Enter today's date:such as 5/1/99
Enter Grade Level completed: such as:12 or college 1,2 etc.
Enter Computer Experience: such as:little,good,moderate,lots.
Why are you taking this test?
1. UNDER THE ACCOUNTANT'S INTERPRETATION OF MEASURING INCOME AND REPORTING FINANCIAL POSITION, WHICH OF THE FOLLOWING WOULD BE OF LEAST IMPORTANCE? A. THE HISTORICAL COST OF NET ASSETS AT THE BEGINNING OF THE PERIOD B. THE CURRENT VALUES OF NET ASSETS DURING THE PERIOD C. THE HISTORICAL COST OF NET ASSETS AT THE END OF THE PERIOD D. INCOME STATEMENT TRANSACTIONS DURING THE PERIOD E. CAPITAL CONTRIBUTIONS AND WITHDRAWALS DURING THE PERIOD ANSWER = 2. IN FINANCIAL ACCOUNTING, EXAMPLES OF GAINS WOULD INCLUDE: A. TOTAL RECEIPTS OF CASH. B. TOTAL RECEIPTS OF CASH IN EXCESS OF THE HISTORICAL COSTS OF THE ASSETS BEING SOLD. C. TOTAL REVENUES. D. TOTAL INCREASES IN NET ASSETS. E. TOTAL INCREASES IN NET ASSETS FROM OTHER THAN REVENUES. 3. IN FINANCIAL ACCOUNTING, NET INCOME OR LOSS REPRESENTS: A. TOTAL RECEIPTS OF CASH AND TOTAL DISBURSEMENTS OF CASH. B. TOTAL RECEIPTS OF CASH IN EXCESS OF THE HISTORICAL COSTS OF THE ASSETS BEING SOLD. C. THE DIFFERENCE BETWEEN TOTAL REVENUES AND EXPENSES AND TOTAL GAINS AND LOSSES. D. THE DIFFERENCE BETWEEN TOTAL REVENUES AND TOTAL EXPENSES E. THE DIFFERENCE BETWEEN TOTAL GAINS AND TOTAL LOSSES. 4. REVENUES MAY BE DEFINED AS: A. INCREASES IN ASSETS FROM ALL SOURCES. B. THE AMOUNT OF CAPITAL INVESTED BY THE OWNERS OF A BUSINESS. C. THE REDUCTION OF LIABILITIES PREVIOUSLY OWED. D. THE INCREASES IN ASSETS RESULTING FROM SUPPLYING GOODS AND SERVICES TO CUSTOMERS. E. THE COLLECTION OF CASH FROM CUSTOMERS. 5. Prepaid Office Supplies should be classified as: A. AN EXPENSE. B. A LIABILITY. C. AN ASSET. D. A REVENUE. E. AN EQUITY ACCOUNT. 6. WHICH OF THE FOLLOWING IS A POWERFUL CONCEPT IN ACCOUNTING WHICH SERVES AS THE BASIS FOR REVENUE AND EXPENSE RECOGNITION? A. THE TIME PERIOD ASSUMPTION B. THE MATCHING CONVENTION C. THE CASH BASIS OF ACCOUNTING D. THE ENTITY PRINCIPLE E. THE HISTORICAL COST CONCEPT 7. JONES CORPORATION DECLARED A CASH DIVIDEND ON JANUARY 1, 1994. ON JANUARY 15, THE DATE THE DIVIDEND WAS PAID, KILGORE'S RECORDS WOULD REFLECT: A. AN INCREASE IN ASSETS AND A DECREASE IN STOCKHOLDER'S EQUITY. B. A DECREASE IN ASSETS AND A DECREASE IN STOCKHOLDER'S EQUITY. C. A DECREASE IN ASSETS AND A DECREASE IN LIABILITIES. D. A DECREASE IN ASSETS AND AN INCREASE IN LIABILITIES. E. AN INCREASE IN STOCKHOLDER'S EQUITY AND A DECREASE IN LIABILITIES. 