Upwork GENERAL FINANCIAL ACCOUNTING TEST 2016

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 1. Which of the following is NOT an example of a period expense?
Answers:
  1. Administrative costs
  2. Inventory costs
  3. Accounting costs
  4. Selling costs
2. Which of the journal entries below is incorrectly recorded?
Answers:
  1. Dr: Cash, Cr: Investment in ABC Co. – Sale of an investment for cash
  2. Dr: Prepaid Insurance, Dr: Cash – Paid in advance for a 1-year insurance policy
  3. Dr: Accounts Receivable, Cr: Merchandise Inventory – Returned defective merchandise for credit
  4. Dr: Machinery, Cr: Notes Payable – Gave a 1-year note to acquire machinery
3. Which of the following accounts would NOT appear on a corporation’s Balance Sheet?
Answers:
  1. Owner Investment
  2. Retained Earnings
  3. Investment in ABC Stock
  4. Premium on Common Stock
4. Which of the following transactions would NOT result in revenue being reported?
Answers:
  1. Sale of merchandise for cash
  2. Sale of merchandise on account
  3. Collection of an account receivable
  4. All of the above
5. ________________ is the financial obligation of a company in regards to a loan that accrues with the passage of time.
Answers:
  1. Interest Payable
  2. Income Tax Payable
  3. Income Tax Expense
  4. Accounts Payable
6. XYZ Company failed to record the purchase of inventory on account at the end of 2008. In which of the following ways is the Balance Sheet misstated?
Answers:
  1. Assets and liabilities are both understated.
  2. Assets are understated and liabilities are overstated.
  3. Assets and shareholders’ equity are both understated.
  4. Assets, liabilities, and shareholders’ equity are all correctly stated.
7. Which of the following is recorded only when another business enterprise is acquired?
Answers:
  1. Cash
  2. Equity
  3. Accounts Payable
  4. Goodwill
8. ______________ refers to shares originally issued and outstanding that have been reacquired from the owners.
Answers:
  1. Treasury Stock
  2. Common Stock
  3. Preferred Stock
  4. Retained Earnings
9. Amounts paid for various fees incurred in organizing a corporation are called ____________.
Answers:
  1. Organization Costs
  2. Current Assets
  3. Deferred Taxes
  4. Current Liabilities
10. A manufacturing firm’s cost of producing its product is called ______________.
Answers:
  1. direct labor
  2. product costs
  3. indirect labor
  4. overhead
11. XYZ Company publishes a monthly sports magazine. The company has fiscal year of Jan-Dec. On July 1 of Year 1, the company sold 1000 two-year subscriptions for $200 each. On December 31 of Year 1, the amount reported as a liability on the Balance Sheet and the amount reported as revenue on the Income Statement are, respectively:
Answers:
  1. $0 and $200,000
  2. $50,000 and $150,000
  3. $100,000 and $100,000
  4. $150,000 and $50,000<>
12. Which of the following accounts accumulate amounts for only a single accounting period?
Answers:
  1. Permanent Accounts
  2. Temporary Accounts
  3. Assets
  4. Liabilities
13. Which of the following would cause the accounting equation to be out of balance?
Answers:
  1. Recording a purchase on account at the wrong amount
  2. Recording a 2007 purchase in 2008
  3. Posting the credit for a cash purchase at the wrong amount
  4. All of the above
14. From the following list of accounts and account balances, determine the amount that would be properly classified as Property, Plant, & Equipment.
$100,000 – Land Used in Business
$60,000 – Machinery Leased from Others
($80,000) – Accumulated Depreciation
$140,000 – Inventories
$40,000 – Land Held for Future Plant Site
$200,000 – Building
$50,000 – Investment in Stock of Construction Company
Answers:
  1. $220,000
  2. $360,000
  3. $260,000
  4. $280,000
15. At the beginning of the year, XYZ Company reported Accounts Receivable of $39,000. During the year, the company had credit sales totaling $288,000. At year end, the Accounts Receivable balance was $8,000 higher than the beginning balance. How much cash was collected on the accounts during the year?
