Upwork Accounts Payable Test 2016 .....
89 Answered Test Questions:
1. What level of detail should invoices contain?
Answers:
a. Summary, only the total due
a. Totals by item
a. Totals by date
a. Specific details – dates, quantities, individual pricing
2. Why do companies require deposits & advances?
Answers:
a. They don’t trust the customers to pay
a. It improves cash flow, especially for long duration projects
a. They want to make sure customers have money to pay
3. Tax Accounting Services pays off $200 on account. To record this transaction for Tax Accounting Services, the cash account is credited. Which account is debited?
Answers:
a. Accounts Receivable
a. Service Revenue
a. Cash
a. Accounts Payable
4. A company receives an advance payment for special order goods that are to be manufactured and delivered within 6 months. The advance payment should be reported in the company’s balance sheet as a
Answers:
a. deferred charge.
a. contra asset account.
a. current liability.
a. non-current liability.
5. On December 31, 2007, special insurance costs incurred but unpaid were not recorded. If these insurance costs were related to work-in-process, what will be the effect of the omission on accrued liabilities and retained earnings in the December 31, 2007 balance sheet?
Accrued liabilities Retained Earnings
Answers:
a. No effect No effect
a. No effect Overstated
a. Understated No effect
a. Understated Overstated
6. Rush checks may also be called _____
Answers:
a. emergency checks
a. ASAP checks
a. quick checks
a. All of the above.
7. Who is to be covered by VAT (Value Added Tax)?
Answers:
a. All business transactions carried on within a State by individuals
a. All business transactions carried on within a State by partnerships
a. All business transactions carried on within a State by Companies
a. All of the above
8. What steps are taken before approving an invoice for payment?
Answers:
a. Validating the invoice once it is matched for checking
a. If workflow is implemented, initiating approval for the invoice
a. Creating accounting after approval of invoice
a. Both a and b
a. a, b, and c
9. Who typically calculates the tax liability to be paid?
Answers:
a. The State government, which informs the company what is owed
a. The Accounts Payable staff
a. The CFO
a. The General or Tax Accountant within the company
10. Among the items reported on Cord, Inc.’s income statement for the year ended December 31, 2007 were the following:
Amortization of goodwill acquired in 1992 $10,000
Insurance premium on the life of an officer. $5,000
Cord is the owner and beneficiary.
Temporary differences amount to:
Answers:
a. $0
a. $5,000
a. $10,000
a. $15,000
11. When are sales & use taxes due?
Answers:
a. The date varies from State to State
a. On the15th of every month
a. Annually, on the same date as federal taxes
a. Quarterly, on the 15th of the following month
12. Lime & Co.’s payroll for the month ended January 31,2007 is summarized as follows: Total wages $10000 Federal income tax withheld $1200 All wages paid were subject to FICA. FICA tax rates were 7% each for the employees and the employer. The company remits payroll taxes on the 15th of the following month. In its financial statements for the month ended January 31, 2007, what amounts should it report as total payroll tax liability and as payroll tax expense?
Answers:
a. $1200 $1400
a. $1900 $1400
a. $1900 $700
a. $2600 $700
13. The correct journal entry to record a purchase of inventory on credit using a perpetual inventory system includes:
Answers:
a. debit Cost of Goods Sold, credit Inventory
a. debit Accounts Payable, credit Inventory
a. debit Accounts Receivable, credit Sales Revenue
a. debit Inventory, credit Accounts Payable
14. Of the following, which is a typical situation involving a deposit?
Answers:
a. The company uses a recruiting firm to find key employees
a. In order to buy office supplies, the company has to put a deposit down
a. The business has leased a new location and is required to put a deposit for the last month’s rent
a. Federal taxes for the upcoming year
15. If a prepaid expense is expiring (the final month is expensed), and the company has not received an invoice for the upcoming prepaid period, the accounting should:
Answers:
a. Continue to book the monthly expense in the upcoming month and contact the company to find if an invoice will be issued for the coming year
a. Do not book the monthly expense and assume your company is no longer in business with the company
a. Send an email to the CFO
a. Delete the line from Excel and assume no further expense
16. A bill is a form on which you record details of _________ .
Answers:
a. the sales made
a. the expenses incurred
a. a purchase made by a vendor to whom the Company owe money
a. the income accrued
17. Streamlined Sales Tax is a national effort by which of the following?
Answers:
a. The State Government
a. The Local Government
a. The private sector to simplify and modernize sales and use tax collection
a. All of the above
18. How will you track the deposits that clients pay to the vendors?
Answers:
a. Track deposits as negative balances in Accounts Payable
a. Record the deposit in the Enter Bills window
a. Neither of the above
19. When are invoices treated as having been paid short?
Answers:
a. If any discount for early payment is allowed
a. If there are any damaged goods
a. If there are any prior credits
a. All of the above.
20. What is the difference between Accounts Payable and Accounts Receivable?
Answers:
a. Accounts receivable are amounts owed by the suppliers on account whereas the Accounts Payable are amounts owed to the customers on account.
a. Accounts receivable are amounts owed by the customers on account whereas the Accounts Payable are amounts owed to the suppliers on account.
a. Accounts receivable are amounts owed by the customers on account whereas the Accounts Payable are amounts owed to the bankers on account.
a. None of the above
21. What is the report generated to find the net purchases from each vendor regardless of how payments were recorded called?
Answers:
a. Inventory valuation summary
a. Expenses by vendor summary
a. Unpaid bills details
a. Purchases by vendor summary
22. Which of the following methods can be used to value inventory in QuickBooks?
Answers:
a. Double declining balance
a. Last in, first out (LIFO)
a. First in, first out (FIFO)
a. Average cost
23. When clients have customers who are also vendors, what is the best way to offset Accounts Payable against Accounts Receivable?
