Final Test Questions

Accounting Fundamentals II: completion: final exam Page 1 of 10
Resources Lessons Quizzes Assignments Discussion Completion
Accounting Fundamentals II
completion: final exam
Final Exam
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1. Who are the owners of a corporation?
j The people who started the corporation.

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j The vendors who sell merchandise to the corporation.

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j The stockholders of the corporation.

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j The customers who purchase merchandise from the corporation.

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2. What is a purchase discount?
j The price of the order.

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j A percentage taken off the Purchase Invoice amount.

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j The total cost of merchandise plus shipping.

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j The selling price of the merchandise.

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3. What do the Accounts Payable Ledger accounts show?
j How much money is owed to the business by its customers.

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https://www.ed2go.com/cgi-bin/classroom/final.cgi?c=af2&s=0607 8/10/2007
j How much money a business owes its vendors.

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j How many employees a business employs.

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j How much federal income tax is owed.

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4. What is a sales tax?
j A percent of the purchase price set by a government agency.

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j A discount in the price of merchandise.

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j The amount of the shipping charges for the order.

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j The price of one item ordered.

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5. What is a sales discount?
j The quantity ordered multiplied by the price of each item.

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j A percent that can be deducted from the invoice merchandise total (not including
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shipping charges).
j The total of the merchandise plus the shipping charges.

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j The amount owed to the government for taxes.

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6. Where would a sale on account be journalized?
j Sales Journal.
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j Cash Receipts Journal.

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j Cash Payments Journal.

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j General Journal.
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7. What is a bad debt or written-off debt?
j A debt that the business owes a vendor.

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j A debt that a customer owes the business but will not pay.
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j A debt that does not have a sales tax included in the total.
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j A debt that will be paid in 10 days.

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8. When an account balance is written off, what happens to the account balance?
j It is zeroed out by an adjusting entry.

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j It is reduced by 10%.
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j It is increased by interest in the amount of 12%.

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j It is sent to a collection agency.

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9. How often is an allowance for uncollectible accounts determined?
j Each week.
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j At the end of each fiscal period.

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j Each day.
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j Each employee pay period.

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10. What is an example of a plant asset?
j A computer.
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j Scotch tape.
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j Copier paper.
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j A box of pencils.
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11. What is an example of a current asset?
j A copy machine.
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j A fax machine.
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j Light bulbs.
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j A desk.
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12. What is the life expectancy of a plant asset?
j The original price of the piece of equipment.

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j The number of payments that are made on the purchase.

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j The number of years that the equipment is expected to be operational and useful
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to the business.
j The amount of annual depreciation allocated to the piece of equipment.

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13. Why is a Note Receivable classified as a current asset?
j It represents money that should be received within one year.

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j It represents a liability that must be paid by the business.

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j It represents the amount of money that the owner has withdrawn from the
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business.
j It represents the amount of capital that the owner has invested in the business.
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14. What would the maturity date on a nine-month Note Payable dated May 5 be?
j January 5.
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j March 5.
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j February 5.
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j November 5.
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15. What would the interest fee on a six-month Note Receivable in the amount of
$3,000.00 at a rate of 4% be?
j $120.00.
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j $240.00.
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j $60.00.
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j $80.00.
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16. A Closing Entry is necessary for all expense accounts for what reason?
j So that those accounts will have a zero balance with which to begin the new
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fiscal period.
j So that the balance in expense accounts will be doubled.

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j So that the debits and credits in the General Ledger will be equal.
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j So that the expense account balances and the income account balances agree.
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17. What is accrued interest income?
j Income that the business will never receive.

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j Income that the owner has given to the business from his personal finances.
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j Income that the business has earned in one fiscal period but will receive in a
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future fiscal period.
j Money that the business owes its employees.

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18. Interest due on a Note Payable in one fiscal period but not paid until the next fiscal
period is referred to as what?
j Accrued income.
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j An accrued expense.
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j Outstanding interest payable.

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j An Account Payable.
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19. What is the main purpose of the Trial Balance section of the worksheet?
j To show the net income or net loss for the fiscal period.
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j To prove the equality of debits and credits in the General Ledger.

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j To show the corporation's capital stock.

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j To show the dividend paid for the quarter.

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20. What are retained earnings?
j The total net income of the corporation for the fiscal period.
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j The amount divided among the board of directors.

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j The portion of the net income that the corporation keeps for expansion or
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business-related activities.
j The total amount of net income earned in the fiscal period.

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21. What is capital stock?
j The total earnings of the corporation for the fiscal period.

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j The amount that is paid out to stockholders each quarter.

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j The amount taken in from the sale of shares of stock.

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j The total amount of Notes Receivable for the fiscal period.

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22. What classification of accounts is entered into the Trial Balance section of the
worksheet?
j All account classifications in the General Ledger.

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j Assets and Liabilities.

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j Expenses.
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j Revenue.
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23. What two accounts are affected by the adjusting entry to Merchandise Inventory?
j Merchandise Inventory and Purchases.

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j Merchandise Inventory and Sales.

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j Merchandise Inventory and Income Summary.

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j Income Summary and Sales.

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24. In the Income Statement section of the worksheet, if the Debit column (column 5) is
smaller than the Credit column (column 6), what does this indicate?
j The business has a net loss.

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j The business has dividends that it must pay to its stockholders.

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j The business has a net income.

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j The business needs to decrease its expenses.

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25. What does the component percentage for expenses show?
j How much of each dollar in sales was spent on expenses.

