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Sample Test for Financial Accounting Multiple Choice Identify the letter of the choice that best completes the statement or answers the question

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Sample Test for Financial Accounting Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. In the annual report, where would a financial statement reader find out if the company’s financial statements give a fair depiction of its financial position and operating results? a. Notes to the financial statements b. Management discussion and analysis section c. Balance sheet d. Auditor’s report e. None of the options listed ____ 2. Which accounting assumption assumes that an enterprise will continue in operation long enough to carry out its existing objectives and commitments? a. Monetary unit assumption b. Economic entity assumption c. Time period assumption d. Going concern assumption e. None of the options listed Johnny’s Car Repair Shop started the year with total assets of $60,000 and total liabilities of $40,000. During the year the business recorded $100,000 in car repair revenues, $55,000 in expenses, and dividends of $10,000. ____ 3. The net income reported by Johnny’s Car Repair Shop for the year was a. $35,000. b. $45,000. c. $20,000. d. $90,000. e. none of the options listed ____ 4. The purchase of an office building by issuing long-term notes payable should be reported as a a. cash outflow in the financing section of the statement of cash flows. b. cash outflow in the investing section of the statement of cash flows. c. cash outflow in the operating section of the statement of cash flows. d. noncash investing and financing activity. e. none of the options listed ____ 5. If beginning capital was $25,000, ending capital is $37,000, and the owner's withdrawals were $23,000, the amount of net income or net loss for the period was: a. net loss of $35,000 b. net income of $35,000 c. net income of $14,000 d. net loss of $14,000 e. none of the options listed ____ 6. The deferred income tax liability: a. Represents income tax payments that are deferred until future years because of temporary differences between GAAP rules and tax accounting rules. b. Is a contingent liability. c. Can result in a deferred income tax asset. d. Is never recorded. e. Is recorded whether or not the difference between taxable income and financial accounting income is permanent or temporary. ____ 7. A company normally sells it products for $20 per unit, which includes a profit margin of 25%. However, the selling price has fallen to $15 per unit. This company's current inventory consists 200 units purchased at $16 per unit. Replacement cost has now fallen to $13 per unit. Calculate the value of inventory at the lower of cost or market. a. $2,550. b. $2,600. c. $2,700. d. $3,000. e. $3,200. ____ 8. A measure of profitability is the a. current ratio. b. debt to total assets ratio. c. return on assets ratio. d. working capital. e. none of the options listed ____ 9. Working capital is a measure of a. consistency. b. liquidity. c. profitability. d. solvency. e. none of the options listed ____ 10. The difference between the balance of a plant asset account and the related accumulated depreciation account is termed a. market value. b. contra asset. c. book value. d. liability. e. none of the options listed ____ 11. A company purchased a POS cash register on January 1 for $5,400. This register has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second-year of its useful life using the double-declining-balance method? a. $ 500. b. $ 800. c. $ 864. d. $1,000. e. $1,080. ____ 12. Which of the following is not an activity listed in the statement of cash flows? a. Investing Activities b. Funding Activities c. Operating Activities d. Financing Activities e. None of the options listed ____ 13. Net present value is negative when a. the present value of cash inflows is greater than the present value of cash outflows. b. the present value of cash outflows is greater than the present value of cash inflows. c. the future value of cash inflows is greater than the present value of cash outflows. d. the present value of cash outflows is greater than the future value of cash outflows. e. none of the options listed ____ 14. Which of the following is an example of a deferral? a. Accruing year-end wages b. Recognizing revenues earned but not yet recorded c. Recording prepaid rent d. Recognizing expenses incurred but not yet recorded e. None of the options listed ____ 15. A company began the accounting period with $50,000 in owner’s capital, ended with $75,000 in owner’s capital, and the owner withdrew $30,000 during the period for personal use. What was the company’s net income or loss for the period? a. $55,000 net income b. $30,000 net loss c. $5,000 net loss d. $5,000 net income e. none of the options listed ____ 16. Deciding whether to record a sale when the order for services is received or when the services are performed is an example of a a. classification issue. b. valuation issue. c. recognition issue. d. communication issue. e. none of the options listed Sample Test for Financial Accounting Answer Section MULTIPLE CHOICE 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: D D B D B A B C B C C B B C A C Sample Test for Management Accounting Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. Which phrase best describes the current role of the managerial accountant? a. Managerial accountants prepare the financial statements for an organization. b. Managerial accountants facilitate the decision-making process within an organization. c. Managerial accountants make the key decisions within an organization. d. Managerial accountants are primarily information collectors. e. Managerial Accountants are solely staff advisors in an organization. 