the journals and recording it in the ledgers, is known in bookkeeping as ....?

Answers:

• reconciling

• journalizing

• posting

• crediting

• transferring

54. Which of the following documents would you NOT rely on to originate accounting entries?

Answers:

• Sales invoices

• Cash register receipts

• Delivery dockets

• Adjustment/credit notes

• Electronic transfers

55. An accounting principle that record asset such as land at original cost and ignoring increases in value is the:

Answers:

• Historical Cost Rule

• Consistency Rule

• Materiality Rule

• Conservative Rule

56. Cost of Good Sold is calculated by adding purchases to the beginning inventory and then subtracting ...?

Answers:

• Selling expenses

• Any Accounts Payable discounts taken

• Accounts Payable balance owed to inventory vendors

• Ending Inventory

• Gross profit

57. Which specific expense group is deducted from revenue to calculate gross profit?

Answers:

• Depreciation & Amortization expenses

• Overhead expenses

• Cost of sales

• Selling & Administration expenses

• Finance & Funding expenses

58. When a check received for a sale is returned  by the bank, the two accounts to be adjusted are cash and ...?

Answers:

• Bank Charges

• Accounts receivable

• Discount on Sales

• Purchases

• Accounts payable

59. Net Sales minus the Cost of Goods Sold equals ...?

Answers:

• EBIT

• Earnings After Tax

• Operating profit

• Net profit

• Gross profit

60. The current period's profit will be reported in which section of the Balance Sheet?

Answers:

• Equity

• Current assets

• Non-current liabilities

• Current liabilities

• Non-current assets

61. When a business uses cash to purchase inventory, which of the following bookkeeping entries is the correct one?

Answers:

• Credit - Cash account, Credit - Inventory account

• Debit - Inventory account, Credit - Cash account

• Credit - Inventory account, Debit - Cash account

• Debit - Inventory account, Debit - Cash account

62. If a supplier's invoice is recorded on the last day of the year for future services, one side of the entry should be accounts payable, and the other entry should be to which account?

Answers:

• Owners equity

• Cash at bank

• Equity

• Services expense

• Prepaid Expense

63. The accounting practice where general treatment of items does not differ from period to period, is known as ...?

Answers:

• Reliability

• Substance over form

• Accruals

• Consistency

• Relevance

64. A company disposes of equipment that it no longer uses in its business. The amount received by the company is more than the amount the asset is carried at in the accounting records. The company will report a...

Answers:

• Revenue

• Profit

• None of these

• Loss

• Gain

65. What accounting concept is being applied when personal transaction must be separated from business transaction?

Answers:

• Going concern concept

• Cost Principle

• Objectivity Principle

• Business entity concept

• Accrual method

66. Working capital is calculated by the formula ...?

Answers:

• Equity - Total liabilities

• Total assets - Current liabilities

• Current assets + Current earnings

• Current assets - Inventory

• Current asset - Current liabilities

67. In the double-entry bookkeeping system, financial transactions are first recorded in the:

Answers:

• journals

• subsidiary ledger

• general ledger

• trial balance

• spiral notebook

68. What is the next step in the bookkeeping process after you have recorded the financial transaction details in the appropriate journal?

Answers:

• Calculate and record the end of period adjusting entries

• Post the details to the general ledger

• Prepare financial statements

• Analyse and classify the financial transactions

• Prepare a trial balance

69. Which of the following transactions increases the balance of the Creditors control account in the general ledger?

Answers:

• Discount revenue

• Discount allowed

• Cash received

• Purchases on credit

70. Which is not a current asset?

Answers:

• Prepaid Insurance

• Petty Cash

• Furniture

• Accounts Receivable

71. Transactions that include revenue that has been earned but not yet collected OR expenses that have been incurred but not yet evidenced or paid, are known as...

Answers:

• Credit Purchases

• Cash payments and receipts

• Prepaid expenses

• Unearned revenues

• Accruals

72. "A statement of assets and liabilities that is reconciled with the equity of the owner at the close of an accounting period" is a definition of which financial report?

