Accounting

Front 1

The accounting titles used in journalizing transactions need not be identical to the account titles in the ledger: true or false

Back 1

False.

Front 2

Posting is the process of proving the equality of debits and credits in the trial balance.

Back 2

False.

Front 3

A trial balance does not prove that all transactions have been recorded or that the ledger is correct.

Back 3

True.

Front 4

The best interpretation of the word credit is the

Back 4

right side of the account.

Front 5

The usual sequence of steps in the recording process is to

Back 5

analyze each transaction, enter the transaction in the journal, and transfer the information to the ledger accounts.

Front 6

A trial balance is a listing of

Back 6

general ledger accounts and balances.

Front 7

Which of the following would not be considered an internal user of accounting data for the XYZ Restaurant Company?
a. president of the company
b. restaurant manager
c. merchandise inventory clerk
d. president of the employees' labor union

Back 7

d. president of the employees' labor union

Front 8

The common charactereistic possessed by all assets is:

Back 8

future economic benefits

Front 9

When cash or other assets are distributed to stockholders, these distributions are termed

Back 9

dividends.

Front 10

Revenues are:
a. the cost of assets consumed during the period
b. gross increased in stockholder's equity resulting from business activities
c. the cost of services used during the period
d. actual or expected cash outflow

Back 10

b. gross increases in stockholders' equity resulting from business activities

Front 11

A balance sheet shows:

Back 11

assets, liabilities and stockholders equity

Front 12

Information that relates to a firm's solvency is used to assess the firm's ability to

Back 12

pay it's debts

Front 13

Relevant accounting information is:

Back 13

information that is capable of making a difference in a decision.

Front 14

Which of the following statements is not true?
a. comparability means using the same accounting principles from year to year within a company.
b. reliability of information gives assurance that info is free of error or bias
c. relevant accounting info must be capable of making a difference in the decision
d. the FASB concluded that the overriding criterion by which accounting choices can be judged is decision usefulness

Back 14

a. comparibility means using the same accounting principles from year to year within a company

Front 15

Relevance characteristics are:

Back 15

Predictive value
Feedback value
Timely

Front 16

The information provided in the notes that accompany financial statements is required because of the

Back 16

full disclosure principle

Front 17

In applying the operating guidelines within the conceptual framework, an item is considered material if

Back 17

it if likely to influence the decision of a reasonably prudent investor or creditor

Front 18

The current ratio is:

Back 18

current assents divided by current liabilities

Front 19

Which one of the following accounting systems is not currently in use in hospitality industry?

Back 19

The Uniform Financial System for Gaming

Front 20

The economic entity assumption states that

Back 20

economic events can be identified with a particular event

Front 21

Which of the following accounts is not closed at the end of an accounting period?
a. Retained Earning
b. Dividends
c. Rooms Revenue
d. Insurance Expense

Back 21

b. Dividends

Front 22

Which of the folowing steps in the accounting cycle may be performed more frequently than annually?
a. Preparing a post-closing trial balance
b. Journalize closing entries
c. Post closing entries
d. Prepare a trial balance

Back 22

d. Prepare a trial balance

Front 23

A post-closing trial balance will show
a. zero balances for all accounts
b. zero balances for balance sheet accounts
c. only balance sheet accounts
d. only income statement accounts

Back 23

c. only balance sheet accounts

Front 24

The information for preparing a trial balance on a worksheet is obtained from?

Back 24

c. general journal entries

Front 25

Assuming that there is a net loss for a period, debits equal credits in all but which section of the worksheet?
a. income statement and balance sheet columns
b. adjustment columns
c. trial balance columns
d. adjusted trial balance columns

Back 25

a. income statement and balance sheet columns

Front 26

under the acrual basis of accounting:
a. cash must be received before revenue is recognized
b. Net income is computed by matching cash outflows against cash inflows
c. Events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received
d. The ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles

Back 26

c. Events that change a company's financial statements are recognized in the period they occur rather than in th period in which cash is paid or received

Front 27

For which of the following types of adjusting entries are liabilities understated and expenses understated before the adjusting entry is made?
a. Unearned Revenues
b. Accrued Revenues
c. Prepaid Expenses
d. Accrued Expenses

Back 27

d. Accrued Expenses

Front 28

Adjusting entries will always require?
a. one permanent and temporary account
b. two balance sheet accounts
c. both an income statement and a balance sheet account
d. both a and c.

