1. Which of the following is not a core b. Accounts receivable increases b.

Intercompany transactions are

financial statement? because of the interest. eliminated in consolidated parent
c. A note receivable is recorded in non- financial statements.
a. The Income Statement current assets. c. They can significantly impact taxes.
b. Statement of Cash Flows d. Company A records the loan as a d. Intercompany transactions are
liability. between different legal entities
c. The Trial Balance under the same parent control.
11. When are liabilities recorded under the
d. The Balance Sheet accrual basis of accounting? 19. Which is the method of depreciation
2. The income statement, which presents used for US tax returns that is not
the results of operations, can be GAAP-compliant?
prepared in many forms including: a. When incurred
b. When paid
a. Straight-line method
a. Single Step Income Statement c. At the end of the fiscal year
b. Modified accelerated cost recovery
b. Condensed Income Statement d. When bank accounts are reconciled systems
c. Common Sized Income Statement 12. Which is true about time in c. Double-declining balance method
accounting?
d. All of the above d. Units of production method
3. Which of the following account types 20. What is the most-used method to
increase by debits in double-entry a. Current liabilities are debts payable amortize intangible assets on a
accounting? within 2 years. company’s financial statements?
b. Balance sheets reflect a company’s
financial position at a certain point in
a. Assets, Expenses, Losses time. a. Straight-line method
b. Assets, Revenue, Gains c. The time value of money is a finance b. Sum of the years’ digits method
c. Expenses, Liabilities, Losses concept, not relevant in accounting. c. Double-declining balance method
d. Gains, Expenses, Liabilities d. Accounts receivable are more easily d. Units of production method
collected as time passes. 21. Which financial statement is a report of
4. Which of the following is true?
13. When a company purchases property, a company’s revenues and expenses
plant, and equipment, how is it during a certain time period?
a. Accounts receivable are found in the reflected on the statement of cash
current asset section of a balance flows?
sheet. a. Statement of Changes in Equity
b. Accounts receivable increase by b. Income Statement
a. As a source of cash in the "cash
credits. c. Statement Of Cash Flows
from investing activities" section
c. Accounts receivable are generated 22. After making a sale of $3,000, where
b. As a source of cash in the "cash
when a customer makes payments. $1,200 is paid in cash and $1,800 is
from financing activities" section.
d. Accounts receivable become more sold on credit, how would a company
c. As a use of cash in the "cash from go about updating its balance sheet?
valuable over time.
investing activities" section.
5. A company that uses the cash basis of
d. As a use of cash in the "cash from
accounting will: a. $1,800 debit in accounts receivable;
operating activities" section.
$3,000 credit in retained earnings;
14. What would the journal entry be for a $1,200 debit in cash
a. Record revenue when it is collected. company that takes out a five-year,
$100,000 business loan? b. $3,000 debit in retained earnings;
b. Record revenue when it is earned.
$1,200 credit in cash; $1,800 credit
c. Record revenue at the same time as in accounts receivable
accounts receivable. a. Debit $100,000 non-current asset, c. $1,800 debit in accounts payable;
d. Record bad debt expense on the Credit $100,000 non-current $1,200 debit in cash; $3,000 credit
income statement. liabilities in retained earnings
6. What are the main sections on a b. Debit $100,000 current asset, Credit d. $1,200 credit in cash; $1,800 credit
balance sheet? $100,000 non-current liabilities in accounts payable; $3,000 debit in
c. Debit $100,000 non-current retained earnings
liabilities, Credit $100,000 non- 23. Which is not an example of financing
a. Assets, liabilities, income
current assets cash flow?
b. Assets, liabilities, equity
d. Debit $100,000 current liabilities,
c. Assets, liabilities, expenses Credit $100,000 current assets
a. Paying off a debt of $25,000
d. Assets, gains, revenue 15. Which accounts are associated with
cost of goods sold? b. Investing in equipment worth
7. How are a company’s financial $90,000
statements used?
c. Paying $12,000 worth of dividends
a. Accrued interest to shareholders
a. For internal analysis b. Depreciation d. Issuing $42,000 worth of shares
b. For external negotiation c. Dividends 24. Which side of the ledger account are
c. For compliance d. Inventory debits recorded on?
d. All of the above 16. Which organizations are involved in
8. Which of the following scenarios development of US Generally a. Left
increases accounts payable? Accepted Accounting Principles
(GAAP)? (Check all that apply.) b. Right
c. Depends on the debit
a. A customer fails to pay an invoice.
a. Financial Accounting Standards 25. Are assets on the balance sheet
b. A supplier delivers raw materials on Board (FASB) recorded at their estimated fair market
credit. value?
b. Government Accounting Standards
c. Office supplies are purchased with Board (GASB)
cash. a. Yes
c. Securities and Exchange
d. None of the above Commission (SEC) b. No
9. Which of the following must a certified d. Federal Accounting Standards c. Sometimes; it’s situational
public accountant (CPA) have in-depth Advisory Board (FASAB)
knowledge of to pass the CPA 26. Increasing an asset involves crediting
licensing exam? (Check all that apply.) 17. Which inventory valuation method the account.
reflects the most current market value
for inventory on hand?
a. Accounting software packages a. True
b. Auditing b. False
a. Last-in-First-Out (LIFO)
c. Derivatives 27. Unearned revenues are recorded on a
b. Average Costs
company’s balance sheet under which
d. International banking laws c. First-in-First-Out (FIFO) kind of account?
10. What is the result of the following d. Specific Identification
transaction for Company A? Company
18. Which of the following statements is a. Current asset
A’s customer is unable to pay for a
previous credit sale in accordance with not true about intercompany b. Owners’ or stockholders’ equity
Company A’s 90-day payment terms. accounting?
c. Non-current asset
The customer makes a promissory
note to Company A that extends d. Liability
a. Intercompany transactions are
payment over a 24-month term between two units within the same 28. What is the minimum number of
including 5% interest. legal entity. accounts that accounting entries can
have?
a. No result because the customer
didn’t pay.
 a. One
b. Four
c. Five
d. Two
29. The listing of all the financial accounts
within a company’s general ledger is
called the _____.

