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

Question Bank
Over 700 unique questions

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1 / 30

Cost systems aim to:

A) Increase raw material costs

B) Determine the exact cost of operations

C) Predict inflation

D) Reduce employee wages

2 / 30

Financial ratios are useful because they:

A) Complicate financial analysis

B) Help analyze trends and relationships in data

C) Focus only on short-term profits

D) Eliminate the need for accounting

3 / 30

In cash accounting, expenses are recorded when:

A) Work is performed

B) The payment is sent or received

C) The invoice is entered

D) Sales are made

4 / 30

A higher working capital to funded debt ratio usually means lower financial risk.

A) True

B) False

5 / 30

When a specific account is deemed uncollectible, the journal entry is:

A) Debit cash, credit sales

B) Debit reserve for bad debts, credit accounts receivable

C) Debit sales returns, credit inventory

D) Debit accounts receivable, credit reserve

6 / 30

Your company wants to improve cash flow and reduce storage costs. What should you focus on, and where is this discussed?

A) Increasing fixed assets

B) Improving inventory control

C) Adding more payroll taxes

D) Increasing depreciation

7 / 30

Which accounting method best matches revenue and expenses over the life of a long project?

A) Completed contract

B) Percentage of completion

C) Cash basis

D) Capitalized cost

8 / 30

You purchase a piece of equipment for $50,000, expect it to last 10 years, and estimate a salvage value of $5,000. What is the straight-line depreciation expense per year? Where can you find the formula?

A) $4,500

B) $5,000

C) $5,500

D) $6,000

9 / 30

The best measure of a company's financial performance over time is the:

A) Balance Sheet

B) Income Statement

C) Statement of Owner’s Equity

D) Loan Application

10 / 30

The quick ratio includes prepaid expenses in the calculation.

A) True

B) False

11 / 30

To claim depreciation, a company must:

A) Sell the asset immediately

B) Use the asset in business and own it

C) Lease the asset

D) Donate the asset

12 / 30

Plotting job progress is mainly beneficial for:

A) Tax reporting only

B) Budgeting and scheduling future work

C) Increasing employee salaries

D) Reducing materials inventory

13 / 30

The Income Statement primarily shows:

A) Cash balances

B) Assets and liabilities

C) Revenues and expenses

D) Outstanding debts

14 / 30

Under the cash accounting method, which event triggers revenue recognition?

A) Invoice generation

B) Cash collection

C) Contract signature

D) Work completion

15 / 30

A company with a current ratio of 0.8 would be considered:

A) Very liquid

B) Strongly profitable

C) Risky in paying short-term debts

D) Overcapitalized

16 / 30

Why is the relationship between financial statements important?

A) They share formatting rules

B) They duplicate information

C) Figures flow from one to another

D) Each statement is independent

17 / 30

Which financial statement is directly associated with profitability?

A) Balance Sheet

B) Income Statement

C) Statement of Cash Flows

D) Trial Balance

18 / 30

Which is considered a current liability?

A) Bonds Payable

B) Accounts Payable

C) Equipment

D) Retained Earnings

19 / 30

Cash basis accounting records income when work is performed.

A) True

B) False

20 / 30

Variable overhead expenses:

A) Stay the same regardless of production

B) Change with the level of production or sales

C) Are based on fixed costs

D) Include long-term lease payments

21 / 30

Which situation is an example of a contingent liability?

A) A company's loan payment

B) A pending lawsuit

C) Purchase of new inventory

D) Receipt of customer deposits

22 / 30

Quick assets include inventory.

A) True

B) False

23 / 30

A reserve for bad debts account:

A) Increases net accounts receivable

B) Decreases net accounts receivable

C) Has no impact on the balance sheet

D) Adds to cash balances

24 / 30

Depreciation is the process of:

A) Increasing asset value over time

B) Spreading the cost of an asset over its useful life

C) Paying for equipment in full upfront

D) Estimating sales revenue

25 / 30

Security deposits that are expected to be refunded should be classified as:

A) A prepaid expense

B) An asset

C) A liability

D) Goodwill

26 / 30

Combined ratios are important because they:

A) Confuse financial reports

B) Are required by law

C) Provide deeper insights across statements

D) Only show cash balances

27 / 30

Which of the following would NOT be classified as a prepaid asset?

A) Prepaid insurance

B) Prepaid rent

C) Prepaid advertising

D) Utilities payable

28 / 30

Working capital is calculated by:

A) Total Assets – Total Liabilities

B) Current Assets – Current Liabilities

C) Revenue – Expenses

D) Net Income – Dividends

29 / 30

If a trial balance does not balance, the first step is to:

A) Call the bank

B) Fire the accountant

C) Review recent entries for errors

D) File taxes early

30 / 30

The real turnover ratio applies to:

A) Cash balances

B) Inventory or asset sales

C) Accounts receivable

D) Tax payments

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

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