2. An example of qualitative data is: a. product cost b. customer satisfaction c. net income d. inventory cost e. net worth. 3. Product and service costing information is prepared for a. manufacturing companies with inventory. b. merchandising companies. c. service providers. d. each of the other four answers.. e. manufacturing companies without inventory. 4. Manufacturing costs typically consist of a. direct materials, direct labor, and manufacturing overhead. b. production and shipping costs. c. production and marketing costs. d. direct materials, direct labor, and administrative costs. e. direct materials, direct labor, marketing and administrative costs. 5. In comparison to the traditional manufacturing environment, overhead costs in a JIT environment all the following are true except: a. are more easily tracked to products. b. are frequently direct in nature. c. include rent, insurance and utilities. d. most of the costs are likely to be indirect in nature. e. labor need not be tracked to the product. 6. As production increases within the relevant range, a. variable costs will vary on a per unit basis. b. variable costs will vary in total. c. fixed costs will vary in total. d. fixed and variable cost stay the same in total. e. none of the other four answers is true. 7. You are given the cost and volume information below: Volume Cost 1 unit 10 units 100 units $ 15 150 1500 What type of a cost is given? a. fixed cost b. variable cost c. step cost d. mixed cost e. rent cost. 8. Which of the following statements regarding graphs of fixed and variable costs is true? a. Variable costs can be represented by a straight line where costs are the same for each data point. b. Fixed costs can be represented by a straight line starting at the origin and continuing through each data point. c. Fixed costs are zero when production is equal to zero. d. Variable costs are zero when production is equal to zero. e. Fixed and Variable costs are curvilinear form above zero on the “Y” axis. 9. All of the following statements regarding budgeting is true except a. Budgeting helps managers determine the resources needed to meet their goals and objectives. b. Budgeting is a key ingredient in good decision-making. c. Budgeting is a bookkeeping task d. The focus of budgeting is planning. e. Budgeting is an executive responsibility. 10. Broihan Corporation has the following purchases budget for the last half of 2002: July August September $100,000 80,000 110,000 October November December $ 90,000 100,000 94,000 Historically, the company pays one half at the time of purchase and the remainder in the month following purchase. What are the expected cash disbursements in August? a. $ 80,000. b. $ 90,000. c. $ 95,000. d. $100,000 e. $105,000 11. The Inground Sprinkler Supply sells sprinkler systems suited for large or small yards. The company has decided to adopt an activity-based costing system. Last year the company incurred $1,000,000 in overhead costs related to the following activities: Activity Purchasing Material handling Quality inspection Allocation Base number of purchase orders number of shipments received number of inspections Overhead Cost $ 350,000 200,000 450,000 The activities for large and small yard systems were as follows: purchase orders shipments received inspections Large Small 15,000 7,500 11,500 20,000 12,500 11,000 If a customer requested a bid on a specially designed sprinkler that would probably require four inspections, how much quality inspection overhead would you include in the bid? a. $ 0 b. $40 c. $80 d. $120. e. $160. 12. Bubblemania has three product lines - A, B, and C. A Sales Variable costs Contribution Margin Fixed costs Net income $10,000 4,500 5,500 3,500 2,000 B 9,000 7,000 2,000 6,000 (4,000) C 12,000 6,000 6,000 3,000 3,000 Total 31,000 17,500 13,500 12,500 1,000 Product line B appears unprofitable, and management is considering discontinuing the line. How would the discontinuation of Product line B affect net income? a. increase by $4,000 b. decrease by $4,000 c. increase by $2,000 d. decrease by $2,000 e. increase by $6,000 13. Coed Novelties manufactures key chains for college bookstores. During 2003, the company had the following costs: Direct materials used $ Direct labor Factory rent Equipment deprecation – factory Equipment depreciation – office Marketing expense Administrative expenses 31,000 18,000 12,000 2,000 750 2,500 40,000 35,000 units produced were in 2003. What is the product cost per unit? a. approximately $1.24 b. $1.80 c. approximately $3.04 d. $1.40 e. approximately $1.82 14. The time value of money focuses on a. accounting net income. b. earnings per share. c. cash flow. d. current earnings e. accrual net income. 15. The Unique Bookshelf Company is considering the purchase of a custom delivery van costing approximately $50,000. Using a discount rate of 20%, the present value of future cost savings is estimated at $51,200. To yield the 20% return, the actual cost of the van should not exceed the $50,000 estimate by more than: a. $50,000 b. $51,200 c. $25,000 d. $ 1,200 e. 20% 16. The Cape Cod Cotton Candy Company had the following information available regarding last year's operations: Sales (100,000 units) Variable costs Contribution margin Fixed costs Net Income $200,000 100,000 100,000 50,000 50,000 If sales were to increase by 200 units, what would be the effect on net income? a. $400 increase b. $200 increase c. $150 increase d. $100 increase e. $200 loss Sample Test for Management Accounting Answer Section MULTIPLE CHOICE 1. ANS: B 2. ANS: B 3. ANS: D 4. ANS: A 5. ANS: D 6. ANS: B 7. ANS: B 8. ANS: D 9. ANS: C 10. ANS: B 11. ANS: C 12. ANS: D 13. ANS: B 14. ANS: C 15. ANS: D 16. ANS: B Gateway Macroeconomics Exam -- Sample #1 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. If expected inflation is 2%, the nominal interest rate is 7% and the economy is growing at a rate of 3%, the real interest rate is equal to 6% b. 12% 4% d. 5% 9% a. c. e. a. c. e. 2. The GDP deflator is (Real GDP x 100)/(Nominal GDP). b. (Nominal GDP x 100)/(Real GDP). (Nominal GDP)/(Real GDP). d. (Real GDP)/(Nominal GDP). none of the above. 