8. THE ACCRUAL BASIS OF ACCOUNTING: A. RECOGNIZES REVENUE IN THE PERIOD IN WHICH IT IS EARNED AND EXPENSES IN THE PERIOD IN WHICH THEY ARE INCURRED. B. RECOGNIZES REVENUE IN THE PERIOD IN WHICH CASH IS RECEIVED AND EXPENSES IN THE PERIOD IN WHICH THEY ARE PAID. C. RECOGNIZES REVENUE IN THE PERIOD IT HAS BEEN EARNED AND FOR WHICH CASH HAS BEEN COLLECTED. D. RECOGNIZES EXPENSES IN THE PERIOD IN WHICH THEY ARE INCURRED AND PAID FOR WITH CASH. E. DEFINES REVENUES AS GAINS AND EXPENSES AS LOSSES. 9. IN FINANCIAL ACCOUNTING, REVENUES AND EXPENSES ARE OFTEN INCLUDED IN THE DETERMINATION OF NET INCOME EVEN THOUGH NO CASH RECEIPTS OR DISBURSEMENTS HAVE OCCURRED. THIS PRACTICE IS BASED ON THE CONCEPT OF: A. THE TIME PERIOD ASSUMPTION. B. THE HISTORICAL COST ASSUMPTION. C. CASH BASIS ACCOUNTING. D. ACCRUAL BASIS ACCOUNTING. E. THE GOING CONCERN ASSUMPTION. 10. UNDER THE ACCRUAL BASIS OF ACCOUNTING, IF CASH IS RECEIVED PRIOR TO THE SALE, THEN: A. REVENUE IS RECOGNIZED WHEN THE CASH IS RECEIVED. B. A LIABILITY IS RECOGNIZED WHEN CASH IS RECEIVED. C. A LIABILITY IS REMOVED FROM THE SYSTEM WHEN THE CASH IS RECEIVED. D. REVENUE IS REMOVED FROM THE SYSTEM WHEN THE SERVICES HAVE BEEN PERFORMED OR THE GOODS HAVE BEEN DELIVERED. E. A REVENUE AND A LIABILITY ARE RECORDED WHEN THE CASH IS RECEIVED. 11. THE PREPAID RENT ACCOUNT SHOULD BE CLASSIFIED AS: A. AN EXPENSE. B. A LIABILITY. C. AN ASSET. D. A REVENUE. E. AN EQUITY ACCOUNT. 12. UNDER THE CASH BASIS OF ACCOUNTING , A SALE IS RECOGNIZED WHEN: A. AN EXCHANGE PRICE HAS BEEN DETERMINED. B. THE EARNINGS PROCESS IS ESENTIALLY COMPLETE. C. CASH HAS BEEN RECEIVED. D. ASSETS HAVE BEEN INCREASED. E. UNDER THE CASH BASIS OF ACCOUNTING, REVENUE IS NOT RECOGNIZED UNTIL ALL OF THE ABOVE EVENTS HAVE OCCURRED. 13. IN SIMPLIFIED TERMS, THE REVENUE REALIZATION RULE STATES THAT REVENUE SHOULD BE RECOGNIZED WHEN: A. AN EXCHANGE PRICE HAS BEEN DETERMINED AND THE EARNINGS PROCESS IS ESSENTIALLY COMPLETE. B. AN EXCHANGE OF CASH RESULTING IN AN EARNING PROCESS HAS OCCURRED. C. NET ASSETS HAVE INCREASED. D. LIABILITIES HAVE BEEN REDUCED. E. ALL OF THE ABOVE STATEMENTS ARE REPRESENTATIVE OF THE REVENUE RECOGNITION RULE. 14. ALTERNATIVES TO THE SALE AS BEING THE POINT OF REVENUE RECOGNITION WOULD NOT BE APPLIED IN WHICH OF THE FOLLOWING SITUATIONS? A. IN LONG-TERM CONSTRUCTION PROJECTS B. IN THE MINING OF PRECIOUS METALS SUCH AS GOLD OR SILVER C. IN LONG-TERM INSTALLMENT SALES D. IN THE FAST FOOD INDUSTRY E. EACH OF THE ABOVE SITUATIONS WOULD REQUIRE ALTERNATIVES TO THE SALE AS BEING THE POINT OF REVENUE RECOGNITION. 