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Accounting Quiz

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to everyone in the wonderful field of accounting, business
and the study of accounting. Good luck!

This week's quiz brought to you by:
Lisa McKinney, Faculty
The University of Alabama



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1 - Which of the following liabilities will require a company to provide goods and services in the future rather than cash?
accounts payable
unearned revenues
note payable
wages payable

2 - The cost of fixed assets recognized as being consumed during a fiscal period is:
interest expense
cost of goods sold
plant expense
depreciation expense

3 - An account that identifies a resource that has been paid for but not used up is:
prepaid expense
accounts payable
accounts receivable
cost of goods sold

4 - When a company performs the accounting cycle step know as closing the books, which of the following occurs?
retained earnings is reset to zero
all asset and liability accounts are reset to zero
all revenue and expense accounts are reset to zero
the company is liquidated

5 - Merchandise inventory costing $10,000 was sold to customers on credit for $15,000. What amount of revenue and cash flow resulted from this transaction?
Revenue of $5,000 and Cash Flow of $15,000
Revenue of $15,000 and Cash Flow of $0
Revenue of $10,000 and Cash Flow of $10,000
Revenue of $5,000 and Cash Flow of $0

6 - Tempel Manufacturing uses accrual accounting. Each of the following events occurred during the month of February. Which one of them should be recorded as a revenue or expense for the month of February?
Collections of $10,000 were made from sales that occurred during January.
Materials costing $18,000 were purchased and paid for. It is expected that they will be used during March.
A bill in the amount of $8,600 was received from a supplier for goods purchased during January. It was paid immediately.
Sales of $30,000 were made on credit. They will be collected during March.

7 - On September 1, 2005, the company received a $9,000 check from a tenant to cover the next six months' rent. It was recorded on this date as Unearned Revenue. What are the correct balances as of December 31, 2005? :
$3,000 Unearned Revenue; $6,000 Rental Revenue
$6,000 Unearned Revenue; $6,000 Rental Revenue
$0 Unearned Revenue; $6,000 Rental Revenue
$3,000 Unearned Revenue; $3,000 Rental Revenue

8 - The Prepaid Insurance account has a $4,800 balance before adjustment. This represents the premium paid on a 1-year policy on October 1, 2005. Regarding this transaction, what amount should be reported on the December 31, 2005, balance sheet and income statement, respectively after appropriate adjusting entries are made?
Prepaid Insurance $1,200; Insurance Expense $3,600
Prepaid Insurance $3,600; Insurance Expense $1,200
Prepaid Insurance $3,600; Insurance Expense $0
Prepaid Insurance $0; Insurance Expense $1,200

9 - Select the answer that best describes the end-of-year adjusting entry required for the following transaction on December 31, 2005: The supplies account has a $2,000 balance. A physical count indicates that $500 is on hand at year end.
increase assets
decrease liabilities
increase owner's equity
increase expenses

10 - A credit sales results in which of the following set of effects on the financial statements?
Sales Revenue on the Income Statement and Accounts Receivable on the Balance Sheet
Sales Revenue on the Income Statement and Cash on the Balance Sheet
Accounts Receivable on the Income Statement and Cash on the Balance Sheet
Accounts Receivable on the Income Statement and Sales Revenue on the Balance Sheet

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