ACCOUNTING PRINCIPLES
1.
At December 1, 2011, Marco Company's accounts receivable balance was $1,200. During
December, Marco had credit sales of $5,000 and collected accounts receivable of $4,000. At
December 31, 2011, the accounts receivable balance is:
a. $2,200 credit
b. $1,200 debit
c. $2,200 debit
d. $6,200 debit
2.
After using the percentage of sales method for recording bad debts expense, estimated
uncollectible accounts are calculated to be $10,000. If the balance of the Allowance for
Doubtful Accounts is $2,000 credit before adjustment, what is the amount of bad debts
expense for this period?
a. $12,000
b. $ 8,000
c. $10,000
d. $ 2,000
3.
If a company fails to record estimated bad debt expense, which one of the following will
happen?
a. net income is overstated
b. accounts receivable is understated
c. net income is understated
d. allowance for doubtful accounts is overstated
4.
Why is it so important for accountants to have integrity?
a. to comply with laws
b. so that they can make more money
c. so that someone checks on management
d. so that users can rely on the financial information given to them
5.
Before writing off a $1,000 uncollectible account, Accounts Receivable had a balance of
$25,000 and Allowance for Doubtful Accounts had a balance of $4,000. After write off, the net
realizable value of accounts receivable is:
a. $24,000
b. $20,000
c. $25,000
d. $21,000
6.
Generally accepted accounting principles are:
a. income tax regulations of the Internal Revenue Service
b. principles that have been proven correct by academic researchers
c. theories that are based on physical laws of the universe
d. standards that indicate how to report economic events
7.
Treasury stock is:
a. a corporate stock issued by the treasurer of a company
b. a corporation's own stock which has been reacquired but not canceled
c. stock of another company purchased by a corporation and held as an asset
d. stock issued by the U.S. Treasury Department
8.
If a liability is dependent on a future event, it is called a:
a. hypothetical liability
b. potential liability
c. contingent liability
d. probabilistic liability
9.
Under a consignment arrangement, the:
a. consignor has ownership until goods are sold to a customer
b. consigned goods are included in the inventory of the consignee
c. consignor has ownership until goods are shipped to the consignee
d. consignee has ownership when the goods are in the consignee's possession
10. A subsidiary ledger is:
a. used in place of the general ledger if the general ledger is destroyed or stolen
b. a group of accounts used by branches and subsidiaries of a corporate business
c. a group of accounts that provides detailed information about a control account in the
general ledger
d. used to post excess transactions if a general ledger account becomes full during an
accounting period
Accounting Principles Answer Key
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
C
C
A
D
D
D
B
C
A
C
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