Exam122

Welcome to Your Builder's Guide to Accounting Free Supplemental Exam

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Exam Details

Time Limit
60 minutes

Questions
30 randomly selected

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Over 700 unique questions

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1 / 30

Offering incentive discounts such as “2% ‐ 10 days, net 30” means:

A) Customers get a 2% discount if they pay within 30 days

B) Customers get a 2% discount if they pay within 10 days

C) Customers must pay 2% more if late

D) No payment terms are specified

2 / 30

The flow of funds shown in Figure 11‐10 involves:

A) Transferring payroll funds from a clearing account to employees

B) Paying quarterly taxes

C) Moving sales revenue to savings

D) Allocating fixed overhead costs

3 / 30

If total sales are $750,000 and cost of goods sold is $450,000, gross profit margin is:

A) 25%

B) 30%

C) 40%

D) 50%

4 / 30

Under cash accounting, unpaid invoices are recorded as revenue.

A) True

B) False

5 / 30

At break‐even, net profit equals zero.

A) True

B) False

6 / 30

If the quick ratio is significantly lower than the current ratio, it usually means:

A) The company has strong cash reserves

B) The company is relying heavily on inventory

C) The company has no liabilities

D) The company has too much cash

7 / 30

Your business has fixed costs of $60,000 and your contribution margin ratio is 30%. What sales dollars are needed to break even? Where can you find the formula?

A) $18,000

B) $90,000

C) $180,000

D) $200,000

8 / 30

Cost systems aim to:

A) Increase raw material costs

B) Determine the exact cost of operations

C) Predict inflation

D) Reduce employee wages

9 / 30

Cash accounting provides the most accurate view of a company’s profitability over time.

A) True

B) False

10 / 30

Invoices should include enough detail to:

A) Confuse customers

B) Avoid customer questions and disputes

C) Delay payments

D) Reduce sales

11 / 30

An unbalanced trial balance usually signals:

A) Proper accounting

B) Financial stability

C) An error or omission

D) Increased profitability

12 / 30

Which is NOT one of the four ways to keep separate payroll records?

A) By pay period

B) By department

C) By employee

D) By vendor

13 / 30

Last In, First Out (LIFO) assumes that:

A) The newest inventory is sold first

B) The oldest inventory is sold first

C) Inventory cost never changes

D) Inventory is sold at retail value

14 / 30

Comparative analysis typically involves:

A) Single-year data

B) Historical comparisons

C) Future forecasting only

D) Detailed employee records

15 / 30

Cash flow trends are important because they:

A) Predict payroll requirements

B) Help forecast liquidity and financial stability

C) Increase total revenue

D) Eliminate fixed expenses

16 / 30

The Income Statement primarily shows:

A) Cash balances

B) Assets and liabilities

C) Revenues and expenses

D) Outstanding debts

17 / 30

Your company must file a form to report federal payroll taxes every quarter. Which form do you use and where is this discussed?

A) Form W-2

B) Form 1099

C) Form 941

D) Form 1120

18 / 30

Which is considered a current liability?

A) Bonds Payable

B) Accounts Payable

C) Equipment

D) Retained Earnings

19 / 30

During reconciliation, if you find a bank service charge, you should:

A) Ignore it

B) Add it to your checkbook balance

C) Subtract it from your checkbook balance

D) Add it to bank statement balance

20 / 30

Loans used effectively as investments can result in:

A) Higher taxes

B) Debt increases without return

C) Profitable growth

D) Reduced credit ratings

21 / 30

Which financial statement details the sources and uses of cash over a specific period?

A) Balance Sheet

B) Income Statement

C) Statement of Cash Flows

D) Statement of Owner's Equity

22 / 30

Current ratio analysis is most important for:

A) Long-term investments

B) Short-term debt management

C) Marketing plans

D) Future product design

23 / 30

Retained earnings increase when:

A) Dividends are paid

B) The company has a net loss

C) The company earns a profit and retains it

D) The company issues new shares

24 / 30

In the chart of accounts, each account is typically assigned:

A) A project code

B) A number or code for easy reference

C) A random letter

D) A sales region

25 / 30

Which of the following is an example of a prepaid asset?

A) Salary payable

B) Accounts receivable

C) Prepaid insurance

D) Notes payable

26 / 30

Comparative period statements are useful for:

A) Showing financial data across multiple periods

B) Preparing payroll

C) Recording daily expenses

D) Creating invoices

27 / 30

Prepaid insurance becomes an expense when:

A) The policy is signed

B) Payment is made

C) Time passes and coverage is used

D) The insurance company demands it

28 / 30

A general ledger helps management by providing:

A) Detailed employee attendance

B) Individual customer orders

C) Overall financial status

D) Maintenance records

29 / 30

Which of the following best describes a financial ratio?

A) A mathematical relationship between two financial numbers

B) A legal regulation for accounting

C) An IRS tax rule

D) A loan application requirement

30 / 30

During rising prices, FIFO usually results in:

A) Higher cost of goods sold

B) Lower inventory values

C) Higher reported profits

D) Higher tax deductions

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Welcome to Your Builder's Guide to Accounting Free Supplemental Exam

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