1. The sales revenue generated during the normal course of business would be an example of which type of business activity? (Points : 3)        Operating        Investing        Financing        None of these Question 2.2. Which statement is normally prepared first? (Points : 3)        Income statement        Balance sheet        Statement of cash flows        Retained earnings statement Question 3.3. A list of assets, liabilities, and owners’ equity as of a specific date is a(n) (Points : 3)        income statement.        balance sheet.        statement of cash flows.        retained earnings statement. Question 4.4. Gilbert, Inc. had the following account balances at September 30, 2010. What is Gilbert’s net income for the month of September?   Accounts Payable $5,000 Capital Stock $10,000 Cash $14,300 Equipment $15,400 Fees Earned $54,400 Miscellaneous Expense $18,200 Rent Expense $4,150 Retained Earnings $6,550 Wages Expense $13,900 (Points : 3)        $32,450        $27,450        $6,550        $18,150 Question 5.5. For EFG Co., the transaction "Payment of dividends" would (Points : 3)        increase total assets.        decrease total assets.        have no effect on total assets.        increase stockholders’ equity. Question 6.6. The basic financial statements do NOT include the (Points : 3)        income statement.        tax return        balance sheet.        statement of cash flows. Question 7.7. For EFG Co., the transaction "Payment of interest expense" would (Points : 3)        increase total assets.        decrease total assets.        have no effect on total assets.        increase stockholders’ equity. Question 8.8. The payment of a liability (Points : 3)        decreases assets and stockholders' equity.        increases assets and decreases liabilities.        decreases assets and increases liabilities.        decreases assets and decreases liabilities.                                                   Question 9.9. The __________ is prepared with various sections, subsections, and captions that aid in its interpretation and analysis. (Points : 3)        accounting equation        retained earnings statement        intangible asset section        classified balance sheet Question 10.10. Updating accrual accounting records prior to preparing financial statements is called (Points : 3)        the closing process.        converting to cash basis accounting.        the adjustment process.        going concern adjustments. Question 11.11. Unearned revenue is what type of an account? (Points : 3)        Asset        Revenue        Stockholders’ equity        Liability             Question 12.12. The unearned rent account has a balance of $40,000. If $3,000 of the $40,000 is unearned at the end of the accounting period, the amount of the adjusting entry is (Points : 3)        $3,000.        $40,000.        $37,000.        $43,000. Question 13.13. Multiple-step income statements show: (Points : 3)        g.

1. 1. The sales revenue generated during the normal course of
business would be an example of which type of business
activity? (Points : 3)
Operating
Investing
Financing
None of these
Question 2.2. Which statement is normally prepared first?
(Points : 3)
Income statement
Balance sheet
Statement of cash flows
Retained earnings statement
Question 3.3. A list of assets, liabilities, and owners’ equity as
of a specific date is a(n) (Points : 3)
income statement.
balance sheet.
statement of cash flows.
retained earnings statement.
Question 4.4. Gilbert, Inc. had the following account balances
at September 30, 2010. What is Gilbert’s net income for the
month of September?
Accounts Payable
$5,000
Capital Stock
$10,000
Cash

2. $14,300
Equipment
$15,400
Fees Earned
$54,400
Miscellaneous Expense
$18,200
Rent Expense
$4,150
Retained Earnings
$6,550
Wages Expense
$13,900
(Points : 3)
$32,450
$27,450
$6,550
$18,150
Question 5.5. For EFG Co., the transaction "Payment of
dividends" would (Points : 3)
increase total assets.
decrease total assets.
have no effect on total assets.
increase stockholders’ equity.
Question 6.6. The basic financial statements do NOT include
the (Points : 3)
income statement.
tax return
balance sheet.
statement of cash flows.

3. Question 7.7. For EFG Co., the transaction "Payment of interest
expense" would (Points : 3)
increase total assets.
decrease total assets.
have no effect on total assets.
increase stockholders’ equity.
Question 8.8. The payment of a liability (Points : 3)
decreases assets and stockholders' equity.
increases assets and decreases liabilities.
decreases assets and increases liabilities.
decreases assets and decreases liabilities.

4. Question 9.9. The __________ is prepared with various
sections, subsections, and captions that aid in its interpretation
and analysis. (Points : 3)
accounting equation
retained earnings statement
intangible asset section
classified balance sheet
Question 10.10. Updating accrual accounting records prior to
preparing financial statements is called (Points : 3)
the closing process.
converting to cash basis accounting.
the adjustment process.
going concern adjustments.
Question 11.11. Unearned revenue is what type of an account?
(Points : 3)
Asset
Revenue
Stockholders’ equity
Liability
Question 12.12. The unearned rent account has a balance of
$40,000. If $3,000 of the $40,000 is unearned at the end of the
accounting period, the amount of the adjusting entry is (Points :
3)
$3,000.
$40,000.
$37,000.
$43,000.