3. According to the loanable funds framework, if businesses see new opportunities to expand capacity by building new factories, the likely effect will be that: Interest rates decrease due to an increase in borrowing. b. Interest rates decrease due to a greater amount of saving. There will be no change in interest rates. d. The total quantity of borrowing and lending will fall. None of the above. a. c. e. a. c. e. 4. A full-time student who did not have a job and was not looking for work would be categorized as employed b. unemployed not in the labor force d. marginally unemployed partially employed 5. Which of the following statements is consistent with the theory of liquidity preference? a. When the Federal Reserve Board of Govenors increases the money supply faster than usual, interest rates fall. b. When the Federal Reserve Board of Governors increases the money supply faster than usual, interest rates rise. c. When the Federal Reserve Board of Governors increases the money supply faster than usual, interest rates don't change in the short run, but we will get substantial inflation. d. When the Federal Reserve Board of Governors increases the money supply faster than usual, interest rates don't change in the short run, but the cost of living is likely to fall. e. None of the above statements are correct. 6. An onen market nurchase is where the Fed C. When the Federal Reserve Board of Governors increases the money supply faster than usual, interest rates don't change in the short run, but we will get substantial inflation. d. When the Federal Reserve Board of Governors increases the money supply faster than usual, interest rates don't change in the short run, but the cost of living is likely to fall. e. None of the above statements are correct. a. 6. An open market purchase is where the Fed purchases government bonds from the public, thereby decreasing the money supply. b. purchases government bonds from the public, thereby increasing the money supply. increases the money supply by selling government bonds to the public. d. decreases the money supply by selling government bonds to the public. none of the above. c. e. a. c. e. a. c. e. 7. All of the following would cause a rightward shift in the short-run aggregate-supply curve except a change in labor laws that facilitates labor mobility and thereby raises the productivity of workers. b. the invention of a new and more powerful computer chip that increases productivity throughout the economy. a war that reduces the economy's physical capital stock. d. new educational advances that substantially increase the level of human capital. an increase in immigration. 8. Which of the following is not an example of monetary policy? Purchasing of government bonds in an open market operation. b. A change in required reserve regulations. A change in the discount rate. d. An increase in the earned income tax credit. Selling of government bonds in an open market operation. 9. If nominal wages adjust slowly to changing economic conditions, then a decrease in the price level will cause the real wage rate to rise and employment and real output to fall. This description of the impact of a decrease in the price level on real output is used to explain: a shift in the aggregate-demand curve. b. the negative slope of the aggregate demand curve. a shift in the short-run aggregate-supply curve. d. the vertical shape of the long-run supply curve. the positive slope of the short-run aggregate-supply curve. 10. According to the theory of “money neutrality” which of the following statements is likely to be true? When the money supply is increased, real wage rates will rise. b. When the money supply is increased, real interest rates will fall. When the money supply is increased, real GDP will increase. d. When the money supply is increased, real wage rates will fall. When the money supply is increased, nominal wage rates will rise. 11. If the reserve ratio is 25 percent, the money multiplier is 2. b. 4. a. c. e. a. c. e. a. a. 11. If the reserve ratio is 25 percent, the money multiplier is 2. b. 4. 5. d. 8. c. e. 25. a. 12. Private property rights make it more likely that a society will develop rapidly. b. allow an individual to decide what to do with the product of his/her labor. force a person not to help support family members in need. d. allow the owners of a firm to decide what to do with any profits. all but “c”. c. e. a. 13. A country will grow faster if investment in human capital increases. b. saving decreases. the government raises taxes on savings. d. investment in physical capital decreases. all of the above. c. e. a. 14. The aggregate supply-aggregate demand model suggests that the government can stabilize an economy that experiences a sudden and unexpected decline in consumer confidence and aggregate demand by: increasing the money supply. b. decreasing government spending to balance the budget. raising taxes. d. all of the above. none of the above. c. e. a. c. 15. Suppose that aggregate consumption is $1,000,000, aggregate investment is $200,000, government spending is $300,000, the value of exports is $100,000, and the value of imports is $200,000. What is the value of Gross Domestic Product (GDP)? $1,800,000 