15. WHICH OF THE FOLLOWING TRANSACTIONS REPRESENTS REVENUE TO AN ENTITY? A. THE RECEIPT OF $10,000 ON ACCOUNT B. THE SALE OF AN OLD DELIVERY TRUCK FOR $1,000 CASH C. THE ISSUE OF A $2,000 NOTE PAYABLE D. SENDING BILLS TO CLIENTS FOR PROFESSIONAL SERVICES RENDERED E. ALL OF THE ABOVE TRANSACTIONS REPRESENT REVENUE TO AN ENTITY. 16. HUGO CORPORATION PAID DUNSTON CORPORATION RENT IN ADVANCE FOR ONE YEAR. BY RECORDING THIS PAYMENT HUGO CORPORATION WILL REFLECT: A. AN INCREASE IN ASSETS AND LIABILITIES. B. AN INCREASE IN ASSETS AND STOCKHOLDER'S EQUITY. C. AN INCREASE IN ASSETS AND DECREASE IN LIABILITIES. D. A DECREASE IN ASSETS AND A DECREASE IN STOCKHOLDER'S EQUITY. E. NO CHANGE IN TOTAL ASSETS. 17. SMALL COMPANY WAS BILLED FOR ACCOUNTING SERVICES IT RECEIVED DURING THE PERIOD. SMALL WILL PAY THE BILL IN 30 DAYS. AS SMALL'S BOOKKEEPER YOU WILL: A. DEBIT AN ASSET ACCOUNT. B. DEBIT A LIABILITY ACCOUNT. C. CREDIT AN ASSET ACCOUNT. D. CREDIT A LIABILITY ACCOUNT. E. MAKE NO JOURNAL ENTRY UNTIL THE BILL IS PAID. 18. WHICH OF THE FOLLOWING STATEMENTS IS FALSE? A. REVENUES REPRESENT INCREASES TO RETAINED EARNINGS. B. INCREASES TO RETAINED EARNINGS ARE RECORDED AS DEBITS. C. EXPENSES REPRESENT DECREASE IN RETAINED EARNINGS. D. EXPENSES ARE RECORDED ON THE LEFT SIDE OF A LEDGER ACCOUNT. E. A DEFICIT BALANCE IN RETAINED EARNINGS IS REFLECTED BY A DEBIT BALANCE. 19. WHICH OF THE FOLLOWING STATEMENTS IS FALSE? A. EXPENSES REPRESENT DECREASES TO RETAINED EARNINGS. B. DECREASES TO RETAINED EARNINGS ARE RECORDED AS DEBITS. C. REVENUES REPRESENT INCREASES TO RETAINED EARNINGS. D. REVENUES ARE RECORDED ON THE LEFT SIDE OF A LEDGER ACCOUNT. E. ALL OF THE ABOVE STATEMENTS ARE FALSE. 20. WHICH OF THE FOLLOWING STATEMENTS REGARDING EXPENSES IS TRUE? A. AN EXPENSE MAY REPRESENT A DECREASE IN A LIABILITY ACCOUNT. B. AN EXPENSE MAY REPRESENT AN INCREASE IN AN ASSET ACCOUNT C. AN EXPENSE IS ALWAYS RECORDED ON THE RIGHT-HAND SIDE OF A LEDGER ACCOUNT. D. AN EXPENSE ALWAYS INVOLVES A CREDIT TO RETAINED EARNINGS. E. NONE OF THE ABOVE STATEMENTS IS TRUE. 21. WHICH OF THE ABOVE STATEMENTS REGARDING REVENUES IS TRUE? A. A REVENUE MAY REPRESENT A DECREASE IN A LIABILITY ACCOUNT. B. A REVENUE MAY REPRESENT AN INCREASE IN AN ASSET ACCOUNT. C. A REVENUE IS ALWAYS RECORDED ON THE RIGHT-HAND SIDE OF A LEDGER ACCOUNT. D. A REVENUE ALWAYS RESULTS IN AN INCREASE IN STOCKHOLDERS' EQUITY. E. ALL OF THE ABOVE STATEMENTS ARE TRUE. 22. WHICH OF THE FOLLOWING STATEMENTS IS FALSE? A. INCREASES TO RETAINED EARNINGS ARE RECORDED WITH CREDITS B. SALES ARE RECORDED AS DEBITS. C. EXPENSES REDUCE RETAINED EARNINGS. D. DIVIDENDS REDUCE RETAINED EARNINGS. E. EXPENSES AND DIVIDENDS ARE BOTH RECORDED AS DEBITS. 