Accounting MCQs

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Which of the following concepts (principles) would be most likely to require that an item be recorded at the amount actually paid?

 

entity concept

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reliability concept

 

cost principle

 

going-concern concept

 

Which of the following financial statements reports expenses in decreasing order of their amount, with the largest expense first?

 

income statement

 

statement of cash flows

 

statement of owner’s equity

 

balance sheet

 

Which of the following statements about revenue is correct?

 

Revenues decrease owner’s equity, so a revenue account’s normal balance is a credit balance.

 

Revenues decrease owner’s equity, so a revenue account’s normal balance is a debit balance.

 

Revenues increase owner’s equity, so a revenue account’s normal balance is a credit balance.

 

Revenues increase owner’s equity, so a revenue account’s normal balance is a debit balance.

 

Under which of the following methods of accounting is an expense recorded when it is incurred, regardless of when cash is paid?

 

Receivable

 

Deferral

 

Cash

 

Accrual

Which of the following is NOT a long-term asset?

 

Accounts receivable

 

Buildings

 

Land

 

Equipment

A company that uses the perpetual inventory method purchases inventory of $2,000 on account FOB shipping point with terms of 2/10 net/30. The seller prepays $100 of transportation costs for the company. Which of the following entries would be made to record full payment to the seller when the payment is made 20 days later?

 

The accounting entry would be a $2,100 debit to Accounts Payable, a $40 credit to Inventory and a $2,060 credit to Cash.

 

The accounting entry would be a $2,060 debit to Accounts Payable, a $40 debit to Inventory and a $2,100 credit to Cash.

 

The accounting entry would be a $2,100 debit to Accounts Payable, a $42 credit to Inventory and a $2,058 credit to Cash.

 

The accounting entry would be a $2,100 debit to Accounts Payable and a $2,100 credit to Cash.

 

Which of the following concepts (principles) would be most likely to require an assumption that the entity will remain in operation for the foreseeable future?

 

entity concept

 

going-concern concept

 

reliability concept

 

cost principle

 

Which of the following is an asset that is expected to be converted to cash, sold, or consumed during the next year (or normal operating cycle, if longer)?

 

Current asset

 

Quick asset

 

Long-term asset

 

Liquid asset

 

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