Question:* The ability of a firm to pay its current maturing obligations on time is known as ...?
Answer: • Solvency
Question:* What happen to an asset when it is depreciated?
Answer: • it decreases in value
Question:* The books of original entry are known as the ......?
Answer: • Journals
Question:* True or False? An accrual occurs before a payment or receipt. A deferral occurs after a payment or receipt.
Answer: • True
Question:* Which of the following transactions is primarily identified in the bank reconciliation process?
Answer: • bank charges
Question:* For every financial transaction entered in the bookkeeping system, the total of the debits must equal the total of the credits?
Answer: • True
Question:* When an owner contributes additional money to a business, the equity ....?
Answer: • Increases
Question:* That part of the equity that the owner invests in the business is known as ...?
Answer: • Capital
Question:* True or False: Recording a business transaction always requires at least a debit to one account and a credit to a different account.
Answer: • True
Question:* Net profit is always greater than Gross Profit.
Answer: • False
Question:* If Assets totaled $55,000 and Liabilities totaled $25,000, Equity would be ....?
Answer: • $30,000
Question:* Loan funds owed to a bank would belong to which account group?
Answer: • Liabilities
Question:* Under what section is the Accounts Receivable account reported in the Balance Sheet?
Answer: • Current assets
Question:* "Amounts owed by the business and expected to be paid out within one year" is the description of which account group?
Answer: • Current liabilities
Question:* A _______ entry is entered on the left side of an account.
Answer: • debit
Question:* Assets that will be converted to cash within one year will be reported under what category in the Balance Sheet?
Answer: • Current Assets
Question:* Which of the following does NOT form part of the bank reconciliation process?
Answer: • Aged debtors
Question:* Income that has been earned within a financial period but has not yet been received in cash, is known as ...?
Answer: • accrued revenue
Question:* Which term in accounting means that every transaction affects two or more accounts?
Answer: • double entry
Question:* An adjustment being made for an error relating to transactions posted to the wrong expense account would be recorded in which journal?
Answer: • general
Question:* Which of the following is a capital expenditure?
Answer: • Purchase of equipment
Question:* Which of the following general ledger accounts would NOT generally have a subsidiary ledger?
Answer: • Goodwill
Question:* Which principle/guideline requires the company's financial statements to have footnotes containing information that is important to users of the financial statements?
Answer: • Full disclosure
Question:* The golden rule of accounting says that, for every debit entry, there must be...
Answer: • a corresponding credit entry
Question:* Interest paid by a business on a bank loan is ...?
Answer: • an expense
Question:* Which of the following items would be accounted for as an expense?
Answer: • Payment of the current period's rent
Question:* What three sections make up the Balance Sheet?
Answer: • assets, liabilities and equity
Question:* There are two accounting methods for recording financial transactions, the cash method and the:
Answer: • accrual method
Question:* Invoices from vendors (suppliers) which are due in 30 days should be credited to Accounts _______.
Answer: • Payable
Question:* What is a listing of account numbers with account titles but without amounts called?
Answer: • Chart of Accounts
Question:* Under which classification would 'Merchandise Inventory' be recorded?
Answer: • Current asset
Question:* Which amounts appear on left side of T-account?
Answer: • debit
Question:* An invoice being paid that relates to insurance cover for the next accounting period should be reported in the financial statements for this accounting period as .....?
Answer: • a prepaid expense
Question:* On December 15, XYZ Co. hired Jane Houston as a contractor to begin working on January 3 at a monthly salary of $5,000. ABC's balance sheet of December 31 will show a liability of...
Answer: • No liability
Question:* Which account group does 'Accounts Receivable' belong to?
Answer: • Assets
Question:* An accounts payable ledger records which transactions?
Answer: • Purchases made on credit
Question:* Inventories encompass all of the following, except:
Answer: • Land and other property not held for sale
Question:* Which of the following is NOT a correct description of the 'Debit and Credit' concept in bookkeeping?
Answer: • 'Debit' is always good for the business and 'Credit' is always bad for the business.
Question:* The calculation for gross profit is, Sales less ...?
Answer: • Cost of goods sold
Question:* Which of the following would NOT be considered a “The Bottom Line” result in financial reporting?
Answer: • Sales
Question:* What is the typical balance of a liability account reported in the Balance Sheet?
Answer: • credit balance
Question:* Which of the following would be reported in the financial statements as a current asset?
Answer: • Accounts receivable
Question:* Which of the following account groups does NOT appear on the Balance sheet of the business?
Answer: • Expenses
Question:* If a company has $50,000 in Total Assets (including $10,000 in Current Assets + $40,000 in Fixed Assets) and $20,000 in Equity, what is their Total Liability?