Answers:
  1. $296,000
  2. $288,000
  3. $280,000
  4. $272,000
16. XYZ Company has just completed its first year of operations in Year 1. The company distributed dividends of $50,000. If the ending balance of Retained Earnings on December 31 of Year 1 is $70,000, and the company had revenues of $400,000 from Year 1 sales, then what is the total of the company’s Year 1 expenses?
Answers:
  1. $350,000
  2. $330,000
  3. $280,000
  4. None of the above
17. A ____________ is the right to use property owned by someone else.
Answers:
  1. purchase
  2. lease
  3. prepaid asset
  4. deferred revenue
18. A trial balance prepared at the end of the accounting period after adjusting entries are made is called a/an _________________.
Answers:
  1. Pre-Adjustment Trial Balance
  2. Prior Year Trial Balance
  3. Adjusted Trial Balance
  4. Balance Sheet
19. XYZ Company has assets and liabilities of $15,000 and $12,000, respectively. If the company issues an additional $1,500 of stock for cash, what will be the balance in shareholders’ equity following the transaction?
Answers:
  1. $15,000
  2. $25,500
  3. $4,500
  4. $16,500
20. XYZ Company purchased a 1-year insurance policy for $3,000 on April 1 of Year 1. The amount of prepaid insurance reported on the Balance Sheet and the amount of insurance expense reported on the Income Statement on December 31 of Year 1 are, respectively:
Answers:
  1. $750 and $2,250
  2. $2,250 and $750
  3. $1,000 and $2,000
  4. $2,000 and $1,000
21. Unused materials for manufacturing products are called ______________.
Answers:
  1. COGS
  2. Accounts Receivable
  3. depreciation
  4. inventory
22. XYZ Company is interested in disposing of one of its subsidiaries and is trying to decide on the maximum price it might be able to charge. Which valuation method below would the company be most likely to use?
Answers:
  1. Acquisition Cost
  2. Net Realizable Value
  3. Present Value
  4. Replacement Cost
23. Which of the following assets is a monetary asset?
Answers:
  1. Patent
  2. Land
  3. Inventory
  4. Accounts Receivable
24. A debit balance is normal for all of the following accounts except _______________.
Answers:
  1. Preferred Stock
  2. Treasury Shares
  3. Investment in Stock
  4. All of the above
25. At the beginning of the year, XYZ Company owed $14,500 to its creditors for inventory purchases. At year end, the company owed $9,150. During the year, the company made payments totaling $48,500 to its creditors for inventory purchases. What was the cost of the additional inventory that was purchased during the year?
Answers:
  1. $7,650
  2. $43,150
  3. $53,650
  4. $39,350
26. Payments made in advance for goods or services a firm will receive at a later date are called ______________.
Answers:
  1. Deferred Income
  2. Deferred Tax liability
  3. Advances to Suppliers
  4. Unearned Revenue
27. Amounts due from customers, for which the claim is in the form of a written promise to pay, are called ________________.
Answers:
  1. Trade Payables
  2. Accounts Receivable
  3. Equity
  4. Notes Receivable
28. A residual claim of owners having certain preferences relative to other owners’ claims is called __________________.
Answers:
  1. Treasury Stock
  2. Retained Earnings
  3. Preferred Stock
  4. Common Stock
29. Which of the following operations is NOT considered part of the accounting process leading to financial statement preparation?
Answers:
  1. Journalizing transactions
  2. Posting to the general ledger
  3. Adjusting accounts
  4. Auditing statements
30. Amounts borrowed by a business for a relatively long period of time under a formal written contract or indenture are called _________________.
Answers:
  1. Unsecured Loans
  2. Current Liabilities
  3. Bonds Payable
  4. Cash
31. Amounts owed for goods or services acquired under an informal credit agreement are called ___________________.
Answers:
  1. Accounts Payable
  2. Notes Payable
  3. Money Market Funds
  4. Common Stock
32. The process of transferring entries in the general journal to the accounts in the general ledger is called ________________.
Answers:
  1. posting
  2. journalizing
  3. financial reporting
  4. taxation
33. The balance in all asset accounts combined is $100,000 on December 1. During December, the following transactions took place:
– Purchase of $10,000 of inventory for cash
– Purchase of $15,000 of machinery on account
– Retirement of $20,000 in bonds with cash
Given this information, what is the combined balance in the asset accounts on December 31?
