ACC 300 Multiple choice questions 1. A Journal does all of the following except a. Summarizes all of the transactions that effect one account in a

ACC 300 Multiple choice questions

1. A Journal does all of the following except a. Summarizes all of the transactions that effect one account in a “T-account” b. Records all the assets of a company c. Records each day’s transactions d. Records all the revenues and expenses of a company

2. If a company does not receive cash until after it delivers goods a. It must wait to receive cash until it can record revenue b. It must record unearned revenue at the time it delivers goods c. It must record revenue at the time it delivers the goods d. It must increase the amount of accounts receivable at the time it gets paid by its customer
 

3. Which ratio is a test of liquidity? a. Net profit margin b. Inventory turnover c. Times interest earned d. Debt-to-assets

4. Internal control involves all of the following except a. Consistent branding b. Protection against theft of assets c. Enhancement of the reliability of accounting information d. Promoting efficient and effective operations

5. Which of the following would not be considered an internal user of accounting data for a company? a. The president of a company b. The controller of a company c. Creditor of a company d. Salesperson of a company

6. A short-term creditor is primarily interested in the __________ of the borrower. a. liquidity b. profitability c. consistency d. solvency

7. Management usually wants ________ financial statements and the IRS requires all businesses to file _________ tax returns. a. annual, annual b. monthly, annual c. quarterly, monthly d. monthly, monthly

8. Which of the following income statement figures would probably be the best indicator of a company’s future performance? a. Total revenues b. Income from operations c. Net income d. Gross profit

9. Which of the following is not a limitation of internal control? a. Cost of establishing control procedures should not exceed their benefit b. The human element c. Collusion d. The size of the company

10.The selection of an appropriate inventory cost flow assumption for an individual company is made by a. the external auditors. b. the SEC. c. the internal auditors. d. management.

True/False:

11. _____It is possible to prepare a balance sheet at any point in time using the current balances in the T-accounts. True

12._____The local baseball team sold $10,000 of tickets for next year’s season. As a result, it’s revenues are increased by $10,000. False

13._____Ratio analysis involves comparing an amount for one or more financial statement items to an amount for other items for the same year. True

14._____Segregation of duties is an internal control. True

15._____ The inventory turnover ratio is calculated as cost of goods sold divided by ending inventory. False

16._____ Internal control is mainly concerned with the amount of authority a supervisor exercises over a subordinate. False

17._____ Horizontal analysis is a technique for evaluating a financial statement item in the current year with other items in the current year. True

18._____ Financial statements must be prepared before the closing entries are made. False

19._____ The primary accounting standard-setting body in the United States is the Securities and Exchange Commission. False

20._____ Accounting communicates financial information about a business to both internal and external users. True

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