Answer: • $30,000
Question:* Which of the following transactions would have NO impact on stockholders' equity?
Answer: • Purchase of land from the proceeds of a bank loan
Question:* On which part of a Balance Sheet do Prepaid Expenses appear?
Answer: • Assets
Question:* Which of the following is more an accountant's role than a bookkeeper's role?
Answer: • reporting to governments and meeting statutory requirements
Question:* Which account group does 'Drawings' belong to?
Answer: • Owners equity
Question:* In which journal do bookkeepers generally add memos or notes for individual transactions?
Answer: • General
Question:* 'Prepaid expenses' are classified and reported in the financial statements under which account group?
Answer: • Assets
Question:* Which of the following is NOT a method of inventory valuation?
Answer: • ISO
Question:* Which type of balances do Expense and Asset accounts typically have?
Answer: • debit
Question:* Taking the information from the journals and recording it in the ledgers, is known in bookkeeping as ....?
Answer: • posting
Question:* Which of the following documents would you NOT rely on to originate accounting entries?
Answer: • Delivery dockets
Question:* An accounting principle that record asset such as land at original cost and ignoring increases in value is the:
Answer: • Historical Cost Rule
Question:* Cost of Good Sold is calculated by adding purchases to the beginning inventory and then subtracting ...?
Answer: • Ending Inventory
Question:* Which specific expense group is deducted from revenue to calculate gross profit?
Answer: • Cost of sales
Question:* When a check received for a sale is returned by the bank, the two accounts to be adjusted are cash and ...?
Answer: • Accounts receivable
Question:* Net Sales minus the Cost of Goods Sold equals ...?
Answer: • Gross profit
Question:* The current period's profit will be reported in which section of the Balance Sheet?
Answer: • Equity
Question:* When a business uses cash to purchase inventory, which of the following bookkeeping entries is the correct one?
Answer: • Debit - Inventory account, Credit - Cash account
Question:* If a supplier's invoice is recorded on the last day of the year for future services, one side of the entry should be accounts payable, and the other entry should be to which account?
Answer: • Prepaid Expense
Question:* The accounting practice where general treatment of items does not differ from period to period, is known as ...?
Answer: • Consistency
Question:* A company disposes of equipment that it no longer uses in its business. The amount received by the company is more than the amount the asset is carried at in the accounting records. The company will report a...
Answer: • Gain
Question:* What accounting concept is being applied when personal transaction must be separated from business transaction?
Answer: • Business entity concept
Question:* Working capital is calculated by the formula ...?
Answer: • Current asset - Current liabilities
Question:* In the double-entry bookkeeping system, financial transactions are first recorded in the:
Answer: • journals
Question:* What is the next step in the bookkeeping process after you have recorded the financial transaction details in the appropriate journal?
Answer: • Post the details to the general ledger
Question:* Which of the following transactions increases the balance of the Creditors control account in the general ledger?
Answer: • Purchases on credit
Question:* Which is not a current asset?
Answer: • Furniture
Question:* Transactions that include revenue that has been earned but not yet collected OR expenses that have been incurred but not yet evidenced or paid, are known as...
Answer: • Accruals
Question:* "A statement of assets and liabilities that is reconciled with the equity of the owner at the close of an accounting period" is a definition of which financial report?
Answer: • Balance sheet
Question:* Which of the following is NOT a liability of the business?
Answer: • Accounts Receivable
Question:* When an owner invests more money into the business, which of the following bookkeeping entries is correct ?
Answer: • Debit Cash account, Credit Owners equity
Question:* The deposit book issued by the bank is used to evidence the banking of .....?
Answer: • Monies received
Question:* The accounting equation is ....?
Answer: • Assets = Liabilities + Owners equity
Question:* To credit an expense account means to decrease it.
Answer: • True
Question:* When an asset is sold for cash, into which journal is the transaction recorded?
Answer: • Cash receipts journal
Question:* Which of the following is NOT generally used as an alternative name for 'Owners Equity'?
Answer: • Investments and loans
Question:* In what type of journal would adjustments be generally recorded?
Answer: • General Journal
Question:* Which statement correctly completes the sentence? If Cost of Goods Sold increases, ........
Answer: • gross profit decreases
Question:* Under which account group is 'Accumulated depreciation' reported in the financial statements?
Answer: • Assets
Question:* Which of the following statements describes the accounting equation?
Answer: • Assets = Liabilities + Equity/Capital
Question:* The owner of a small business writes himself a check for 5,000 for personal use. How is this check recorded in the journal?
Answer: • credit Cash at bank account, debit Drawings
Question:* Recording revenues as they are earned and expenses as they are incurred, regardless of when the money is exchanged, is known as ....?