Answers:
  1. $80,000
  2. $115,000
  3. $105,000
  4. $95,000
34. XYZ Company completed its second year of operations in Year 2. On January 1 of Year 2, the balance in Retained Earnings was $84,000. During the year, the company declared and paid a dividend of $65,000 to shareholders. The company reported net earnings of $105,000 in its Year 2 Income Statement. What was the balance in Retained Earnings on December 31 of Year 2?
Answers:
  1. $189,000
  2. $170,000
  3. $149,000
  4. $124,000
35. Temporary revenue and expense accounts may be closed _________________.
Answers:
  1. individually by separate entries to Retained Earnings
  2. in a single entry to Retained Earnings
  3. to a temporary “Income Summary” account
  4. Any of the above methods is acceptable.
36. Amounts received for the par value of a firm’s voting stock are called ___________.
Answers:
  1. Common Stock
  2. Accounts Receivable
  3. Preferred Stock
  4. Retained Earnings
37. ________________ is/are a measure of the inflow of net assets from selling goods and providing services.
Answers:
  1. Revenues
  2. Liabilities
  3. Assets
  4. Equity
38. The Accumulated Depreciation account reflects _____________________.
Answers:
  1. depreciation for the current accounting period only
  2. cumulative depreciation on the asset since acquisition
  3. the amount of depreciation that can be taken in future periods
  4. None of the above
39. Which of the following accounts represents distributions of earnings to shareholders of the firm?
Answers:
  1. Dividends
  2. Retained Earnings
  3. Rent Expense
  4. Payroll Expense
40. XYZ Company reported a balance in Accounts Receivable of $40,500 on January 1 of year 2. During Year 2, the company collected $127,500 from its customers who had purchased on account. On December 31 of Year 2, the company reported a balance in Accounts Receivable of $21,250. How much were XYZ Company’s credit sales for Year 2?
Answers:
  1. $108,250
  2. $129,500
  3. $146,750
  4. $148,750
41. Which of the following accounts is NOT an expense?
Answers:
  1. Depreciation
  2. Sales Salaries
  3. Dividends Declared
  4. Delivery Expense
42. At the beginning of the year, XYZ Company reported a $7,200 balance in its Prepaid Insurance account. At year end, the company reported Insurance Expense of $9,000 in its Income Statement and a balance of $3,800 in the Prepaid Insurance account. What was the cost of the additional insurance that was purchased during the year?
Answers:
  1. $9,000
  2. $12,400
  3. $5,600
  4. $12,800
43. During the year, XYZ Company’s inventory account balance increased from $26,000 to $31,500. During the year, the company made payments totaling $152,500 to creditors for inventory purchases and reported Cost of Goods Sold of $159,500 on its Income Statement. How much inventory was purchased during the year?
Answers:
  1. $165,000
  2. $158,000
  3. $152,500
  4. $159,500
44. Which of the following accounts is not closed during the closing process?
Answers:
  1. Wage Expense
  2. Interest Expense
  3. Utility Expense
  4. Accumulated Depreciation
45. XYZ Company purchased some equipment for $120,000 on July 1 of Year 1. The equipment has an estimated useful life of 10 years and an estimated salvage value of $7,500. XYZ Company computes depreciation on a straight-line basis. How much depreciation should be recorded for Year 1?
Answers:
  1. $12,000
  2. $11,250
  3. $6,000
  4. $5,625
46. A right granted to an individual or company that excludes others from manufacturing, using, or selling a certain process or device is called a _____________.
Answers:
  1. liability
  2. trademark
  3. tax liability
  4. patent
47. Which of the following accounts is NOT a temporary account that should be closed during the closing process?
Answers:
  1. Prepaid Insurance
  2. Cost of Goods Sold
  3. Sales Revenue
  4. Depreciation
48. A trial balance that shows revenue and expense accounts with zero balances and balance sheet accounts at the end of the period is called a __________________.
Answers:
  1. Balance Sheet
  2. Pre-Closing Trial Balance
  3. Post-Closing Trial Balance
  4. Income Statement

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