Accounting Principles Hà Nội NEU University

Accounting Principles: Chapters 1–6 Exam

30 questions

60 min

Answer key

Exam info

Subject: Accounting Principles
Exam type: University
Questions: 30
Duration: 60 min
Answers: ✓ With explanations
School: Đại học Kinh tế Quốc dân (NEU)

Questions (30)

Q 1.
A store manager uses product-level cost and revenue information to decide whether a product line should be discontinued. Which classification best describes this situation?
- A.
  Internal user; analysis and interpretation of accounting information
- B.
  External user; transaction identification
- C.
  Internal user; recording only
- D.
  External user; maintaining the general ledger
Q 2.
Which organization is primarily responsible for developing accounting standards used by U.S. companies?
- A.
  International Accounting Standards Board
- B.
  Securities and Exchange Commission
- C.
  Financial Accounting Standards Board
- D.
  Sarbanes-Oxley Act
Q 3.
A business pays 18,000 dollars in cash to purchase equipment. What is the immediate effect on the accounting equation?
- A.
  Total assets increase by 18,000 dollars, while liabilities remain unchanged.
- B.
  Total assets increase by 18,000 dollars, while owner's equity decreases by 18,000 dollars.
- C.
  Total assets decrease by 18,000 dollars, while liabilities increase by 18,000 dollars.
- D.
  Total assets remain unchanged, but cash decreases and equipment increases by equal amounts.
Q 4.
Which statement correctly pairs a financial statement with its reporting basis and primary purpose?
- A.
  Income statement; financial position at a specific date
- B.
  Balance sheet; financial position at a specific date
- C.
  Owner's equity statement; assets at a point in time
- D.
  Statement of cash flows; only the ending cash balance
Q 5.
Which group contains accounts that normally have debit balances?
- A.
  Assets, owner's drawings, and expenses
- B.
  Liabilities, owner's capital, and revenues
- C.
  Assets, liabilities, and expenses
- D.
  Owner's capital, revenues, and expenses
Q 6.
A company buys a delivery truck for 9,000 dollars, pays 2,500 dollars immediately, and owes the balance. Which compound entry is correct?
- A.
  Debit Cash 9,000; credit Equipment 2,500 and Accounts Payable 6,500.
- B.
  Debit Equipment 9,000; credit Cash 9,000.
- C.
  Debit Cash 9,000; credit Equipment 2,500 and Accounts Payable 6,500.
- D.
  Debit Equipment 9,000; credit Cash 2,500 and Accounts Payable 6,500.
Q 7.
Which situation can still leave a trial balance with equal total debits and total credits?
- A.
  A journal entry is debited in the ledger but omitted from the trial balance.
- B.
  A complete, balanced journal entry is never posted to the ledger.
- C.
  A balanced entry is posted to the wrong debit and credit accounts.
- D.
  Two unrelated errors have equal amounts and occur on the same side of the trial balance.
Q 8.
A company received 10,000 dollars in advance and initially credited Unearned Service Revenue. By the end of the period, it has satisfied 70 percent of the related performance obligation. What adjustment is required?
- A.
  Debit Service Revenue 7,000; credit Cash 7,000.
- B.
  Debit Cash 7,000; credit Unearned Service Revenue 7,000.
- C.
  Debit Unearned Service Revenue 7,000; credit Service Revenue 7,000.
- D.
  Debit Accounts Receivable 7,000; credit Service Revenue 7,000.
Q 9.
Before adjustment, Supplies has a 4,500-dollar balance. A physical count shows 2,700 dollars of supplies remaining. What adjusting entry is required?
- A.
  Debit Supplies Expense 1,800; credit Supplies 1,800.
- B.
  Debit Supplies 1,800; credit Supplies Expense 1,800.
- C.
  Debit Supplies Expense 1,800; credit Cash 1,800.
- D.
  No adjustment is needed because supplies are already recorded as an asset.
Q 10.
An 18-month insurance policy costing 7,200 dollars was paid in advance. Four months have now expired. What adjustment should be made?
- A.
  Debit Prepaid Insurance 1,600; credit Insurance Expense 1,600.
- B.
  Debit Insurance Expense 1,600; credit Cash 1,600.
- C.
  Debit Accumulated Depreciation 1,600; credit Insurance Expense 1,600.
- D.
  Debit Insurance Expense 1,600; credit Prepaid Insurance 1,600.
Q 11.
