Week Five Acc/280 Final Exam Essay
Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process? A. Analysis B. Identification C. Communication D. Recording 2) Which list below best describes the major services performed by public accountants? A. Cost accounting, production scheduling, recruiting B. Bookkeeping, mergers, budgets C. Employee training, auditing, bookkeeping D. Auditing, taxation, management consulting 3) Which of the following is an external user of accounting information? A. Managers B. Labor unions C. Finance directors D. Company officers ) The SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles. It is true that A. the SEC and FASB rarely cooperate in developing accounting standards. B. they are both governmental agencies. C. the SEC is a private organization of accountants. D. the SEC often mandates guidelines when no accounting principles exist. 5) Generally accepted accounting principles are A. principles that have been proven correct by academic researchers. B. income tax regulations of the Internal Revenue Service. C. standards that indicate how to report economic events. D. heories that are based on physical laws of the universe. 6) The private sector organization involved in developing accounting principles is the A. Financial Auditors’ Standards Body. B. Feasible Accounting Standards Body. C. Financial Accounting Studies Board. D. Financial Accounting Standards Board. 7) All of the financial statements are for a period of time except the A. retained earnings. B. balance sheet. C. income statement. D. statement of cash flows. 8) After a business transaction has been analyzed and entered in the book of original entry, the next step in the recording process is to transfer the information to
A. stockholders’ equity. B. ledger accounts. C. the company’s bank. D. financial statements. 9) Auditing is A. a part of accounting that involves only recording of economic events. B. an area of accounting that involves such activities as cost accounting, budgeting, and accounting information systems. C. the examination of financial statements by a CPA in order to express an opinion on their fairness. D. conducted by the Securities and Exchange Commission to ensure that registered financial statements are presented fairly. 10) Posting A. accumulates the effects of journalized transactions in the individual accounts. B. nvolves transferring all debits and credits on a journal page to the trial balance. C. should be performed in account number order. D. is accomplished by examining ledger accounts and seeing which ones need updating. 11) The dividends account A. must show transactions every accounting period. B. is increased with debits and decreased with credits. C. appears on the income statement along with the expenses of the business. D. is not a proper subdivision of stockholders’ equity. 12) An account will have a credit balance if the A. first transaction entered was a credit. B. debits exceed the credits. C. credits exceed the debits. D. ast transaction entered was a credit. 13) On June 1, 2008 Leno Inc. buys a copier machine for its business and finances this purchase with cash and a note. When journalizing this transaction, the company’s accountant will A. make a compound entry. B. make a simple entry. C. use two journal entries. D. list the credit entries first, which is proper form for this type of transaction. 14) After journal entries are posted, the reference column A. of the general ledger will show journal page numbers. B. of the general journal will show “Dr” or “Cr”. C. of the general journal will be blank. D. of the general ledger will show account numbers. 5) On August 13, 2008, Dudbury Enterprises purchased office equipment for $1,000 and office supplies of $200 on account. Which of the following journal entries is recorded correctly and in the standard format? A) Office Equipment 1,000 Account Payable 1,200 Office Supplies 200 B) Office Equipment 1,000 Office Supplies 200 Account Payable 1,200 C) Accounts Payable 1,200 Office Equipment 1,000 Office Supplies 200 D) Office Equipment 1,000 Office Supplies 200 Accounts Payable 1,200 A. D B. C C. B D. A 16) An adjusting entry A. is always a compound entry.