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j How much of the working capital was spent for expenses.

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j How much out of Accounts Receivable was spent on expenses.

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j How much the stockholders will receive in dividends.

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26. What is the main purpose of the Stockholders' Equity Statement?
j To show the total amount of sales.

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j To show the cost of merchandise on hand at the end of the fiscal period.
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j To show the increase or decrease in the stockholders' equity.

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j To show the total liabilities owed by the corporation.

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27. What is the book value of an asset?
j The price that was originally paid for the item.

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j The number of years that the item has been in use.

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j The difference between the asset's account balance and the depreciation
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assigned to that asset.
j The depreciation assigned to the item.

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28. If the balance in Merchandise Inventory is larger at the end of the year than at the
beginning, what adjusting entry would you make for this account?
j A credit entry.
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j A debit entry for the difference.

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j No entry.
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j A credit entry for $1,000.00.

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29. What is the main purpose of closing entries?
j To show the board of directors how much money the corporation owes its
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vendors.
j To decrease the balance in various General Ledger accounts.

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j To close out various General Ledger accounts and prepare the General Ledger
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for the next fiscal period.
j To determine if the corporation had a net income or a net loss for the fiscal
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period.
30. What does the balance in the General Ledger account Dividends Payable represent?
j The amount of money that the board of directors has earned for the fiscal period.
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j The amount of dividends that the corporation owes its stockholders.

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j The amount of the net income for the fiscal period.

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j The amount of money that the corporation needs to raise through the sale of
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stock.
31. What is another name for FICA?
j Aid to Needy Families.

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j Social Security tax.

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j Retirement tax.
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j Old Age Pension tax.

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32. How is the amount of federal income tax withheld determined?
j By the number of hours an employee works.

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j By how long the employee has worked for the business.

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j By the gross wages, marital status of the employee, and number of allowances.
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j By the amount of work that the employee performs.

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33. What are two voluntary deductions that an employee may elect to have withheld from
his pay?
j Federal income tax and Social Security tax.

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j Federal income tax and United Way donations.

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j U.S. Savings Bonds and United Way donations.

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j Social Security tax and health insurance premiums.

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34. What is the main purpose of the 941 Report, Employer's Quarterly Federal Tax
Return?
j To show how many people the business employs.

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j To show how much federal income tax and FICA tax is due the federal
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government.
j To determine how many total allowances all employees of the business are
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claiming.
j To send in the sales tax collected for the quarter.

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35. Why must an employer have an employee fill in a W-4 form when he or she begins
work, and yearly thereafter?
j To determine if the employee is qualified for the job.

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j To show the employee's name, address, Social Security number, marital status,
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and number of allowances.
j To find out the employee's age.

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j To determine if the employee has a criminal record.

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36. How much federal income tax would an employee with four allowances have
withheld?
j More than an employee with three allowances.

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j Less than an employee with five allowances.

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j Less than an employee with two allowances.

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j More than an employee with one allowance.

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Accounting Fundamentals II: completion: final exam Page 1 of 10

Resources Lessons Quizzes Assignments Discussion Completion

1. Who are the owners of a corporation?

j The people who started the corporation.

j The vendors who sell merchandise to the corporation.

j The stockholders of the corporation.

j The customers who purchase merchandise from the corporation.

2. What is a purchase discount?

j The price of the order.

j A percentage taken off the Purchase Invoice amount.

j The total cost of merchandise plus shipping.

j The selling price of the merchandise.

3. What do the Accounts Payable Ledger accounts show?

j How much money is owed to the business by its customers.

j How much money a business owes its vendors.

j How many employees a business employs.

j How much federal income tax is owed.

4. What is a sales tax?

j A percent of the purchase price set by a government agency.

j A discount in the price of merchandise.

j The amount of the shipping charges for the order.

j The price of one item ordered.

5. What is a sales discount?

j The quantity ordered multiplied by the price of each item.

j The total of the merchandise plus the shipping charges.

j The amount owed to the government for taxes.

6. Where would a sale on account be journalized?

j Cash Receipts Journal.

j Cash Payments Journal.

7. What is a bad debt or written-off debt?

j A debt that the business owes a vendor.

j A debt that will be paid in 10 days.

j It is zeroed out by an adjusting entry.

j It is increased by interest in the amount of 12%.

j It is sent to a collection agency.

9. How often is an allowance for uncollectible accounts determined?

j At the end of each fiscal period.

j Each employee pay period.

10. What is an example of a plant asset?

11. What is an example of a current asset?

12. What is the life expectancy of a plant asset?

j The original price of the piece of equipment.

j The number of payments that are made on the purchase.

j The amount of annual depreciation allocated to the piece of equipment.

13. Why is a Note Receivable classified as a current asset?

j It represents money that should be received within one year.

j It represents a liability that must be paid by the business.

j So that the balance in expense accounts will be doubled.

17. What is accrued interest income?

j Income that the business will never receive.

j Money that the business owes its employees.

j Outstanding interest payable.

j To prove the equality of debits and credits in the General Ledger.

j To show the corporation's capital stock.

j To show the dividend paid for the quarter.

20. What are retained earnings?

j The amount divided among the board of directors.

j The total amount of net income earned in the fiscal period.

21. What is capital stock?

j The total earnings of the corporation for the fiscal period.

j The amount that is paid out to stockholders each quarter.

j The amount taken in from the sale of shares of stock.

j The total amount of Notes Receivable for the fiscal period.