Answer: • Accrual accounting
Question:* Which of the following statement about the perpetual inventory system is TRUE?
Answer: • it provides a continuous record of stock turnover
Question:* When applying the accrual basis of accounting, how would you report expenses that covered a future period?
Answer: • As an asset - prepaid expenses
Question:* The accounting convention that requires the assets of a business to be reported in the financial statement at the actual price that was paid to acquire them, is known as .....?
Answer: • Historical cost
Question:* A Debit balance is usually not normal for which account?
Answer: • All of these
Question:* When an invoice for a service covers more than one accounting period, the journal entry will show an Expense and a:
Answer: • Prepaid Expense
Question:* As at the balance date, prepaid expenses will be represented in the financial statements as ....?
Answer: • a debit balance current asset
Question:* If a financial transaction increased an asset you would credit the asset account in the bookkeeping system?
Answer: • False
Question:* The original book of entry for financial transactions in the bookkeeping system is the .....?
Answer: • Journal
Question:* Which one of the following is a Contra-Asset account?
Answer: • Accumulated Depreciation
Question:* Which principle/guideline requires a company's balance sheet to report its land at the amount the company paid to acquire the land, even if the land could be sold today at a significantly higher amount?
Answer: • Cost Principle
Question:* A business with available cash to use will have a ......?
Answer: • Debit balance in its Cash At Bank account
Question:* Cash sales are recorded in which subsidiary journal?
Answer: • Cash receipts journal
Question:* Which of the following is NOT found on an income statement?
Answer: • Cash at bank
Question:* The process of writing off the value of intangible assets to acknowledge their loss of value is known as:
Answer: • Amortization
Question:* In a company's accounts, the shareholder's fund is equal to ...?
Answer: • Total assets - Total liabilities
Question:* Which of the following is NOT a contra account?
Answer: • Bank charges
Question:* What does the term "2% 10, Net 30" mean?
Answer: • The total bill is due in 30 days, but a discount of 2% may be taken if the bill is paid in 10 days of the bill date.
Question:* The broad accounting principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is known as ...?
Answer: • Matching principle
Question:* The account set up as an advance or float for petty cash is treated as ... ?
Answer: • an asset account
Question:* End-of-period adjustments do NOT include which transactions?
Answer: • Cash sales
Question:* Which principle/guideline minimizes the detail of reporting based on the insignificant size of the amount?
Answer: • Materiality
Question:* A chart of accounts is an index of the accounts contained in the ... ?
Answer: • General Ledger
Question:* If Assets totaled $40,000 and Owners Equity is 40% of the total Assets, what is the value of the Liabilities?
Answer: • $24,000
Question:* Treasury stock is classified under which account group?
Answer: • equity
Question:* Which of the following balance-day entries do not need reversing entries at the start of the new period?
Answer: • bad and doubtful debts
Question:* Which of the following accounts is NOT a current liability?
Answer: • Term Loans secured by a mortgage
Question:* A cash receipts journal is a special journal used to record all cash disbursement.
Answer: • False
Question:* A credit balance in the bank statement would be normally reconciled with:
Answer: • a debit balance in the Cash at Bank account
Question:* Which account is NOT part of the profit and loss account?
Answer: • Accumulated depreciation
Question:* TUV Co. performed services for Client Asim and billed them in December. TUV follows the accrual basis of accounting. In January TUV received the $5,000 from Asim and debited the Cash account: What account should it credit?
Answer: • Account receivable
Question:* XYZ Co. has current assets of $50,000 and total assets of $150,000. XYZ has current liabilities of $30,000 and total liabilities of $80,000. What is the amount of XYZ's owner's equity?
Answer: • $70,000
Question:* In regards to time, which of the following headings would you NOT find on an income statement?
Answer: • As at the 30 June
Question:* Which of the following statements in relation to materiality is true? I. Materiality of item depends on their individual or collective influence on the economic decisions of users. II.Materiality of an item depends on its absolute size and nature
Answer: • Both I and II
Question:* Which of the following is a current liability?
Answer: • Accrued expenses
Question:* When recording financial transactions using the "T" account method, the 'Debit' value is recorded on the right and the 'Credit' value is recorded on the left.
Answer: • False
Question:* A bank service charge on the bank statement will require a _____________ to the general ledger account 'Cash at Bank' of the business.
Answer: • credit entry
Question:* The accounting principle that is the primary support for the accrual method of bookkeeping is the .....?
Answer: • Matching principle
Question:* A petty cash expenditure would be recorded and debited to which account?