b. $1,500,000 $1,400,000 d. $1,700,000 $1,600,000 16. If the dollar value of a country's exports is greater than the value of its imports, net foreign investment is generally positive. b. net foreign investment is unaffected. net foreign investment is generally negative. d. investment flows into the country. both a and d. e. a. c. e. Gateway Macroeconomics Exam -- Sample #2 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. Which of the following is an example of active fiscal policy? a. Government expenditures rise during a recession because unemployment insurance benefits increase. b. The government runs a budget deficit during a recession because income tax collections fall. c. Congress passes a tax cut after the beginning of a recession with the aim of stimulating the economy. d. all of the above none of the above e. a. 2. Negative net exports means that the country sells more goods abroad than it buys from other countries. b. the country buys more goods from other countries than it sells to other countries. c. the country has a closed economy. d. the country's tariffs are too low. both c and d e. a. 3. Which of the following is not an example of an automatic stabilizer? the increase in unemployment insurance payments during a recession b. the increase in welfare payments during a recession the reduction in income tax revenues during a recession d. the passage of a stimulus package to respond to a recession All of these are automatic stabilizers. C. e. e. 4. To decrease the money supply, the Fed would a. buy government bonds. b. increase the discount rate. c. decrease the reserve requirement. d. any of the above none of the above 5. The aggregate supply-aggregate demand model predicts that an unexpected increase in government spending will have what short-run effects? A decrease in the price level and an increase in real output. b. A decrease in the price level and no effect on real output. An increase in the price level and a decrease in real output. d. A decrease in both the price level and real output. An increase in both the price level and real output. 6. Which of the following would be included in Gross National Product (GNP) but not in Gross Domestic Product (GDP) of the United States? the earnings of an American-owned factory in Germany b. the income of a Texan employed in Oklahoma a. c. e. a. e. the income of employees of foreigners working in foreign embassies in the U.S. 7. According to the following information, what is the unemployment rate? (Round to the nearest tenth of a percent.) 10,000 500 3,000 a. b. Number of Employed: Number of Unemployed: Not in the Labor Force: 5.0% 4.8% 3.7% 30.0% none of the above c. d. e. a. 8. In economics, “National Saving” is calculated by Subtracting private consumption and investment from total income. b. Subtracting credit card debt from the total value of stock market investments. Combining the total value of savings accounts with stock market investments. d. Subtracting private and government consumption from total income. None of the above. c. e. a. c. e. a. c. 9. Which of the following is NOT one of the components of aggregate demand? Consumption spending. b. Investment spending. Government purchases of goods and services. d. Money supply Net exports. 10. In the long-run, higher saving leads to permanently faster growth. b. permanently slower growth. temporarily faster growth. d. temporarily slower growth. none of the above. 11. Which of the following is not included in a country's Gross Domestic Product (GDP)? the value of final goods sold b. the value of final services sold the value of investment d. the value of government expenditures the value of household production in the economy 12. Which of the following statements are correct? a. Economists using the classical dichotomy distinguish between variables measured in monetary units from those measured in physical units. e. a. c. e. b D1 variabler vorheg menured in tory unita b. c. d. the value of final services sold the value of investment the value of government expenditures the value of household production in the economy e. a. c. 12. Which of the following statements are correct? a. Economists using the classical dichotomy distinguish between variables measured in monetary units from those measured in physical units. b. Real variables are variables measured in monetary units. c. Nominal variables are variables measured in physical units. d. a is false, but b and c are both correct. e. a, b, and c are all correct. 13. The quantity equation relates a measure of the money supply (M), to the velocity of money (V), the GDP deflator (P) and real GDP (Y). Which of the following expression accurately describes the quantity equation? MY = PV b. MP=VY MV=PY d. M/P=V/Y e. None of the above describes the quantity equation. 14. An increase in the minimum wage will likely: increase structural unemployment. b. decrease structural unemployment. increase frictional unemployment. d. decrease frictional unemployment. increase cyclical unemployment. 15. According to the loanable funds framework, if businesses reduce their willingness to spend money on new capital equipment, inflation will increase b. interest rates will increase. interest rates will decrease. d. interest rates will not change. e. none of the above are true. a. c. e. a. c 16. Governments can increase the likelihood of economic development by a. instituting policies to see that everyone shares equally. b. supporting smooth transitions from one set of office-holders to another. c. encouraging banks to lend to politically favored borrowers at below-market interest rates. d. adopting policies that specifically benefit those in office. e. heavily taxing profits from new inventions.