Answers:

• Equity statement

• Cashflow statement

• Bank reconciliation

• Balance sheet

• Income statement

73. Which of the following is NOT a liability of the business?

Answers:

• Accounts Payable

• Customer Advances

• Accounts Receivable

• Unearned revenue

• Interest Payable

74. When an owner invests more money into the business, which of the following bookkeeping entries is correct ?

Answers:

• Debit Cash account, Credit Owners equity

• Credit Owners equity, Credit Cash account

• Credit Cash account, Debit Owners equity

• Debit Cash account, Debit Owners equity

75. The deposit book issued by the bank is used to evidence the banking of .....?

Answers:

• Bank fees charged to the account

• Monies received

• Checks issued for payment to suppliers

• Electronic banking - payments out

76. The accounting equation is ....?

Answers:

• Liabilities = Assets + Owners Equity

• Owners Equity = Liabilities - Assets

• Assets + Liabilities = Owners equity

• Assets = Liabilities - Owners equity

• Assets = Liabilities + Owners equity

77. To credit an expense account means to decrease it.

Answers:

• True

• False

78. When an asset is sold for cash, into which journal is the transaction recorded?

Answers:

• Sales returns journal

• Cash receipts journal

• Cash payments journal

• Sales journal

• Purchases journal

79. Which of the following is NOT generally used as an alternative name for 'Owners Equity'?

Answers:

• Shareholder's equity

• Net Worth

• Investments and loans

• Capital

80. In what type of journal would adjustments be generally recorded?

Answers:

• Cash Receipts Journal

• General Ledger

• Sales Journal

• General Journal

• Purchase Journal

81. Which statement correctly completes the sentence? If Cost of Goods Sold increases, ........

Answers:

• sales revenue decreases

• gross profit decreases

• gross profit increases

• net profit increases

• closing stock decreases

82. Under which account group is 'Accumulated depreciation' reported in the financial statements?

Answers:

• Assets

• Expenses

• Owners Equity

• Revenue

• Liabilities

83. Which of the following statements describes the accounting equation?

Answers:

• Assets + Liabilities = Equity/Capital

• Assets = Liabilities - Equity/Capital

• Assets = Liabilities + Equity/Capital

• Assets = Liabilities = Equity/Capital

• Assets = Equity/Capital - Liabilities

84. The owner of a small business writes himself a check for 5,000 for personal use. How is this check recorded in the journal?

Answers:

• credit Cash at bank account, debit Drawings

• debit Bank Loan, credit Drawings

• credit Accounts Receivable, debit Drawings

• credit Drawings, debit Cash at bank account

85. Recording revenues as they are earned and expenses as they are incurred, regardless of when the money is exchanged, is known as ....?

Answers:

• Single entry accounting

• Cost accounting

• Accrual accounting

• Cash accounting

86. Which of the following statement about the perpetual inventory system is TRUE?

Answers:

• it eliminates the need to carry out stocktakes

• it provides a partial record of stock turnover

• it is cheaper to operate than the physical inventory system

• it does not record stock movements

• it provides a continuous record of stock turnover

87. When applying the accrual basis of accounting, how would you report expenses that covered a future period?

Answers:

• As a liability in the current period

• As an expense in the current period

• As an asset - prepaid expenses

• As drawings against equity in a future period

88. The accounting convention that requires the assets of a business to be reported in the financial statement at the actual price that was paid to acquire them, is known as .....?

Answers:

• Monetary measurement

• Going Concern

• Materiality

• Realization of income

• Historical cost

89. A Debit balance is usually not normal for which account?

Answers:

• All of these

• Wages Payable

• Accumulated Depreciation

• Retained Earnings

90. When an invoice for a service covers more than one accounting period, the journal entry will show an Expense and a:

Answers:

• Liability

• Prepaid Expense

• Cash Entry

• Non-current asset entry

91. As at the balance date, prepaid expenses will be represented in the financial statements as ....?

Answers:

• a credit balance non-current asset

• a credit balance expense

• a debit balance non-current asset

• a debit balance current asset

• a credit balance current asset

92. If a financial transaction increased an asset you would credit the asset account in the bookkeeping system?

Answers:

• False

• True

93. The original book of entry for financial transactions in the bookkeeping system is the .....?

Answers:

• Subsidiary Ledger

• Cash at Bank account

• Journal

• General Ledger

94. Which one of the following is a Contra-Asset account?

Answers:

• Marketable Securities

• Accrued Revenue

• Bank Charges

• Accumulated Depreciation

95. Which principle/guideline requires a company's balance sheet to report its land at the amount the company paid to acquire the land, even if the land could be sold today at a significantly higher amount?

