QUIZ

DOUBLE ENTRY
1. Office supplies worth $750 being purchased on account should be journalised
as:
a.Dr Supplies $750 / Cr Cash $750
b.Dr PPEs $750 / Cr Cash $750
c.Dr Supplies $750 / Cr Accounts Payable $750
d.Dr Inventory $750 / Cr Accounts Payable $750
2. Which of the following accounts ((i) Cash, (ii) Accounts Payables, (iii)
Loans, (iv) Inventory) should be credited to record an increase in them?
a.(i) only
b.(ii) only
c.(ii) and (iii)
d.(i) and (iv)
3. What accounts are affected when utility expenses of the current month were
paid?
a.Cash and Expenses
b.Accounts Payable and Revenues
c.Cash and Accounts Payable
d.Accounts Receivable and Expenses
4. Which of the following accounts ((i) Accounts Receivables, (ii) Accounts
Payable, (iii) Supplies, (iv) PPEs) should be credited to record an decrease in
them?
a.(i), (ii) and (iii)
b.(i) and (iv)
c.(ii) only
d.(i) only
5. Which of the following business events affects the expanded accounting
equation and should be recorded?
a.A part-time worker is hired. The employee will work 15–20 hours per week
starting next Monday at a rate of $18 per hour.
b.Equipment worth $4,800 is ordered.
c.A manager patted an employee on the shoulder saying “good job”.
d.Office supplies worth $750 are purchased on account.
VALUE ADDED TAX
6. Which statement is correct?
a.We use VAT control account to record VAT When sale is made.
b.We use VAT control account to record VAT When purchase is made.
c.We use VAT output account to record VAT When purchase is made.
d.We use VAT control account to record VAT When sale is made.
7. Which statement is correct?
a.VAT is an indirect tax that is applied to the cost of all goods and services.
b.VAT is an indirect tax that is applied to the cost of certain goods and services.
c.VAT is a direct tax that is applied to the cost of all goods and services.
d.VAT is a direct tax that is applied to the cost of certain goods and services.
8. When does the company need to calculate the amount of VAT payable?
a.At the end of the month or quarter.
b.At the end of the financial year.
c.At the end of the week.
d.At the end of the day.
9. Company A sell 1,000 units of product X at net sell of price $2 per unit (VAT
of 10% is applied). The amount of VAT is:
a.$2,000
b.$200
c.$ 1,000
d.$ 20
10. Company A has the following data in Jan: The amount of VAT control on
debit side on 1st Jan: $1,500, the amount of VAT output: $6,000, the amount of
VAT input: $4,500. The amount of VAT will be:
a.$500
b.$0
c.$6,000
d.$6,500
ALLOWANCE METHOD
11. Hampson Furniture has credit sales of $1,200,000 in 20X0 , of which
$200,000 remains uncollected on 31st December. The credit manager estimates
that $12,000 of these sales will be uncollectible. What is entry to record the
estimated uncollectibles:
a.Debit Account receivable 12,000; Credit Bad Debts expense 12,000
b.Debit Doubtful Debts expense 12,000, Credit Allowance for Doubtful Debts
12,000
c.Debit Bad Debts expense 12,000; Credit Account receivable 12,000
d.Debit Allowance for Doubtful Debts 12,000; Credit Doubtful Debts expense
12,000
12. A company estimates that 20% of its $500,000 of accounts receivable will
be uncollectible. Its Allowance for Doubtful Accounts presently has a credit
balance of $18,000. Accountant will make debit to:
a.Allowance for Doubtful Debts 10,000
b.Doubtful Debts expense 8,000
c.Allowance for Doubtful Debts 8,000
d.Doubtful Debts expense 10,000
13. If company write off confrmed irrecovable debts (bad debts) are greater than
previous allowance for doubtful debts, the accounting entry is:
a.Dr Accounts Receivable; Cr Bad debt expense, Cr Allowance for Doubtful
Debts
b.Dr Bad debt expense, Dr Allowance for Doubtful Debts; Cr Accounts
Receivable
c.Dr Allowance for Doubtful Debts; Cr Accounts Receivable
d.Dr Bad debt expense; Cr Accounts Receivable
14. On 18th October, American Co. writes off M. Tom $200 balance as
uncollectible. There are not allowance before company makes writing off. What
is the American’s entry .