B. affects a balance sheet account and an income statement account. C. affects two income statement accounts. D. affects two balance sheet accounts. 17) Adjusting entries are required A. when revenues are recorded in the period in which they are earned. B. when expenses are recorded in the period in which they are incurred. C. when the company’s profits are below the budget. D. because some costs expire with the passage of time and have not yet been journalized. 18) Adjusting entries are required A. every time financial statements are prepared. B. monthly. C. quarterly. D. yearly. 19) An adjusted trial balance A. annot be used to prepare financial statements. B. is a required financial statement under generally accepted accounting principles. C. proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made. D. is prepared after the financial statements are completed. 20) If unearned revenues are initially recorded in revenue accounts and have not all been earned at the end of the accounting period, then failure to make an adjusting entry will cause A. revenues to be understated. B. revenues to be overstated. C. accounts receivable to be overstated. D. liabilities to be overstated. 1) Financial statements are prepared directly from the A. ledger. B. trial balance. C. adjusted trial balance. D. general journal. 22) If the total debit column exceeds the total credit column of the income statement columns on a worksheet, then the company has A. an error because debits do not equal credits. B. suffered a net loss for the period. C. to make an adjusting entry. D. earned net income for the period. 23) A worksheet is a multiple column form that facilitates the A. measurement process. B. preparation of financial statements. C. analysis process. D. identification of events. 24) Preparing a worksheet involves A. hree steps. B. four steps. C. five steps. D. two steps. 25) The net income (or loss) for the period A. cannot be found on the worksheet. B. is found by computing the difference between the income statement columns of the worksheet. C. is found by computing the difference between the trial balance totals and the adjusted trial balance totals. D. is found by computing the difference between the income statement credit column and the balance sheet credit column on the worksheet. 26) Closing entries are made A. so that all assets, liabilities, and Stockholders’ equity accounts will have zero balances when the next accounting period starts.
B. in order to transfer net income (or loss) and dividends to the retained earnings account. C. so that financial statements can be prepared. D. in order to terminate the business as an operating entity. 27) The worksheet does not show A. the ending balance in the retained earnings account. B. the trial balance before adjustments. C. revenue and expense account balances. D. net income or loss for the period. 28) Closing entries A. cause the revenue and expense accounts to have zero balances. B. summarize the activity in every account. C. reduce the number of permanent accounts. D. are prepared before the financial statements. 9) In preparing closing entries A. the retained earnings account will be debited if there is net income for the period. B. the dividends account will be debited. C. each expense account will be credited. D. each revenue account will be credited. 30) Which of the following is a true statement about closing the books of a corporation? A. Revenues and expenses are closed to the Income Summary account. B. Revenues, expenses, and the dividends account are closed to the Income Summary account. C. Only revenues are closed to the Income Summary account. D. Expenses are closed to the Expense Summary account. 1) Vertical analysis is also known as A. perpendicular analysis. B. common size analysis. C. trend analysis. D. straight-line analysis. 32) Which one of the following is not a tool in financial statement analysis? A. Horizontal analysis B. Circular analysis C. Vertical analysis D. Ratio analysis 33) Horizontal analysis is also called A. linear analysis. B. vertical analysis. C. trend analysis. D. common size analysis. 34) Internal controls are not designed to safeguard assets from A. natural disasters. B. employee theft. C. robbery. D. unauthorized use. 35) Internal control is defined, in part, as a plan that safeguards
A. all balance sheet accounts. B. assets. C. liabilities. D. capital stock. 36) Having one person post entries to accounts receivable subsidiary ledger and a different person post to the Accounts Receivable Control account in the general ledger is an example of A. inadequate internal control. B. duplication of effort. C. external verification. D. segregation of duties. 37) Companies that are subject to, but fail to comply with, the Sarbanes-Oxley Act of 2002 A. may do so legally by obtaining an exemption. B. will be automatically dissolved. C. may be subject to fines and officer imprisonment. D. ay be forced to sell their foreign subsidiaries. 38) Certified Public Accounting firms which audit public companies are reviewed by: A. The Public Company Accounting Oversight Board B. The American Institute of Certified Public Auditors C. The Securities and Exchange Commission D. The Financial Auditing Standards Board 39) The importance of a good system of internal controls was recognized with the passage of A. the Blue Sky Laws. B. the Securities and Exchange Act of 1994. C. the Securities and Exchange Act of 1933. D. the Sarbanes-Oxley Act of 2002. 40) The principles of internal control include all of the following except A. hysical, mechanical, and electronic controls. B. combining of duties. C. establishment of responsibility. D. independent internal verification. 41) An employee authorized to sign checks should not record A. cash disbursement transactions. B. mail receipts. C. owner cash contributions. D. sales transactions. 42) Joe is warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates A. segregation of duties is violated. B. independent internal verification is violated. C. documentation procedures are violated. D. establishment of responsibility is violated.