Back 28

d. both a and c

Front 29

An accrued expense account represents expense that has
a. been earned and received
b. been incurred but not recorded
c. been incurred and recorded
d. been earned but not received.

Back 29

b. been incurred but not recorded

Front 30

Retained Earnings is equal to:

Back 30

Opening Retained Earnings Balance + Revenues - Expenses - Dividends

Front 31

An asset-expense relationship exists with
a. Liability accounts
b. Revenue accounts
c. Prepaid expense adjusting entries
d. Accrued expensee adjusting entries.

Back 31

c. Prepaid expense adjusting entries

Front 32

Which of the following is not a justification for adjusting entries?
a. Adjusting entries are necessary to ensure that revenue recognition principles are followed.
b. Adjusting entries are necessary to ensure that the matching principle is followed.
c. Adjusting entries are necessary to enable financial statements to be in conformity with GAAP.
d. Adjusting entries are necessary to bring the general ledger accounts in line with the budget.

Back 32

d. Adjusting entries are necessary to bring the general ledger accounts in line with the budget

Front 33

Accumulated Depreciation is a(n)
a. Expense account
b. Stockholders' equity account
c. Liability account
d. Contra asset account

Back 33

d. Contra asset account

Front 34

Under the accrual method of accounting
a. The transactions are recorded only when cash is received.
b. Transactions are recorded when they occur regardless of when the cash is received
c. Transactions are only recorded at the year end when the books are closed.
d. Sales are only recorded when the cash is received and expenses are recorded when they are paid

Back 34

b. Transactions are recorded when they occur regardless of when the cash is received.

Front 35

The balance sheet shows:
a. Revenues, liabilities, and stockholders’ equity.
b. Expenses, dividends, and stockholders’ equity.
c. Revenues, expenses and dividends.
d. Assets, liabilities, and stockholders’ equity.

Back 35

d. Assets, liabilities, and stockholders’ equity.

Front 36

An income statement:
a. Summarizes the changes in stockholders’ equity for a specific period of time.
b. Reports the changes in assets, liabilities, and stockholders’ equity over a period of time.
c. Reports the assets, liabilities, and stockholders’ equity at a specific date.
d. Presents the revenues and expenses for a specific period of time.

Back 36

d. Presents the revenues and expenses for a specific period of time.

Front 37

Liabilities:
a. Are future economic benefits.
b. Are existing debts and obligations.
c. Posses service potential.
d. Are things of value used by the business in its operation.

Back 37

b. Are existing debts and obligations.

Front 38

GAAP stands for
a. Generally Accepted Auditing Procedures
b. Generally Accepted Accounting Principles
c. Generally Accepted Auditing Principles
d. Generally Accepted Accounting Procedures

Back 38

b. Generally Accepted Accounting Principles

Front 39

The profit margin percentage is calculated by dividing net income by _________

Back 39

Net Sales

Front 40

The chief accounting officer of a hotel property is known as the _______ and is considered the head of the accounting department.

Back 40

Controller/Director of Finance

Front 41

_______ is a unique category of revenue for private clubs, which often makes up approximately 50% of club revenue.

Back 41

Membership Dues

Front 42

Which of the following is not a goal of financial reporting?
a. To provide information that is useful to those making investment decisions
b. To provide information that is useful to those making credit decisions
c. To provide information that is useful in understanding everything about the company
d. To provide information that identifies changes in resources and claims

Back 42

c. To provide information that is useful in understanding everything about the company

Front 43

A company can change to a new method of accounting if management can justify that the new method results in
a. more meaningful financial information.
b. a higher net income.
c. a lower net income for tax purposes
d. less likelihood of clerical errors

Back 43

a. more meaningful financial information.

Front 44

T or F: The matching principle dictates that expenses be recognized when cash is paid or the work is performed.

