Accounting Test
Accounting Mastery Quiz
Test your knowledge of accounting principles and practices with this comprehensive 12-question quiz. Designed for both students and professionals, it covers essential topics that are critical for understanding the financial world.
Topics include:
- Intangible assets
- Rent payments
- Depreciation
- Gross profit calculation
- Return on assets
1. Which one of the following is generally considered an intangible asset?
A. Plant, property, and equipment.
B. Purchased goodwill.
C. Computer Software.
D. Leasehold Improvements.
2. Beta Incorporated paid three months’ rent in advance on its new store. At the beginning of the next month, one month’s rent must be recorded as:
A. A prepaid asset.
A liability.
An expense.
Revenue.
3. Depreciation is an accounting procedure that:
A. Allocates the cost of an asset over its useful life.
B. Distributes the market value of an asset over its useful life.
C. Records the increase in value of real estate holdings.
D. Divides equipment cost over an accounting period.
4. Gross profit is calculated as:
A. Revenues minus extraordinary items.
B. Gross profits divided by net sales X 100.
C. Revenues minus cost of goods sold.
D. None of the above.
5. Which of the following pieces of information do you need to know to calculate the return on assets for the year?
A. The total current assets and the net income at the end of the year.
B. The total assets and the net income at the end of the year.
C. The total assets and the net operating income at the end of the year.
D. The current assets and the net income at the end of the year.
6. Possible future claims against a business are:
A. Contingent liabilities.
B. Loans.
C. Investments.
D. Interest income.
7. What does it mean when payment terms are expressed as “1%/10 net 30”?
A. If payment is not made within 30 days, there will be a 1% penalty every 10 days until payment is satisfied.
B. Payment is due in 30 days, but if payment is made within 10 days, there will be a 1% discount.
C. Payment is due in 30 days with a 10 day grace period, after which a 1% penalty will be assessed.
D. None of the above.
8. The accounting department needs to pay a vendor via wire transfer. Which scenario demonstrates the best process from an internal control standpoint?
A. The accounts payable coordinator initiates and sends the wire with a simultaneous notification to the CFO who then performs a follow-up call to the vendor to confirm receipt of funds.
B. The accounts payable coordinator verifies payment instructions, initiates the wire, and the CFO approves it and performs a follow-up call with the vendor to confirm receipt of funds.
C. The accounts payable coordinator requests the payment, the CFO verifies payment instructions, initiates the wire, and the operations manager approves it. The CFO then performs a follow-up call to the vendor to confirm receipt of funds.
D. The accounts payable coordinator verifies the payment instructions, the CFO initiates and sends the wire and then performs a follow-up call to the vendor to confirm receipt of funds.
9. Which statement(s) is true.
A. An income statement represents a point in time.
B. A balance sheet represents a point in time.
C. A balance sheet reflects performance over a period of time.
D. Both (a) and (c).
10. Net income is best described as:
A. Cash flow generated from operating activities.
B. Retained Earnings
C. Revenue minus expenses.
D. Taxable earnings in a given period.
11. Dual controls are an effective tool for what?
A. Ensuring effective communication and coordination between the business units.
B. Maximizing efficiency by reducing processing time.
C. Reducing the risk of fraud and errors.
D. Both (b) and (c).
12. Where would you expect to find cost of good sold expressed on the financial statements?
A. The consolidated cash flow statement.
B. The balance sheet and income statement.
C. The balance sheet
D. The income statement.
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