a.Debit Account receivable 200; Credit Bad Debts expense 200
b.Debit Bad Debts Expense 200; Credit Account Receivable 200
c.Debit Allowance for Doubtful Debts 200; Credit Account receivable 200
d.Debit Allowance for Doubtful Debts 200; Credit Bad Debts expense 200
15. A company estimates that $20,000 of its $500,000 of accounts receivable
will be uncollectible. Its Allowance for Doubtful Debts Accounts presently has a
credit balance of $18,000. The accounting entry will include a __________ to
Bad Debts Expense.
a.Debit Of $20,000
b.Debit Of $2,000
c.Credit Of $38,000
d.Credit Of $2,000

QUIZ
1. How will a manager's decision to record a payment as an asset rather than as
an expense affect net income for the business in the current period?
a. Net income will not be affected by this decision.
b.The effect cannot be determined.
c. Net income will be lower.
d. Net income will be higher.
2. Lantern Company had cost of goods sold of $148,000. The beginning and
ending inventories were $16,000 and $28,000, respectively. Purchases for the
period must have been
a.$160,000
b.$176,000.
с.$136,000.
d. $192,000.
3. The Unearned Revenue account of Genius Incorporated began 20X6 with a
normal balance of $3,000 and ended
20X6 with a normal balance of $18,000. During 20X6, the Unearned Revenue
account was credited for $27,000 that Genius will earn later. Based on these
facts, how much revenue did Genius earn in 20X6?
a. $27,000
b.$12,000
C.$15,000
d.$42,000
4. The income statement reports
a. Revenues, expenses, and liabilities.
b. Only revenue for which cash was received at the point of sale.
c. Financial position of a business at a specific point in time.
d. Net earnings or losses for a period of time.
5. Sales discounts should appear in the financial statements
a. as an addition to sales
b. as a deduction from sales
с.as an addition to inventory
d. as an selling expense
6. Accounting exists because:
a. Businesses need to contribute to national economics.
b. Businesses need to manage resources efficiently and effectively, and measure
results of their operations.
c. Businesses need to minimize expenses and manage cashflows efficiently.
d. Businesses need to provide information to outsiders.
7. Which of the following costs is reported on a company's Income Statement?
a. Land
b. Accounts payable
c. Depreciation expense
d. Accumulated depreciation
8. If the adjusting entry to accrued interest received is omitted, then
a. assets, net income, and shareholders equity are understated.
b. assets, net income, and shareholders equity are overstated.
C. assets are overstated, net income is understated, and shareholders equity is
understated.
d. liabilities are understated, net income is overstated, and shareholders equity is
overstated.
9. Which of the following regarding GAAP is true?
a. GAAP is an abbreviation for goodie, another accounting problem.
b. GAAP is the abbreviation for generally accepted accounting principles.
c. Changes to GAAP must be approved by the Senate Finance Committee.
d. Changes in GAAP do not affect the amount of income reported by a
company.
10. The T-account is used to summarize which of the following?
a. Increases and decreases to a single account in the accounting system.
b. Changes in specific account balances over a time period.
c. Both debit and credit sides of recording a transaction.
d. Debits and credits to a single account in the accounting system.
11. Net sales total $803.000. Beginning and ending accounts receivable are
$80,000 and $74,000, respectively.
Amount of cash were received from customers during the period is:
a. $877,000.
b.$793,000.
C.$809,000.
d. $803,000.
12. When does the cost of inventory become an expense?
a. When cash is collected from the customer.
b. When inventory is delivered to a customer.
c. When inventory is purchased from the supplier.
d. When payment is made to the supplier.
13. Jimmy's DVD, Inc., uses the double-declining-balance method for
depreciation on its computers. Which item is not needed to calculate
depreciation for the first year?
a. Expected useful life in years
b. Residual value
С.All the above are needed.
d. Cost of the computers
15. During a period of rising prices, the inventory method that will yield the
highest net income and asset value is
a. FIFO
b. average cost
c. specific identification
d. LIFO
16. On July 1, 20X6, Amir Communications purchased a new piece of
equipment that cost $65.000. The estimated useful life is 10 years and estimated
residual value is $5,000. What is the depreciation expense for 20X6 if Amir uses
the straight-line method?
a.$6,500
b. $3,000
c. $6,000
d. $3,250
17. On July 1, 20X6, Amir Communications purchased a new piece of
equipment that cost $65.000. The estimated useful life is 10 years and estimated
residual value is $5,000. What is the depreciation expense for 20X6 if Amir uses
the straight-line method?
a.$6,500
b. $3,000
c. $6,000
d. $3,250
18. Unadjusted net income equals $7,800. Calculate net income after the
following adjustments: Salaries payable to employees, $680; Interest due on
note payable at the bank, $120; Unearned revenue that has been earned,
$940; Supplies used, $360.
