Accounting Multiple Choice QuestionsQuestion 1 (1 point) Saved The Dog Groomer is a family-owned business that grooms dogs. Many of the customers pay by cash. On Mondays, the family uses Joseph, a part-time employee, to work the store. Since the store is not busy on Mondays, Joseph is able to manage grooming the dogs, collecting the payments by himself, and maintaining the accounting records.
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Accounting Multiple Choice Questions
Question 1 (1 point)
Saved
The Dog Groomer is a family-owned business that grooms dogs. Many of the customers pay by cash. On Mondays, the family uses Joseph, a part-time employee, to work the store. Since the store is not busy on Mondays, Joseph is able to manage grooming the dogs, collecting the payments by himself, and maintaining the accounting records. Identify the weakness in internal controls.
Question 1 options:
Responsibilities should be clearly assigned.
Custody of assets should be separate from the accounting of assets
Assets should be kept in a safe place.
Rotating staff and mandatory vacations.
Question 2 (1 point)
Saved
How should the petty cash fund be established?
Question 2 options:
Credit Petty Cash
Debit Cash
Expense accounts are debited
Debit Petty Cash
Question 3 (1 point)
A cheque that was outstanding on last month's bank reconciliation was not among the cancelled cheques returned by the bank this month. In preparing this month's bank reconciliation, how should this cheque be handled?
Question 3 options:
The book balance should be adjusted for the amount
The amount of the cheque should be added to the book balance of cash
It should be cancelled
The amount should be deducted from the bank statement balance.
Question 4 (1 point)
A company purchased a stapler for $75. The stapler was recorded for $57 in the company's books but the cheque was issued for $75. How should this error be corrected?
Question 4 options:
No action is required
Increase the bank account in the company's books for $18
Decrease the bank account in the company's books for $18
The bank should make a correcting entry for $18
Question 5 (1 point)
Look at the following chart of the trend analysis for the Snow Removal Company. Which of the following statements is true regarding the performance over the three years?
Question 5 options:
The company is showing an overall improvement in its financial performance
The company has reduced their cost of goods sold expense
The company's gross profit compared to sales has been decreasing.
The company's gross profit compared to sales has been increasing
Question 6 (1 point)
Saved
Here is the bank account balances from a comparative analysis.
Bank Account in 2016 - $8952.40
Bank Account in 2015 - $4768.12
Question 6 options:
A decrease of 46.7%
An increase of 87.8%
An increase of 46.7%
A decrease of 87.8%
Question 7 (1 point)
Based on the following information, what is the common-size calculation for the shaded cell?
Question 7 options:
Net income is 6.4%
Net income is 39.5%
Net income is 24.5%
Net income is 65.3%
Use the above condensed balance sheet to answer the next 3 questions.
Question 8 (1 point)
Using Arnett Enterprises condensed balance sheet above, the current ratio is:
Question 8 options:
2.0 : 1
2.1 : 1
0.5 : 1
47.1%
Question 9 (1 point)
Using Arnett Enterprises condensed balance sheet above, the debt ratio is:
Question 9 options:
100.0%
32.8%
30.5%
67.3%
Question 10 (1 point)
Here is some additional information:
1) the net income for the year ended December 31, 2015 was $21,970.
2) The beginning owner's equity was $164,525.
Using Arnett Enterprises condensed balance sheet above, the return on equity is:
Question 10 options:
$172,962.50
12.7%
7.4 : 1
13.3%
True and False Questions.
Question 11 (1 point)
One of the goals of internal controls is to ensure accurate and reliable accounting information.
Question 11 options:
TrueFalse
Question 12 (1 point)
A good internal control system will make fraud and theft impossible
Question 12 options:
TrueFalse
Question 13 (1 point)
From the bank reconciliation, interest revenue and bank charges require journal entries to bring the company's books up-to-date.
Question 13 options:
TrueFalse
Question 14 (1 point)
An outstanding cheque is adjusted on the company's book balance.
Question 14 options:
TrueFalse
Question 15 (1 point)
The balance as per the bank is $562.50, the outstanding deposits are $175.00 and the outstanding cheques are $200.00. The adjusted balance as per the bank is $887.50.
Question 15 options:
TrueFalse
Question 16 (1 point)
In comparative or horizontal analysis, a decrease from 2015 to 2016 is considered bad.
Question 16 options:
TrueFalse
Question 17 (1 point)
Total assets are used as the base of comparison for common-size statements for the balance sheet.
Question 17 options:
TrueFalse
Question 18 (1 point)
A current ratio of 1.4:1 is considered good and indicates that the company will be well-positioned to pay its bills as they come due.
Question 18 options:
TrueFalse
Question 19 (1 point)
A company has a debt ratio of 75%. A creditor would consider this an acceptable debt ratio.
Question 19 options:
TrueFalse
Question 20 (1 point)
Using only the data presented below for Company A and Company B with identical sales, Company A is the more profitable company B.
Question 20 options:
TrueFalse
Question 21 (1 point)
Liquidity ratios are used to check the business' ability to pay current liabilities without borrowing funds or selling assets.
Question 21 options:
TrueFalse
Question 22 (1 point)
An investor has found the following rates of return.
- Stocks 13.1%
- Bank deposits 8.2%
- Bonds 10.40%
- The Green Co 15.7%
-
Based on the information above, the best rate of return is on bank deposits.
Question 22 options:
TrueFalse
Question 23 (1 point)
A solvent company is unable to pay its bills.
Question 23 options:
TrueFalse
Question 24 (1 point)
Lenders would be interested in the current ratio as it is an indicator of the company's ability to pay its debts as they come due.
Question 24 options:
TrueFalse
Question 25 (1 point)
The average owner's equity is an indicator of liquidity.
Question 25 options:
TrueFalse
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