23. THE STATEMENT OF RETAINED EARNINGS WOULD TYPICALLY INCLUDED: A. THE BEGINNING HISTORICAL COST OF NET ASSETS. B. THE ENDING HISTORICAL COST OF NET ASSETS. C. CAPITAL CONTRIBUTIONS DURING THE PERIOD. D. NET INCOME OR NET LOSS AND DIVIDENDS. E. THE STATEMENT OF RETAINED EARNINGS WOULD TYPICALLY INCLUDED ALL OF THE ABOVE COMPONENTS. 24. LISA GAMM IS THE BOOKKEEPER OF LEGS CORPORATION. IT IS LISA'S RESPONSIBILITY TO PREPARE THE FINANCIAL STATEMENTS AS EFFICIENTLY AS POSSIBLE. GIVEN THE RELATIONSHIP AMONG THE PRIMARY FINANCIAL STATEMENTS, WHAT SEQUENCE WOULD LISA FOLLOW IN THEIR PREPARATION? A. BALANCE SHEET, STATEMENT OF RETAINED EARNINGS, INCOME STATEMENT B. STATEMENT OF RETAINED EARNINGS, INCOME STATEMENT, BALANCE SHEET C. BALANCE SHEET, INCOME STATEMENT, STATEMENT OF RETAINED EARNINGS D. INCOME STATEMENT, STATEMENT OF RETAINED EARNINGS, BALANCE SHEET E. STATEMENT OF RETAINED EARNINGS, BALANCE SHEET, INCOME STATEMENT 25. WHICH OF THE FOLLOWING STATEMENTS IS FALSE? A. STOCKHOLDER'S EQUITY = CAPITAL STOCK + RETAINED EARNINGS B. BEGINNING RETAINED EARNINGS = ENDING RETAINED EARNINGS + DIVIDENDS - NET INCOME. C. ENDING RETAINED EARNINGS = BEGINNING RETAINED EARNINGS + INCOME - DIVIDENDS. D. NET INCOME + LOSSES + EXPENSES = REVENUES + GAINS. E. NONE OF THE ABOVE STATEMENTS IS FALSE. 26. THE TWO BASIC ACCOUNTING METHODS FOR RECOGNIZING REVENUES AND EXPENSES ARE THE: A. HISTORICAL BASIS AND THE MATCHING BASIS. B. CASH BASIS AND THE ACCRUAL BASIS. C. CASH BASIS AND THE MATCHING BASIS. D. ACCRUAL BASIS AND THE HISTORICAL BASIS. E. NONE OF THE ABOVE SELECTIONS IS CORRECT. 27. RECOGNIZING REVENUE USING ALTERNATIVES TO THE POINT OF SALE IS MOST COMMON IN WHICH OF THE FOLLOWING INDUSTRIES? A. THE FAST FOOD INDUSTRY B. THE INSURANCE INDUSTRY C. THE CONSTRUCTION INDUSTRY D. THE COMPUTER INDUSTRY E. ALTERNATIVE POINTS OF REVENUE RECOGNITION ARE COMMON TO EACH OF THE ABOVE INDUSTRIES. 28. WHICH OF THE FOLLOWING WOULD NOT BE CONSIDERED A PERIODIC EXPENSE? A. SALES COMMISSIONS B. RENT EXPENSE C. INSURANCE EXPENSE D. DEPRECIATION EXPENSE E. SUPPLY EXPENSE 29. WHICH OF THE FOLLOWING REPRESENT SOURCES OF ASSETS TO A FIRM ? A. CREDITORS B. INVESTORS C. PROFITABLE OPERATIONS D. ALL OF THE ABOVE REPRESENT SOURCES OF ASSETS TO A FIRM. E. NONE OF THE ABOVE REPRESENT SOURCES OF ASSETS TO A FIRM. 30. BALANCE SHEET ACCOUNTS ARE OFTEN REFERRED TO AS: A. NOMINAL ACCOUNTS. B. TEMPORARY ACCOUNTS. C. REVENUE ACCOUNTS. D. INDUSTRIAL ACCOUNTS. E. REAL ACCOUNTS.