Back 44

False

Front 45

T or F: The revenue recognition principle dictates that revenue should be recognized in the accounting period in which cash is received.

Back 45

False

Front 46

T or F: Consistent use of the same accounting principles and methods is necessary for meaningful analysis of trends within a company

Back 46

True

Front 47

The size of a hotel’s accounting department depends on?
a. the number of guests
b. the size of the hotel.
c. the number of employees.
d. the number of reservations.

Back 47

b. the size of the hotel.

Front 48

The information provided in the notes that accompany financial statements is required because of the
a. cost principle.
b. full disclosure principle.
c. matching principle.
d. revenue recognition principle.

Back 48

b. full disclosure principle.

Front 49

The assumption that assumes a company will continue in operation long enough to carry out its existing objectives is
a. going concern.
b. economic entity.
c. monetary unity.
d. time period.

Back 49

a. going concern.

Front 50

The profit margin percentage is computed by dividing net income by
a. common stockholders’ equity.
b. total assets.
c. net sales.
d. current assets.

Back 50

c. net sales.

Front 51

Which of the following accounting systems is currently used by full service hotels?
a. The Uniform System of Accounts for Restaurants
b. The Uniform Financial System for Gaming
c. The Uniform System of Financial Reporting for Clubs
d. The Uniform System of Accounts for the Lodging Industry

Back 51

d. The Uniform System of Accounts for the Lodging Industry

Front 52

The revenue recognition principle dictates that revenue should be recognized in the accounting period in which it is
a. collected.
b. earned.
c. most likely to be collected.
d. earned and collected.

Back 52

b. earned.

Front 53

A number in the reference column in a general journal indicates
a. that the entry has been posted to a particular account.
b. the page number of the journal.
c. the dollar amount of the transaction.
d. the date of the transaction.

Back 53

a. that the entry has been posted to a particular account.

Front 54

A chart of accounts for a business firm
a. is a graph.
b. indicates the amount of profit or loss for the period.
c. lists the accounts and account numbers that identify their location in the ledger.
d. shows the balance of each account on the general ledger.

Back 54

c. lists the accounts and account numbers that identify their location in the ledger.

Front 55

A list of accounts and their balances at a given time is called
a. a journal.
b. a posting.
c. a trial balance.
d. an income statement.

Back 55

c. a trial balance.

Front 56

T or F: A debit to an account always indicates an increase in that account.

Back 56

False

Front 57

T or F: A general ledger should be arranged in statement order beginning with the balance sheet accounts.

Back 57

True

Front 58

T or F: A trial balance does not prove that all transactions have been recorded or that the ledger is correct.

Back 58

True

Front 59

T or F: Assets are increased by debits and liabilities are decreased by credits.

Back 59

False

Front 60

T or F: Posting should be performed in chronological order—all the debits and credits of one journal entry should be posted before proceeding to the next journal entry.

Back 60

True

Front 61

The recording of wages earned but not yet paid is an example of an adjustment that
a. recognizes an accrued expense.
b. recognizes an unrecorded revenue.
c. apportions revenues between two or more periods.
d. apportions costs between two or more periods.

Back 61

a. recognizes an accrued expense.

Front 62

Accounts often need to be adjusted because
a. there are never enough accounts to record all the transactions.
b. many transactions affect more than one time period.
c. there are always errors made in recording transactions.
d. management can’t decide what they want to report.

Back 62

b. many transactions affect more than one time period.

Front 63

Prepaid expenses are:
a. paid and recorded in an asset account before they are used or consumed.
b. paid and recorded in an asset account after they are used or consumed.
c. incurred but not yet paid or recorded.
d. incurred and already paid and recorded.

Back 63

a. paid and recorded in an asset account before they are used or consumed.

Front 64

Depreciation expense for a period is computed by taking the
a. original cost of an asset – accumulated depreciation.
b. depreciable cost ÷ depreciation rate.
c. cost of the asset ÷ useful life.
d. market value of the asset ÷ useful life.

Back 64

c. cost of the asset ÷ useful life.

