Multiple Choice Questions on Accounting

Topics: Generally Accepted Accounting Principles, Balance sheet, Accounts receivable Pages: 5 (758 words) Published: November 5, 2013
19.The balance sheet reports:
A. Net income at a point in time.
B. Cash flows for a period of time.
C. Assets and equities at a point in time.
D. Assets and liabilities for a period of time.

20.Current assets include cash and all other assets expected to become cash or be consumed: A.Within one year.
B.Within one operating cycle.
C.Within one year or one operating cycle, whichever is shorter. D. Within one year or one operating cycle, whichever is longer.

21.Red Onion Restaurant classifies a six-month prepaid insurance policy as a current asset. Its rationale is based on: A.Materiality.
B.Operating cycle.
C. Definition.
D. Liquidity.

22.An asset that is not expected to be converted to cash or consumed within one year or the operating cycle is: A.Goodwill.
B.Accounts receivable.

23.Which of the following accounts are closed at the end of the accounting period? A.Allowance for uncollectible accounts.
B.Unearned revenue.
C.Retained earnings.
D. Income tax expense.

24.Which is a shareholders' equity account in the balance sheet? A. Accumulated depreciation.
B. Paid-in capital.
C.Dividends payable.
D.Marketable securities.

25.Rent collected in advance is:
A. An asset account in the balance sheet. B. A liability account in the balance sheet. C. A shareholders' equity account in the balance sheet. D. A temporary account, not in the balance sheet at all.

26.Notes payable:
A.Is a current liability account.
B.Usually has a debit balance.
C.Is a noncurrent liability account.
D. Cannot determine its classification without additional information.

27.Which of the following is never a current liability account? A.Accrued payroll
B.Dividends payable
C. Prepaid rent
D. Subscriptions collected in advance

28.New Oaks Winery requires two months to make wine, two years to age it, one month to bottle it, two months to sell it, and one month to collect the receivable. Its operating cycle is: A. Twelve months.

B. Thirty months.
C.Six months.
D.Three months.

29.Noncurrent assets include:
A.Inventory held for sale.
B.Prepaid rent.
C.Accounts receivable.
D. Land held for a possible future plant site.

Listed below are account balances (in $ millions) taken from the records of Symphony Stores. All of these are permanent accounts, except the last two that have yet to be closed. The installment receivables are current. Symphony uses a perpetual inventory system.

30.What would Symphony report as total current assets?
Total current assets: ($680 - 20) + 34 + 50 + 30 + 16 + 5 + 20 + 8 = $823

31.What would Symphony report as total assets?
D. $2,303.
Total assets: ($680 - 20) + ($920 - 80) + 34 + 50 + 30 + 16 + 150 + 450 + 5 + 20 + 8 + 40 = $2,303

32.What would Symphony report as total shareholders' equity? A. $323.
B. $808.
Total shareholders' equity: $485 + 15 + 48 - 120 + 380 = $808

33.What is the amount of working capital for Symphony?
C. $128.

34.Assets do not include:
A.Property, plant, and equipment.
C. Paid-in capital.
D. Unexpired insurance.

35.Cash equivalents would not include:
A.Cash not available for current operations.
B.Money market funds.
C.U.S. treasury bills.
D.Bank drafts.

36.Cash equivalents would include:
A.Highly liquid equity securities.
B.Accounts receivable from a financial institution.
C.A sinking fund for bonds that mature in three years.
D. Debt instruments with maturity dates of less than three months from the date of the purchase.

37.Accrued expenses:
A.Are generally paid in services rather than cash.
B.Result from payment before services are received.
C.Result from services received before payment.
D.Are deferred charges to expense.

38.Janson Corporation Co.'s trial balance included the following account balances at December 31, 2013: Investments...
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