Answers:

• Monetary Unit

• Economic entity

• Business

• All of the above

• Cost Principle

96. A business with available cash to use will have a ......?

Answers:

• Credit balance in its Cash at Bank account

• Debit balance in its Cash At Bank account

• Debit closing balance on the Bank Statement

97. Cash sales are recorded in which subsidiary journal?

Answers:

• Purchases journal

• Cash receipts journal

• Cash payments journal

• Sales journal

• Sales returns and allowances journal

98. Which of the following is NOT found on an income statement?

Answers:

• Purchases

• Bad debts

• Postage and shipping

• Cash at bank

• Depreciation expense

99. The process of writing off the value of intangible assets to acknowledge their loss of value is known as:

Answers:

• Amortization

• Accruals

• Posting

• Asset appreciation

• Depreciation

100. In a company's accounts, the shareholder's fund is equal to ...?

Answers:

• Working capital - Fixed liabilities

• Working capital + Fixed assets

• Current assets - Current liabilities

• Total assets + Current earnings

• Total assets - Total liabilities

101. Which of the following is NOT a contra account?

Answers:

• Sales allowances

• Sales returns

• Accumulated depreciation

• Sales discounts

• Bank charges

102. What does the term "2% 10, Net 30" mean?

Answers:

• If the bill is not paid in 10 days an extra 2% is payable in 30 days.

• The total bill is due in 30 days, but a discount of 2% may be taken if the bill is paid in 10 days of the bill date.

• The buyer must pay 2% in 10 days of the bill date with the balance of the bill being due in 30 days.

• A 2% discount on the bill can be taken if payment is made after 10 days but before 30 days.

• The total bill is due in 30 days but the buyer must pay 2% within the first 10 days of the bill date.

103. The broad accounting principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is known as ...?

Answers:

• Revenue recognition principle

• Full disclouser

• Conservatism

• Matching principle

• Going concern

104. The account set up as an advance or float for petty cash is treated as ... ?

Answers:

• an equity account

• a revenue account

• an asset account

• a liability account

• an expense account

105. End-of-period adjustments do NOT include which transactions?

Answers:

• Cash sales

• Accrued expenses

• Deferred Expense

• Depreciation

• Deferred Revenue

106. Which principle/guideline minimizes the detail of reporting based on the insignificant size of the amount?

Answers:

• Full discloser

• Conservatism

• Materiality

• Historical cost

107. A chart of accounts is an index of the accounts contained in the ... ?

Answers:

• Trial Balance

• Vendors listing

• Customer list

• General Ledger

• General Journal

108. If Assets totaled $40,000 and Owners Equity is 40% of the total Assets, what is the value of the Liabilities?

Answers:

• $16,000

• $14,400

• $23,400

• $24,000

• $14,000

109. Treasury stock is classified under which account group?

Answers:

• equity

• expense

• assets

• revenue

• liabilities

110. Which of the following balance-day entries do not need reversing entries at the start of the new period?

Answers:

• accrued expenses

• bad and doubtful debts

• prepaid expenses

• revenue in advance

• accrued revenue

111. Which of the following accounts is NOT a current liability?

Answers:

• Revenue in advance

• Term Loans secured by a mortgage

• Bank overdraft

• Accounts payable

• Accrued expenses

112. A cash receipts journal is a special journal used to record all cash disbursement.

Answers:

• True

• False

113. A credit balance in the bank statement would be normally reconciled with:

Answers:

• a debit balance in the Cash at Bank account

• a debit balance in the Bank Fees and Charges account

• a nil balance in the Cash at Bank account

• a debit balance in the Accounts Receivable account

• a credit balance in the Cash at Bank account

114. Which account is NOT part of the profit and loss account?

Answers:

• Insurance

• Repairs and Maintenance

• Doubtful debts

• Advertising

• Accumulated depreciation

115. TUV Co. performed services for Client Asim and billed them in December. TUV follows the accrual basis of accounting. In January TUV received the $5,000 from Asim and debited the Cash account: What account should it credit?

Answers:

• Unearned Revenue

• Accrued expenses

• Account Payable

• Service Revenue

• Account receivable

116. XYZ Co. has current assets of $50,000 and total assets of $150,000. XYZ has current liabilities of $30,000 and total liabilities of $80,000. What is the amount of XYZ's owner's equity?