Front 65

A sales journal is used to record
a. only cash sales of merchandise.
b. sales of all assets on credit and for cash.
c. only credit sales of merchandise.
d. credit sales of merchandise, sales returns and allowances and sales discounts.

Back 65

c. only credit sales of merchandise

Front 66

A transaction cannot be recorded in a special journal
a. the company must refuse to enter into the transaction.
b. it is recorded in the general journal.
c. it is recorded directly in the accounts in the general ledger.
d. it is recorded as an adjustment on the work sheet.

Back 66

b. it is recorded in the general journal.

Front 67

The one characteristic that all entries recorded in a cash receipts journal have in common is:
a. a credit to the Cash account.
b. that they all represent collections from customers.
c. that they originate from the sale of merchandise.
d. a debit to the Cash account.

Back 67

d. a debit to the Cash account.

Front 68

The one characteristic that all entries recorded in a multiple-column purchases journal have in common is a:
a. credit to the cash account.
b. debit to the Cash account.
c. debit to the Accounts Payable account.
d. credit to the Accounts Payable account.

Back 68

d. credit to the Accounts Payable account.

Front 69

Correcting entries are journalized in
a. a special journal.
b. the general journal.
c. the general ledger.
d. a correcting journal.

Back 69

b. the general journal.

Front 70

Adjusting entries are recorded
a. only on the worksheet.
b. only in the general ledger.
c. in the general journal.
d. in the special journals.

Back 70

c. in the general journal.

Front 71

Which of the following economic events would not be recorded in the cash receipts journal?
a. Cash sales of merchandise
b. Collections of accounts receivable
c. Credit sales
d. Cash purchase of merchandise

Back 71

FIND OUT REAL ANSWER

Front 72

Entries in the cash payments journal are made from
a. sales invoices.
b. purchase invoices.
c. prenumbered checks.
d. cancelled checks.

Back 72

c. prenumbered checks.

Front 73

Cash from sales of merchandise will be recorded in the
a. purchases journal.
b. sales journal.
c. cash receipts journal.
d. general journal.

Back 73

c. cash receipts journal.

Front 74

Which of the following items is not generally used in preparing a statement of cash flows?
A. Comparative Balance Sheet
B. Adjusted Trial Balance
C. Current Income Statement
D. Additional Information

Back 74

B. Adjusted Trial Balance

Front 75

Which departmental income statement will not show any revenues?
A. Rooms
B. Food
C. Beverage
D. Sales & Marketing

Back 75

D. Sales & Marketing

Front 76

If a company reports a net loss, it
A. may still have an increase in cash.
B. will not be able to pay cash dividends.
C. will not be able to get a loan.
D. will not be able to make capital expenditures.

Back 76

A. may still have an increase in cash.

Front 77

Financing activities involve
A. lending money.
B. acquiring investments.
C. issuing debt.
D. acquiring long-lived assets.

Back 77

C. issuing debt.

Front 78

Changes in pay rates during employment should be authorized by the
a. human resources department.
b. payroll department.
c. treasurer's department.
d. timekeeping department.

Back 78

a. human resources department.

Front 79

The payroll is paid by the:
a. Human Resources Department.
b. Payroll Department.
c. General Cashier.
d. Treasurer’s Department.

Back 79

d. Treasurer’s Department.

Front 80

Which of the following is a payroll function?
a. Hiring employees.
b. Timekeeping.
c. Preparing and paying the payroll.
d. All of the above.

Back 80

d. All of the above.

Front 81

Identify the equation for net pay.
a. gross earnings – taxes
b. payroll deductions – gross earnings
c. gross earnings – payroll deductions
d. gross earnings – overtime pay

Back 81

c. gross earnings – payroll deductions

Front 82

Which principle/guideline directs a company to show all the expenses related to its revenues of a specified period even if the expenses were not paid in that period?

Back 82

Matching

Front 83

When the accountant has to choose between two acceptable alternatives, the accountant should select the alternative that will report less profit, less asset amount, or a greater liability amount. This is based upon which principle/guideline?