Answer: • an expense account
Question:* If you are valuing inventory by the FIFO method, the inventory on hand, according to the books of the business, will be the ...?
Answer: • Newest received
Question:* Is it acceptable in accounting that some of the expenses reported on the income statement are estimates?
Answer: • Yes
Question:* Accounting for inventory by applying the lower of cost or net realizable value is an example of the application of:
Answer: • Conservatism
Question:* Only legal entities can be accounting entities under accounting conventions. True or False?
Answer: • False
Question:* Which of the following is NOT generally used as an alternative name for a 'Balance sheet'?
Answer: • Equity Statement
Question:* The trial balance lists which type of accounts?
Answer: • Only the General ledger accounts
Question:* In a reconciliation process, if the discrepancy amount when divided by 9 results in a whole integer, then it is ...?
Answer: • a transposition error
Question:* In the Accounts Receivable ledger, a Debit entry is most likely for:
Answer: • Recording an uncollected sale
Question:* In times of rising costs for inventory, the Cost of Goods Sold will be highest under which inventory valuation method?
Answer: • LIFO
Question:* What does a debit balance on a bank statement indicate?
Answer: • the bank account is overdrawn
Question:* Which of the following accounting principles supports the need to ensure that recorded information is based on fact and not just on personal opinion?
Answer: • Objectivity
Question:* If the asset side of the accounting equation represents the 'things of value in the business', what does the other side represent?
Answer: • the source of finance to the business
Question:* When trading stock is received from a supplier, the source document for bookkeeping purposes will be the ...?
Answer: • Supplier's invoice
Question:* Which source document would be used when inventories are returned to a supplier?
Answer: • Adjustment note
Question:* A check that was received from a debtor was dishonored. How does this transaction affect the debtors control account in the general ledger?
Answer: • it is debited
Question:* Which of the following is NOT a feature of a perpetual inventory system?
Answer: • gross profit calculations cannot be done without a physical stocktake
Question:* The chronological record of a transaction’s process through the accounting system, from the source document to the financial statements, is known as ....?
Answer: • An audit trail
Question:* Under what account group heading would 'Provision for Doubtful Debts' be reported in the financial statements?
Answer: • Current assets
Question:* Under what account group heading would 'Provision for Doubtful Debts' be reported in the financial statements?
Answer: • Current assets
Question:* The purchase of motor vehicles on credit should be entered into which journal?
Answer: • General
Question:* Which of the following is NOT generally listed as one of the key expense group classifications of an income statement?
Answer: • Accrued expenses
Question:* Interest Expense on a term loan for a large retailer is a ....?
Answer: • a Non operating expense
Question:* Which of the following inventory costing methods is appropriate for a business with a relatively small number of unique inventory items with a high unit cost?
Answer: • Specific identification
Question:* Which account would NOT form part of the Trading Account?
Answer: • Sales commissions
Question:* 'Nominal accounts' in bookkeeping are also known as 'Temporary accounts'.
Answer: • True
Question:* The directive to recognize revenue only when it is reasonably certain of happening and to recognize expenses as soon as they are incurred is known by which principle?
Answer: • Prudence/Conservatism
Question:* Unexpired costs are represented in the accounts of an accounting entity as...
Answer: • assets
Question:* Under the IFRS, the value of land is recorded at ________ on the balance sheet.
Answer: • Fair Value
Question:* On December 1 a company borrowed $100,000 at 12% per year. The interest will be paid quarterly, with the first payment due on March 1. What interest expense amount should the company report on its income statement for the month of December?
Answer: • $1,000
Question:* If a 4 year old asset (equipment) was sold on credit for the book value of $5,000, the total value of assets in the firm's accounting equation is ....?
Answer: • Unchanged
Question:* Which of the following transactions are recorded in the purchases journal?
Answer: • Trading stock bought on credit
Question:* When using the moving average method of inventory valuation, a new unit cost must be computed after each:
Answer: • Purchase
Question:* Assuming a "T account" setup in the general ledger, on which side of the subsidiary account must an entry in the control account be posted?
Answer: • on the opposite side
Question:* Which of the following is NOT considered a function of accounting?
Answer: • a means for calculating the current market value of a business
Question:* Investments securities held for the purpose of retiring bonds payable shall be classified as:
Answer: • Current assets
Question:* The 'Discount allowed' account records the ....?
Answer: • Discount given to debtors
Question:* Which account is NOT part of the trading account?
Answer: • Freight outward
Question:* When using the FIFO inventory costing method, the most recent costs are assigned to the cost of goods sold. True or False?
Answer: • False
Question:* Which of the following is NOT generally used as an alternative name for an 'Income Statement'?
Answer: • Net Profit Statement
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