Answers:

• $60,000

• $80,000

• $90,000

• $70,000

• $120,000

117. In regards to time, which of the following headings would you NOT find on an income statement?

Answers:

• For the period 1 January to 30 June

• For the 6 months ended 30 June

• For the month ended 30 June

• For the month of June

• As at the 30 June

118. Which of the following statements in relation to materiality is true?  I. Materiality of item depends on their individual or collective influence on the economic decisions of users.  II.Materiality of an item depends on its absolute size and  nature

Answers:

• I only

• Both I and II

• II only

• Neither I or II

119. Which of the following is a current liability?

Answers:

• Drawings

• Accrued expenses

• Accrued revenue

• Prepaid expenses

• Mortgage loan

120. When recording financial transactions using the "T" account method, the 'Debit' value is recorded on the right and the 'Credit' value is recorded on the left.

Answers:

• True

• False

121. A bank service charge on the bank statement will require a _____________ to the general ledger account 'Cash at Bank' of the business.

Answers:

• No entry

• debit entry

• credit entry

122. The accounting principle that is the primary support for the accrual method of bookkeeping is the .....?

Answers:

• Matching principle

• 'Full Disclosure' principle

• 'Going concern' principle

• Historical cost principle

• 'Substance Over Form' principle

123. A petty cash expenditure would be recorded and debited to which account?

Answers:

• accounts receivable

• the petty cash float account

• a fixed asset account

• an expense account

• accounts payable

124. If you are valuing inventory by the FIFO method, the inventory on hand, according to the books of the business, will be the ...?

Answers:

• Average of beginning and ending inventory

• Oldest

• Newest received

• Depend on whether costs are rising or falling

125. Is it acceptable in accounting that some of the expenses reported on the income statement are estimates?

Answers:

• Yes

• No

126. Accounting for inventory by applying the lower of cost or net realizable value is an example of the application of:

Answers:

• Conservatism

• Consistency

• Comparability

• Materiality

127. Only legal entities can be accounting entities under accounting conventions. True or False?

Answers:

• True

• False

128. Which of the following is NOT generally used as an alternative name for a 'Balance sheet'?

Answers:

• Statement of Net Assets

• Equity Statement

• Statement of Financial Position

• Statement of Financial condition

129. The trial balance lists which type of accounts?

Answers:

• Only the General ledger accounts

• General ledger accounts plus the individual Debtor and Creditor accounts

• Only the 'nominal' accounts

• Only the 'real' accounts

• Debtor and Creditor accounts only

130. In a reconciliation process, if the discrepancy amount when  divided by 9 results in a whole integer, then it is ...?

Answers:

• a transposition error

• an error of commission

• a compensating error

• an error of omission

• an error of reversal

131. In the Accounts Receivable ledger, a Debit entry is most likely for:

Answers:

• Recording a future obligation towards a vendor

• Recording a cash receipt from a sale

• Recording an uncollected sale

• Canceling an open Receivable

132. In times of rising costs for inventory, the Cost of Goods Sold will be highest under which inventory valuation method?

Answers:

• Average Cost

• LIFO

• Standard Pricing

• Weighted Average Cost

• FIFO

133. What does a debit balance on a bank statement indicate?

Answers:

• the bank owes you money

• it must be a mistake

• the bank account is overdrawn

• the bank account has available funds

134. Which of the following accounting principles supports the need to ensure that recorded information is based on fact and not just on personal opinion?

Answers:

• Consistency

• Materiality

• Objectivity

• Going Concern

• Monetary measurement

135. If the asset side of the accounting equation represents the 'things of value in the business', what does the other side represent?

Answers:

• the source of finance to the business

• the revenue the business has achieved

• the costs of running the business

• the profit the business has made

• items of economic value

136. When trading stock is received from a supplier, the source document for bookkeeping purposes will be the ...?

Answers:

• Delivery docket

• Supplier's invoice

• Purchase order

• Purchase requisition

• Consignment note

137. Which source document would be used when inventories are returned to a supplier?

Answers:

• Sales invoice

• Adjustment note

• Check

• Memoranda

• Purchase invoice

138. A check that was received from a debtor was dishonored. How does this transaction affect the debtors control account in the general ledger?

Answers:

• it is credited

• it is ignored

• it remains unchanged

• it is debited

139. Which of the following is NOT a feature of a perpetual inventory system?

Answers:

• typically includes maximum and minimum stock levels

• typically includes a re-order point

• gross profit calculations cannot be done without a physical stocktake

• separate inventory records are kept for each stock item

• stock losses can be determined

140. The chronological record of a transaction??????s process through the accounting system, from the source document to the financial statements, is known as ....?

