Acct301 Essentials of Accounting: Week 2 Quiz (15 MCQs)
ACCT301 Essentials of Accounting WEEK 2 QUIZ (15 MCQ'S) (TCO 1) Which of the following would not be considered an external user of accounting data for XYZ Company? Internal Revenue Service Agent Management Creditors Customers (TCO 1) The cost of assets consumed or services used is also known as _________. a revenue. an expense. a liability. an asset. (TCO 1) The financial statement that summarizes the changes in retained earnings for a specific period of time is the _________. balance sheet. income statement. statement of cash flows. retained earnings statement. (TCO 1) Pinson Company began the year with retained earnings of $210,000. During the year, the company recorded revenues of $300,000, expenses of $228,000, and paid dividends of $24,000. What was Pinson’s retained earnings at the end of the year? $306,000 $258,000 $486,000 $282,000 (TCO 4) Which of the following statements is not true? Comparability means using the same accounting principles from year to year within a company. Reliability is the quality of information that gives assurance that it is free of error or bias. Relevant accounting information must be capable of making a difference in a decision. The FASB’s overriding criterion is that the accounting rule adopted should be the one that generates the most useful financial information for making a decision. (TCO 4) Using the following balance sheet and income statement data, what is the current ratio? Current assets $7,000 Net income $12,000 Current liabilities 4,000 Stockholders’ equity 21,000 Total assets 30,000 Total liabilities 9,000 Average common shares outstanding was 10,000 1.75:1 1.6:1 0.57:1 2:01 (TCO 4) Using the following balance sheet and income statement data, what is the total amount of working capital? Current assets $7,000 Net income $12,000 Current liabilities 4,000 Stockholders’ equity 21,000 Total assets 30,000 Total liabilities 9,000 Average common shares outstanding was 10,000 $21,000 $7,000 $2,000 $3,000 (TCO 4) Using the following balance sheet and income statement data, what is the debt to total assets ratio? Current assets $7,000 Net income $12,000 Current liabilities 4,000 Stockholders’ equity 21,000 Total assets 30,000 Total liabilities 9,000 Average common shares outstanding was 10,000 75% 19% 57% 30% (TCO 2) Powers Company paid its office rent of $1,000 with cash. As a result of this event, _________. assets decreased by $1,000. equity increased by $1,000. equity decreased by $1,000. both assets decreased by $1,000 and equity decreased by $1,000. (TCO 2) Which accounts normally have debit balances? Assets, expenses, and revenues Assets, expenses, and retained earnings Assets, liabilities, and dividends Assets, expenses, and dividends (TCO 2) In the first month of operations, the total of the debit entries to the cash account amounted to $700 and the total of the credit entries to the cash account amounted to $300. The cash account has a _________ $400 credit balance. $700 debit balance. $400 debit balance. $300 credit balance. (TCO 2) A trial balance would only help in detecting which one of the following errors? A transaction that is not journalized A journal entry that is posted twice Offsetting errors made in recording the transaction A transposition error when transferring the debit side of a journal entry to the ledger (TCO 3) From an internal control standpoint, the asset most susceptible to improper diversion and use is _________ prepaid insurance. cash. buildings. land. (TCO 3) Ron Jones has been a trusted employee for over 10 years. He is responsible for ordering merchandise inventory, receiving the inventory items, and authorizing the payment for these items. Which internal control principle, if any, is being violated? None, Ron has proven to be trustworthy and has enough experience to do a good job. Documentation procedures Establishment of responsibilities Segregation of duties (TCO 3) A check written by the company for $167 is incorrectly recorded by a company as $176. On the bank reconciliation, the $9 error should be _________ added to the balance per books. deducted from the balance per books. added to the balance per bank. deducted from the balance per bank.
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