а.$7,800
b.$7,820
c.$7,580
d. $8,020
19. June/20X0, a company paid $450 for a security service in advance for the
third quarter of 20X0. In the end of July/20X0, the adjusting entry is as
followed:
a. Dr Administrative expense 150 / Cr Cash 150
b. Dr Administrative expense 450 / Cr Prepaymen 450
c. Dr Administrative expense 150 / Cr Prepayment 150
d. Dr Prepayment 450 / Cr Cash 450
20. Given the following information: Receivables at 1st Jan 20X0: $20,000,
Receivables at 31st Dec 20X0: $25,000, Total net revenues during 20X0:
$100,000. What is the amount of cash receipt during 20X0?
a.$95,000
b. $90,000
c. $85,000
d. Cannot be determined.
21. Webby Company reported the following amounts on its income statement:
Service Revenues, $31,600;
Interest Expense, $300; and Net Income, $1,600. If the only other account
reported on the income statement was for "selling expenses," what is its
amount?
a.$30,900
b. $30,000
c$29,700
d. $2,200
22. A company bought a vehicle for $400.000. It is expected to have 8 years of
useful life. At the end of the 4th year, the accumulated depreciation amount is:
a. $50.000
b. None
c. $200.000
d. $400.000
23. The matching principle controls
a. How costs are allocated between Cost of Goods Sold (sometimes called Cost
of Sales) and general and administrative expenses.
b. When costs are recognized as expenses on the income statement.
c. Where on the income statement expenses should be presented.
d. The ordering of current assets and current liabilities on the balance sheet.
24. Accounts Receivable has a debit balance of $2,400, and the Provision for
Doubtful Debt has a credit balance of $400. A $90 account receivable is written
off. What is the amount of net receivables (net realizable value) after the write-
off?
a. $2,000.
b. $2,090.
c. $2,310.
d. $1,900.
25. The Unearned Revenue account of Genius Incorporated began 20X6 with a
normal balance of $3,000 and ended 20X6 with a normal balance of $18,000.
During 20X6, the Unearned Revenue account was credited for $27,000 that
Genius will earn later. Based on these facts, how much revenue did Genius earn
in 20X6?
a.$27,000
b.$12,000
c.$15,000
d. $42,000
26. The Unearned Revenue account of Genius Incorporated began 20X6 with a
normal balance of $3,000 and ended 20X6 with a normal balance of $18,000.
During 20X6, the Unearned Revenue account was credited for $27,000 that
Genius will earn later. Based on these facts, how much revenue did Genius earn
in 20X6?
a.$27,000
b.$12,000
c.$15,000
d. $42,000
27. Which account is least likely to be debited when revenue is recorded?
a. Cash
b. Accounts Payable
c. Accounts Receivable
d. Unearned Revenue
28. Assume the balance in Prepaid Insurance is $2,500 but it should be $1,500.
The adjusting journal entry should include which of the following?
a. Credit to Insurance Expense for $1,000.
b. Debit to Insurance Expense for $1,500.
c. Debit to Prepaid Insurance for $1,000.
d. Debit to Insurance Expense for $1,000.
29. Aurora Company received a four-month, 6% per annum, $2,800 note
receivable on December 1. The adjusting entry on December 31 will
a. credit Interest Revenue $168.
b. credit Interest Revenue $14.
c. debit Interest Receivable $14.
d. debit Interest Revenue $168.
30. The size of a business is represented with its:
a. Total assets.
b. Total owners' equities.
c. Total liabilities.
d. Total revenues.
31. Gordon Company uses the aging method in setting its allowance for
doubtful receivables. Allowance for doubtful accounts prior to adjustment has a
credit balance of $2,900. Management estimates that due to the economic crisis,
a higher level of allowance is necessary and decides that a $5,600 allowance is
an appropriate amount at the year-end. The amount of expense to report on the
Income Statement will be
a.$8,500.
b. $2,900.
c. $2,700.
d. $5,600.
32. A company purchased an oil well for $270,000. It estimates that the well
contains 100,000 barrels, has an eight-year life, and has no salvage value. If the
company extracts and sells 20,000 barrels of oil in the first year, how much
depletion expense should be recorded?
a. $67,500
b. $27,000
c.$54,000
d. $33,750