Answers:

• Variance reporting

• An audit trail

• a trial balance

• Posting

• Journalizing

141. Under what account group heading would 'Provision for Doubtful Debts' be reported in the financial statements?

Answers:

• Equity

• Non-current liabilities

• Current assets

• Current liabilities

• Expenses

142. Under what account group heading would 'Provision for Doubtful Debts' be reported in the financial statements?

Answers:

• Equity

• Non-current liabilities

• Current assets

• Current liabilities

• Expenses

143. The purchase of motor vehicles on credit should be entered into which journal?

Answers:

• Sales

• Purchases

• General

• Cash payments

• Cash receipts

144. Which of the following is NOT generally listed as one of the key expense group classifications of an income statement?

Answers:

• Accrued expenses

• Depreciation and amortization

• Other operating expenses

• Finance expenses

• Selling and administration expenses

145. Interest Expense on a term loan for a large retailer is a ....?

Answers:

• an Extraordinary expense

• an Operating expense

• a Depreciation and Amortization

• a Non operating expense

• a Direct expense

146. Which of the following inventory costing methods is appropriate for a business with a relatively small number of unique inventory items with a high unit cost?

Answers:

• Moving average

• FIFO

• Weighted average

• LIFO

• Specific identification

147. Which account would NOT form part of the Trading Account?

Answers:

• Freight inwards

• Purchases

• Sales commissions

• Sales

• Closing inventory

148. 'Nominal accounts' in bookkeeping are also known as 'Temporary accounts'.

Answers:

• False

• True

149. The directive to recognize revenue only when it is reasonably certain of happening and to recognize expenses as soon as they are incurred is known by which principle?

Answers:

• Separate accounting entity

• Historical cost

• Prudence/Conservatism

• Matching principle

• Dual Aspect of financial transactions

150. Unexpired costs are represented in the accounts of an accounting entity as...

Answers:

• revenue

• liabilities

• assets

• equity

• expenses

151. Under the IFRS, the value of land is recorded at ________ on the balance sheet.

Answers:

• Cost price

• Liquidation value

• Depreciated value

• Fair Value

• Market value

152. On December 1 a company borrowed $100,000 at 12% per year. The interest will be paid quarterly, with the first payment due on March 1. What interest expense amount should the company report on its income statement for the month of December?

Answers:

• $1,200

• $12,000

• $0

• $4,000

• $1,000

153. If a 4 year old asset (equipment) was sold on credit for the book value of $5,000, the total value of assets in the firm's accounting equation is ....?

Answers:

• Increased by $4,000

• Unchanged

• Increased by $5,000

• Decreased by $1,000

• Decreased by $5,000

154. Which of the following transactions are recorded in the purchases journal?

Answers:

• Expenses recorded but not yet paid for

• Trading stock bought on credit

• Assets bought on credit

• Loan repayments payable

• Trading stock purchased for cash

155. When using the moving average method of inventory valuation, a new unit cost must be computed after each:

Answers:

• Month-end

• Purchase and issuance from inventory

• Purchase

• Issuance from inventory

156. Assuming a "T account" setup in the general ledger, on which side of the subsidiary account must an entry in the control account be posted?

Answers:

• always on the debit side

• on the opposite side

• on the same side

• always on the credit side

157. Which of the following is NOT considered a function of accounting?

Answers:

• an aid to decision making

• a means of communication to stakeholders

• a management control device

• a means of establishing accountability

• a means for calculating the current market value of a business

158. Investments securities held for the purpose of retiring bonds payable shall be classified as:

Answers:

• Investments

• Current assets

• Intangible assets

• Deferred bond liability

159. The 'Discount allowed' account records the  ....?

Answers:

• Discount given to debtors

• Discount on sales

• Discount given by suppliers

• Discount given to creditors

• Discount on purchases

160. Which account is NOT part of the trading account?

Answers:

• Duty and excise

• Freight outward

• Freight inward

• Import clearance charges

• Purchases

161. When using the FIFO inventory costing method, the most recent costs are assigned to the cost of goods sold. True or False?

Answers:

• False

• True

162. Which of the following is NOT generally used as an alternative name for an 'Income Statement'?

Answers:

• Statement of Financial Performance

• Statement of operations

• Profit and Loss Statement

• Earnings statement

• Net Profit Statement