Hiring - Step 2: Accounting Test

Accounting Test
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Section 1:

Choose one answer for each of the multiple questions below - Questions 1 to 36

1. Variable costs change in direct proportion with a change in the volume of activity, while fixed costs remain unchanged within the relevant range of activity.

TrueFalse

2. Indirect labor is charged to the product, while direct labor is considered overhead.

TrueFalse

3. "An asset purchased ten years ago for $100,000 has accumulated depreciation of $100,000 at the end of its tenth year. What amount should be charged to depreciation if the asset is used in its eleventh year?"

90901000010000

4. What is the accounting equation most stated as?

Owners equity = Liabilities + AssetsAssets = Liabilities + Owners EquityLiabilities = Assets + Owners equityAll of the above

5. Which of the following statements is false?

to increase cash, debit the accountto increase revenue, credit the accountto decrease a receivable, debit the accountto increase a receivable, debit the account

6. Which of the following statements is true?

to decrease a receivable, debit the accountto decrease revenue, debit the accountto increase owner's equity, debit the accountto increase an expense account, credit the account

7. accounting

A planned process designed to compile financial data and summarize the results in accounting records and reports.A formal report that shows what an individual owns, what an individual owes, and the difference between the two.formal written document that describes the nature of a business and how it will be runPlanning, recording, analyzing, and interpreting financial information

8. When calculating the Owner's Equity, what math problem would be correct?

Revenue - ExpensesRevenue - LiabilitiesAssets - LiabilitiesAssets - Expenses

9. "Accruing wages expense as of December 31 has what effect on the December 31 balance sheet?"

Assets decreaseLiabilities increaseOwner's equity increases

10. "Under accrual accounting, amounts received in advance of providing a service should be reported as"

A liabilityRevenue - LiabilitiesNot reported

11. "A corporation's failure to accrue an expense will cause expenses and ................ to be understated."

AssetsLiabilitiesOwner's Equity

12. Which of the following is the first step in the Accounting Cycle?

Journal entriesAnalyze the transactionIdentify the transactionPost to ledger

13. A credit to the accounts receivable account

indicates a sale to customers on account has occurred.indicates a payment from customers on their account has been received.is an error.indicates that a liability has been incurred.

14. A debit is the normal balance for which account listed below?

Capital accountService Revenue accountAccounts Payable accountAccounts Receivable account

15. If beginning capital was $25,000, ending capital is $37,000, and the owner?s withdrawals were $23,000, the amount of net income or net loss for the period was:

Net loss of $35,000Net income of $35,000Net income of $14,000Net loss of $14,000

16. In the accounting equation: A=L+E, what does E stand for?

EventEqualEquityEquilibrium

17. If you sell an item on credit, what four accounts are affected?

accounts payable, cash, inventory, and cost of salesaccounts payable, sales, inventory, and cost of salesaccounts receivable, sales, inventory, and cost of salesaccounts receivable, cash, inventory, and cost of sales

18. The expense associated with manufacturing items for resale is generally kown as?

Administrative OverheadGross ProfitCost of SalesInventory

19. XYZ, Inc. borrowed $1,000 from the bank and debited its cash account for $1,000. What should be done to complete the recording of the transaction?

Nothing further must be done.Debit a owners' equity account for $1,000.Credit another asset account for $1,000.Credit a liability account for $1,000.

20. XYZ, Inc. paid its supplier $1,000 to satisfy an accounts payable balance. How should XYZ record this transaction?

Debit accounts payable and credit cash for $1,000.Debit supplies expense and credit cash for $1,000.Credit accounts payable and debit cash for $1,000.Only credit a cash for $1,000.

21. Ike's Lawn Service billed a client on May 1 for a service totaling $ 250. When the client pays said costs, what is the effect on the accounting equation?

Liabilities decrease and owners' equity increases.Assets increase and assets decreaseAssets increase and owners' equity increasesAssets decrease and liabilities decrease

22. The accrual basic of accounting recognizes revenues and expenses when:

Revenues are earned and expenses are paidRevenues are received and expenses are incurredRevenues are received and expenses are paidRevenues are earned and expenses are incurred

23. During the month of May, Marty's Mini-Mart purchased supplies totaling $3,400. A count in the storeroom on May 31 indicates that that supplies on hand amount to $750. The supplies on hand at the beginning of the month total $825. What amount will be recorded as an expense on May 31 in Marty's income statement?

$ 75$ 3,475$ 4,150$ 4,225

24. Which of the following is an example of a deferral?

Accruing year-end wagesRecognizing revenues earned but not yet recordedRecording prepaid rentRecognizing expenses incurred but not yet recorded

25. Prepaid expenses to be expired within twelve months are shown in which part of the Financial Statement.

Income StatementCurrent liabilitiesFixed assetsCurrent assets

26. If total liabilities decreased by $15,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period?

$20,000 increase$10,000 decrease$10,000 increase$15,000 decrease

27. Dooley's Dining Services operates seven days a week with a daily payroll of $ 1,100. Workers are paid weekly on Sundays. The end of the month, July 31, falls on a Saturday. What expense should be recorded in the income statement for the month ended July 31?

$ 7,700$ 6,600$ 1,100$ 5,500

28. "Failure to accrue interest expense at the end of an accounting period will mean that reported net income will be:"

Too highToo low

29. "The entry to Accumulated Depreciation to remove an amount associated with a machine that was scrapped."

DebitCredit

30. Which of the following best describes the effect of borrowing money?

Assets decrease and liabilities increaseOwners' equity decreases and liabilities increaseAssets increase and liabilities increaseLiabilities decrease and owners' equity increases

31. Which of the following would not be found on the income statement?

Cost of goods soldNet incomeRetained earningsWage expense

32. Accumulated depreciation will appear on the:

Balance SheetIncome Statement

33. Which of the following accounts is a liability account?

Wages ExpenseSuppliesUnearned Revenues

34. What are the key components of a good account reconciliation?

To record the beginning balance, current month activity, and ending balance of an accountTo assess the validity, correctness or appropriateness of an account balance at a specific point in timeTo record subsystem transactions

35. Which of the following is true about the date format of financial statements?

the income statement represents a snapshot of a business's positionboth the balance sheet and the income statement represent a period of timethe statement of cash flows the balance sheet record a specific datethe balance sheet is a snapshot of a business's position, so a specific day is used

36. The two major components of Owners' Equity are:

Capital Stock and DividendsLong-term Liabilities and Net IncomeDividends and Retained EarningsCapital Stock and Retained Earnings

Section 2:

Choose the correct answer for each question - Vocabulary & Definitions - Questions 37 to 45

37. What are liabilities?

costs of selling products or servicesamounts owedowners' claims to resourcesdistributions to stockholders

38. What is owners' equity?

sales of products or servicesowners' claims to resourcesresources ownedcosts of selling products or services

39. What's revenue?

costs of selling products or servicesexpense to run businesssales of products or servicesdistributions to stockholders

40. What are expenses?

Cost of selling products or servicesAmounts owedDistributions to stockholdersOwners' claims to resources

41. Working capital is a measure of:

ConsistencyLiquidityProfitabilitySolvency

42. Incurring an expense before cash is paid is an example of what kind of adjustment?

Accrued LiabilityDeferred ExpenseAccrued AssetDeferred Revenue

43. What is the name for a formal report that shows what an individual owns, what an individual owes, and the difference between the two?

accountingnet worth statementpersonal net worthaccounting system

44. The name given to an account is the account title.

TrueFalse

45. Resources owned by a business are referred to as

owners' equity.liabilities.assets.revenues.
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