At year-end, services performed but unbilled total 2,400 dollars, and employees have earned but have not been paid 1,100 dollars. Which compound adjusting entry is correct?
- A.
  Debit Accounts Receivable 2,400; credit Service Revenue 2,400.
- B.
  Debit Accounts Receivable 2,400 and Salaries and Wages Expense 1,100; credit Service Revenue 2,400 and Salaries and Wages Payable 1,100.
- C.
  Debit Accounts Receivable 2,400 and Salaries and Wages Expense 1,100; credit Service Revenue 2,400 and Cash 1,100.
- D.
  Debit Salaries and Wages Payable 1,100; credit Accounts Receivable 2,400.
Q 12.
Which statement about an adjusted trial balance is accurate?
- A.
  It proves that every transaction was recorded completely and correctly.
- B.
  It is prepared before adjusting entries are recorded.
- C.
  It proves debit-credit equality after adjustments and provides a basis for preparing financial statements, but it does not prove that all entries are correct.
- D.
  It contains only permanent accounts.
Q 13.
On a worksheet, where is net income entered to make both the income statement and balance sheet columns balance?
- A.
  Income statement debit column and balance sheet credit column
- B.
  Income statement credit column and balance sheet debit column
- C.
  Income statement debit column and balance sheet debit column
- D.
  Income statement credit column and balance sheet credit column
Q 14.
Before closing, a company has 45,000 dollars of owner's capital, 38,000 dollars of revenues, 26,000 dollars of expenses, and 4,000 dollars of drawings. What is ending owner's capital after closing?
- A.
  57,000 dollars
- B.
  53,000 dollars
- C.
  41,000 dollars
- D.
  45,000 dollars
Q 15.
A 4,500-dollar purchase of equipment on account was recorded as a 450-dollar debit to Equipment and a 450-dollar credit to Accounts Payable. What correcting entry should be made without reversing the incorrect entry?
- A.
  Debit Cash 4,050; credit Equipment 4,050.
- B.
  Debit Accounts Payable 4,050; credit Equipment 4,050.
- C.
  Debit Equipment 450; credit Accounts Payable 450.
- D.
  Debit Equipment 4,050; credit Accounts Payable 4,050.
Q 16.
Which classification correctly places a patent, a mortgage due in four years, and a prepaid insurance policy expiring next year on a classified balance sheet?
- A.
  Patent—current asset; mortgage—current liability; prepaid insurance—long-term investment
- B.
  Patent—property, plant, and equipment; mortgage—current liability; prepaid insurance—intangible asset
- C.
  Patent—intangible asset; mortgage—long-term liability; prepaid insurance—current asset
- D.
  Patent—long-term investment; mortgage—intangible asset; prepaid insurance—property, plant, and equipment
Q 17.
At December 31, an adjusting entry debits Salaries and Wages Expense 900 dollars and credits Salaries and Wages Payable 900 dollars. What is the appropriate reversing entry on January 1?
- A.
  Debit Salaries and Wages Payable 900; credit Salaries and Wages Expense 900.
- B.
  Debit Salaries and Wages Expense 900; credit Salaries and Wages Payable 900.
- C.
  Debit Cash 900; credit Salaries and Wages Expense 900.
- D.
  Debit Salaries and Wages Payable 900; credit Cash 900.
Q 18.
Which statement describes the perpetual inventory system?
- A.
  It maintains no continuous inventory records and determines cost of goods sold only at period-end.
- B.
  It continuously updates inventory records and records cost of goods sold at each sale.
- C.
  It requires a physical inventory count to determine every sale's cost.
- D.
  It provides less control over inventory than a periodic system.
Q 19.
Under a perpetual system, a buyer purchases 5,000 dollars of merchandise on account, returns 500 dollars, and pays the remaining balance within the discount period. Terms offer a 3 percent discount. What entry is correct?
- A.
  Debit Accounts Payable 4,500; credit Cash 4,500.
- B.
  Debit Accounts Payable 4,500; credit Cash 4,365 and Sales Discounts 135.
- C.
  Debit Accounts Payable 4,500; credit Cash 4,365 and Inventory 135.
- D.
  Debit Inventory 4,500; credit Accounts Payable 4,500.
Q 20.
A seller returns merchandise with a selling price of 800 dollars to a customer. The original cost was 300 dollars, but the defective goods have a scrap value of 60 dollars. What entries should the seller make?
- A.
  Debit Sales Returns and Allowances 800; credit Sales Revenue 800.