a. Chart of accounts
b. Journal entry
c. Balance sheet
d. P&L statement
30. Which is not classified as a current
asset?

a. Cash
b. Product inventory
c. Liquid assets
d. Prepaid liabilities
e. Property
31. Which formula is used to calculate
operating income?

a. Revenue + Direct Operating Cost =

Operating Income
b. Indirect Operating Cost - Revenue =
Operating Income
c. Gross Income - Operating Expenses
= Operating Income
d. Gross Profit - Indirect Operating
Cost = Operating Income
32. Which of these statements about
accrual accounting is true?

a. Revenue is recorded only when

payments are received, while
expenses are recognized when
they're incurred.
b. All revenue from prepayments
should be recognized when the
payment is received, while expenses
accrue over the life of the obligation.
c. If the business has provided the
goods or services and can
reasonably expect to receive cash, it
can recognize the revenue in that
period.
d. The matching principle dictates that
expenses should be recognized
when they are incurred, regardless
of when revenue is recognized.
33. In a journal entry, a debit decreases
which of the following accounts?

a. Cash
b. Accounts Payable
c. Supplies Expense
d. Both a and c
34. Which describes the double-declining
balance depreciation method?

a. Estimated salvage value is greater

at the end of the assets’ useful life
than with straight-line depreciation.
b. It yields reports of higher income in
the early years and lower income
later on.
c. This method decreases the useful
life of the asset and disposal costs
by half.
d. The depreciation expense is larger
in the first few years and gets
smaller as time goes on.
35. Which one of these WILL NOT yield
earnings before interest and taxes
(EBIT)?

a. Revenue - Cost of goods sold -

Operating expenses
b. Net income + Tax expense +
Interest expense
c. Sales + Taxes + Interest
d. Gross profit - Operating expenses