5. Question 13.13. Multiple-step income statements show: (Points
: 3)
gross profit but not income from operations.
neither gross profit nor income from operations.
both gross profit and income from operations.
income from operations but not gross profit.
Question 14.14. Office salaries, depreciation of office
equipment, and office supplies are examples of what type of
expense? (Points : 3)
Selling expense
Miscellaneous expense
Administrative expense
Other expense
Question 15.15. Which expenses are subtracted from gross
profit to arrive at income from operations? (Points : 3)
All expenses
Cost of merchandise sold
Operating expenses
Sales expenses
Question 16.16. Dig, Inc. had the following merchandise
transactions in October:
Purchases
$50,000
Purchase returns
$ 4,000
Purchase discounts
$ 1,000
Transportation in
$ 2,000

6. What is the total cost of merchandise purchased for Dig, Inc.?
(Points : 3)
$50,000
$47,000
$52,000
$48,000
Question 17.17. A firm’s internal control environment is
influenced by (Points : 3)
Management’s operating style.
organizational structure.
personnel policies.
all of these.
Question 18.18. Which of the following would be added to the
balance per books on a bank reconciliation? (Points : 3)
Service charges
Outstanding checks
Deposits in transit
Notes collected by the bank
Question 19.19. The Sarbanes-Oxley Act of 2002 requires
companies and their independent accountants to (Points : 3)
report on the financial activities of the company.
report on any fraud and theft detected in the company.
report on the state of the economy and likelihood of fraud.
report on the effectiveness of the company’s internal
controls.
Question 20.20. Which of the following is NOT defined as

7. cash? (Points : 3)
Coins
Checks
Money orders
Commercial paper
Question 21.21. A written promise to pay a sum of money on
demand or at a definite time is called a(n) (Points : 3)
default.
deferral.
accrual.
promissory note.
Question 22.22. A note receivable due in 18 months is listed on
the balance sheet under the caption (Points : 3)
long-term liabilities.
fixed assets.
current assets.
investments.
Question 23.23. In reference to a promissory note, the person
who makes the promise to pay is called the (Points : 3)
maker.
payee.
seller.
receiver.
Question 24.24. The due date of a 90-day note dated July 5 is
(Points : 3)
September 30.
October 2.
October 3.

8. October 1.
Question 25.25. Fixed assets are ordinarily presented in the
balance sheet (Points : 3)
at current market values.
at replacement costs.
at cost less accumulated depreciation.
in a separate section along with intangible assets.
Question 26.26. Salvage value has a similar meaning as (Points
: 3)
residual value.
scrap value.
book value.
both residual value and scrap value.
Question 27.27. Expenditures for research and development are
generally recorded as (Points : 3)
current operating expenses.
assets and amortized over their estimated useful life.
assets and amortized over 40 years.
current assets.
Question 28.28. A company acquired some land for $80,000 to
construct a new office complex. Legal fees paid were $2,300,
delinquent taxes assumed were $3,400, and $5,850 was paid to
remove an old building from which salvaged materials sold for
$1,950. What is the cost basis for the land? (Points : 3)
$93,500
$91,550
$85,700
$89,600

9. Question 29.29. The total earnings of an employee for a payroll
period are referred to as (Points : 3)
take-home pay.
pay net of taxes.
net pay.
gross pay.
Question 30.30. What options does a business have when
financing operations? (Points : 3)
Debt financing
Equity financing
Asset financing
Both debt financing and equity financing
Question 31.31. If a corporation issues only one class of stock,
it is called (Points : 3)
common stock.
treasury stock.
no-par stock.
preferred stock.
Question 32.32. How is treasury stock shown on the balance
sheet? (Points : 3)
As an asset
As a decrease in stockholders' equity
As an increase in stockholders' equity
Treasury stock is not shown on the balance sheet.
Question 33.33. The par value per share of common stock
represents (Points : 3)

10. the minimum selling price of the stock established by the
articles of incorporation.
the minimum amount the stockholder will receive when the
corporation is liquidated.
the monetary amount assigned to each share of stock in the
articles of incorporation.
the amount of dividends per share to be received each year.
Question 34.34. An employee receives an hourly rate of $27,
with time and a half for all hours worked in excess of 40 during
a week. Payroll data for the current week are as follows: hours
worked, 46; federal income tax withheld, $350; cumulative
earnings for year prior to current week, $99,700; social security
tax rate, 6.0% on maximum of $106,800; and Medicare tax rate,
1.5% on all earnings. What is the net pay for the employee?
(Points : 3)
$798.85
$873.77
$953.16
$1,223.77
Question 35.35. Where is interest expense listed on the income
statement? (Points : 3)
Other expense section
Cost of merchandise sold
Operating expenses
Interest expense is on the balance sheet, not the income
statement.