- B.
  Debit Sales Returns and Allowances 800; credit Accounts Receivable 800; debit Cost of Goods Sold 300; credit Inventory 300.
- C.
  Record only the reduction of Accounts Receivable.
- D.
  Debit Sales Returns and Allowances 800; credit Accounts Receivable 800; debit Inventory 60; credit Cost of Goods Sold 60.
Q 21.
A merchandiser reports sales revenue of 300,000 dollars, sales returns of 12,000 dollars, sales discounts of 8,000 dollars, cost of goods sold of 180,000 dollars, operating expenses of 70,000 dollars, other revenues of 6,000 dollars, and other expenses of 2,000 dollars. What is net income?
- A.
  30,000 dollars
- B.
  34,000 dollars
- C.
  100,000 dollars
- D.
  36,000 dollars
Q 22.
A periodic-system merchandiser has beginning inventory of 25,000 dollars, net purchases of 90,000 dollars, freight-in of 5,000 dollars, and ending inventory of 32,000 dollars. What is cost of goods sold?
- A.
  88,000 dollars
- B.
  83,000 dollars
- C.
  95,000 dollars
- D.
  120,000 dollars
Q 23.
Which statement correctly applies inventory ownership rules?
- A.
  Goods held on consignment belong to the consignee, and goods in transit under FOB shipping point belong to the seller.
- B.
  Goods held on consignment belong to the consignor, and goods in transit under FOB destination belong to the buyer before delivery.
- C.
  Goods held on consignment belong to the consignor, and goods in transit under FOB shipping point belong to the buyer.
- D.
  Goods held on consignment belong to the consignee, and goods in transit under FOB destination belong to the buyer.
Q 24.
Beginning inventory consists of 1,000 units costing 8 dollars each. A purchase adds 2,000 units costing 10 dollars each. If 2,000 units are sold, what is cost of goods sold under periodic LIFO?
- A.
  8,000 dollars
- B.
  16,000 dollars
- C.
  18,000 dollars
- D.
  20,000 dollars
Q 25.
A company's 2024 ending inventory is overstated by 8,000 dollars. Assuming no other errors, what are the effects in 2024 and 2025?
- A.
  2024 cost of goods sold is understated and net income and equity are overstated; 2025 cost of goods sold is overstated and net income and equity are understated.
- B.
  2024 cost of goods sold is overstated and net income is understated; 2025 cost of goods sold is understated and net income is overstated.
- C.
  Both years have overstated cost of goods sold and understated net income.
- D.
  Only cost of goods sold is affected; assets, net income, and equity are unaffected.
Q 26.
Three inventory categories have costs and net realizable values of 40,000 versus 36,000 dollars, 25,000 versus 29,000 dollars, and 15,000 versus 14,000 dollars. What is the lower-of-cost-or-net-realizable-value inventory?
- A.
  80,000 dollars
- B.
  75,000 dollars
- C.
  79,000 dollars
- D.
  84,000 dollars
Q 27.
A company reports cost of goods sold of 600,000 dollars, beginning inventory of 80,000 dollars, and ending inventory of 120,000 dollars. What are its inventory turnover and approximate days in inventory?
- A.
  3.0 times and approximately 121.7 days
- B.
  5.0 times and 73.0 days
- C.
  6.0 times and approximately 60.8 days
- D.
  10.0 times and approximately 36.5 days
Q 28.
Using the gross profit method, a company has net sales of 250,000 dollars, an estimated gross profit rate of 40 percent, and cost of goods available for sale of 180,000 dollars. What is estimated ending inventory?
- A.
  40,000 dollars
- B.
  70,000 dollars
- C.
  80,000 dollars
- D.
  30,000 dollars
Q 29.
Goods available for sale cost 120,000 dollars and have a retail value of 150,000 dollars. Net sales at retail are 100,000 dollars. What is estimated ending inventory at cost under the retail inventory method?
- A.
  40,000 dollars
- B.
  50,000 dollars
- C.
  70,000 dollars
- D.
  120,000 dollars
Q 30.
Which statement accurately compares inventory accounting under GAAP and IFRS?
- A.
  IFRS prohibits FIFO, while GAAP permits only LIFO.
- B.
  GAAP permits LIFO, but IFRS prohibits it; both permit FIFO and average-cost and generally apply the lower of cost or net realizable value.
- C.
  Both GAAP and IFRS prohibit the average-cost method.
- D.
  GAAP and IFRS permit exactly the same inventory cost-flow assumptions, including LIFO under IFRS.

Answers and explanations are in mode.