Back 83

Conservatism

Front 84

The primary objective of financial reporting is to provide information:

Back 84

useful in predicting cashflow

Front 85

GAAP include which of the following pronouncements:

Back 85

All of the above (Statements of Financial Accounting Standards, Accounting Research Bulletins, Accounting Principles Board Opinions)

Front 86

The documents that set forth fundamental concepts on which financial accounting and reporting standards will be based are:
The documents that set forth fundamental concepts on which financial accounting and reporting standards will be based are:

a. All of the above.
b. Statements of Financial Accounting Standards.
c. Accounting Principles Board Opinions.
d. Statements of Financial Accounting Concepts.

Back 86

d. Statements of Financial Accounting Concepts

Front 87

The qualitative characteristic that means there is agreement between a measure and a real-world phenomenon is:

Back 87

= Representational faithfulness

Front 88

Which of the following is considered a practical constraint on the qualitative characteristics?
a. Verifiability
b. Conservatism
c. Cost effectiveness
d. Timeliness

Back 88

c. cost effectiveness

Front 89

Which of the following characteristics does not describe a liability?
a. Probable.
b. Must be legally enforceable.
c. Result of a past transaction.
d. Present obligation.

Back 89

b. must be legally enforced

Front 90

Large corporations must follow the ----- basis of accounting.

Back 90

Accrual

Front 91

The statement of cash flows explains the changes in cash and cash ----- during the specified time interval.

Back 91

Equivalents

Front 92

Which of the following is not a characteristic of the balance sheet?
a. Assets generally are listed in order of their liquidity.
b. The major classifications of the balance sheet are assets, liabilities, and owners' equity.
c. The balance sheet reports the change in financial position.
d. The balance sheet provides information useful in assessing liquidity.

Back 92

c. The balance sheet reports the change in financial position.

Front 93

The basis used to classify assets as current or noncurrent is:
a. Whether the asset is currently used in the company's operations.
b. Whether an asset is monetary or nonmonetary.
c. The operating cycle or one year, whichever is shorter.
d. Usually one year, because the operating cycle typically is less than one year.

Back 93

d. Usually one year, because the operating cycle typically is less than one year.

Front 94

An item not generally classifies as a current asset is:
a. patent
b. trade receiveables
c. prepaid rent
d. inventories

Back 94

a. patent

Front 95

Included in the category of current liabilities would be:
a. pension obligations
b. lease
c. obligations expected to require the creation of other current liabilities
d. mortgage payable

Back 95

c. obligations expected to require the creation of other current liabilities

Front 96

An item not generally classified as a current liability is:
a. revenue received in advance
b. accrued interest payable
c. accounts payable
d. bonds payable

Back 96

d. bonds payable

Front 97

Current assets minus current liabilities equals:

Back 97

Working Capital

Front 98

Operational assets refer to property, plant, and equipment and:

Back 98

intangibles

Front 99

Information not generally disclosed in the summary of significant accounting policies is:

Back 99

a related party transaction

Front 100

Which of the following items would not be included as a cash flow from operating activities on a statement of cash flows?
a. collections from customers
b. interest on note payable
c. purchase of equipment
d. purchase of inventory

Back 100

c. purchase of equipment

Front 101

OIF: Depreciation Expense

Back 101

Operating

Front 102

OIF: Proceeds from the sale of equipment used in the business

Back 102

Investing

Front 103

OIF: Declaration and payment of dividends on company's stock

Back 103

Financing

Front 104

OIF: Gain on the Sale of Automobile formerly used in the business

Back 104

Operating

Front 105

OIF: An increase in the baland in Accounts payable

Back 105

Operating

Front 106

Amounts earned by a company in its main operating activites are:
a. revenues
b. profits
c. gains
d. none of the above

Back 106

a. revenues

Front 107

Which of the following is most likely an accrued liability?
a. depreciation
b. interest
c. cost of goods sold
d. office supplies

Back 107

b. interest

Front 108

The journal entry to record the borrowing of cash and the signing of a note payable involves:
a. A debit to note payable and a credit to cash.
b. Debits to cash and interest expense and a credit to cash.
c. A debit to cash and a credit to note payable.
d. None of the above.

Back 108

c. A debit to cash and a credit to note payable.