Answers:
a. Use the QuickBooks trade-off feature
a. Create a bank account through which you can clear the Payables and the Receivables
a. Use a single journal entry
a. Use multiple journal entries
24. Accrual Basis means __________.
Answers:
a. the most commonly used accounting method which reports income when earned and expenses when incurred,
a. the accounting method which reports income when received and expenses when paid.
a. the accounting method which reports income when earned and expenses when incurred.
a. All of the above
25. A good example of a typical prepaid expense is:
Answers:
a. Rent
a. Dividends
a. Insurance
a. Wages
26. Orleans & Co., a cash-basis taxpayer, prepares accrual-basis financial statements. In the current year balance sheet, Orleans’s deferred income tax liabilities increased in comparison with those reported for the previous year. Which of the following changes would cause this increase in deferred income tax liabilities?
1. What level of detail should invoices contain?
Answers:
a. Summary, only the total due
a. Totals by item
a. Totals by date
a. Specific details – dates, quantities, individual pricing
2. Why do companies require deposits & advances?
Answers:
a. They don’t trust the customers to pay
a. It improves cash flow, especially for long duration projects
a. They want to make sure customers have money to pay
3. Tax Accounting Services pays off $200 on account. To record this transaction for Tax Accounting Services, the cash account is credited. Which account is debited?
Answers:
a. Accounts Receivable
a. Service Revenue
a. Cash
a. Accounts Payable
4. A company receives an advance payment for special order goods that are to be manufactured and delivered within 6 months. The advance payment should be reported in the company’s balance sheet as a
Answers:
a. deferred charge.
a. contra asset account.
a. current liability.
a. non-current liability.
5. On December 31, 2007, special insurance costs incurred but unpaid were not recorded. If these insurance costs were related to work-in-process, what will be the effect of the omission on accrued liabilities and retained earnings in the December 31, 2007 balance sheet?
Accrued liabilities Retained Earnings
Answers:
a. No effect No effect
a. No effect Overstated
a. Understated No effect
a. Understated Overstated
6. Rush checks may also be called _____
Answers:
a. emergency checks
a. ASAP checks
a. quick checks
a. All of the above.
7. Who is to be covered by VAT (Value Added Tax)?
Answers:
a. All business transactions carried on within a State by individuals
a. All business transactions carried on within a State by partnerships
a. All business transactions carried on within a State by Companies
a. All of the above
8. What steps are taken before approving an invoice for payment?
Answers:
a. Validating the invoice once it is matched for checking
a. If workflow is implemented, initiating approval for the invoice
a. Creating accounting after approval of invoice
a. Both a and b
a. a, b, and c
9. Who typically calculates the tax liability to be paid?
Answers:
a. The State government, which informs the company what is owed
a. The Accounts Payable staff
a. The CFO
a. The General or Tax Accountant within the company
10. Among the items reported on Cord, Inc.’s income statement for the year ended December 31, 2007 were the following:
Amortization of goodwill acquired in 1992 $10,000
Insurance premium on the life of an officer. $5,000
Cord is the owner and beneficiary.
Temporary differences amount to:
Answers:
a. $0
a. $5,000
a. $10,000
a. $15,000
11. When are sales & use taxes due?
Answers:
a. The date varies from State to State
a. On the15th of every month
a. Annually, on the same date as federal taxes
a. Quarterly, on the 15th of the following month
12. Lime & Co.’s payroll for the month ended January 31,2007 is summarized as follows: Total wages $10000 Federal income tax withheld $1200 All wages paid were subject to FICA. FICA tax rates were 7% each for the employees and the employer. The company remits payroll taxes on the 15th of the following month. In its financial statements for the month ended January 31, 2007, what amounts should it report as total payroll tax liability and as payroll tax expense?
Answers:
a. $1200 $1400
a. $1900 $1400
a. $1900 $700
a. $2600 $700
13. The correct journal entry to record a purchase of inventory on credit using a perpetual inventory system includes:
Answers:
a. debit Cost of Goods Sold, credit Inventory
a. debit Accounts Payable, credit Inventory
a. debit Accounts Receivable, credit Sales Revenue
a. debit Inventory, credit Accounts Payable
14. Of the following, which is a typical situation involving a deposit?
Answers:
a. The company uses a recruiting firm to find key employees
a. In order to buy office supplies, the company has to put a deposit down
a. The business has leased a new location and is required to put a deposit for the last month’s rent
a. Federal taxes for the upcoming year
15. If a prepaid expense is expiring (the final month is expensed), and the company has not received an invoice for the upcoming prepaid period, the accounting should:
Answers:
a. Continue to book the monthly expense in the upcoming month and contact the company to find if an invoice will be issued for the coming year
a. Do not book the monthly expense and assume your company is no longer in business with the company
a. Send an email to the CFO
a. Delete the line from Excel and assume no further expense
16. A bill is a form on which you record details of _________ .
Answers:
a. the sales made
a. the expenses incurred
a. a purchase made by a vendor to whom the Company owe money
a. the income accrued
17. Streamlined Sales Tax is a national effort by which of the following?
Answers:
a. The State Government
a. The Local Government
a. The private sector to simplify and modernize sales and use tax collection
a. All of the above
18. How will you track the deposits that clients pay to the vendors?
Answers:
a. Track deposits as negative balances in Accounts Payable
a. Record the deposit in the Enter Bills window
a. Neither of the above
19. When are invoices treated as having been paid short?
Answers:
a. If any discount for early payment is allowed
a. If there are any damaged goods
a. If there are any prior credits
a. All of the above.
20. What is the difference between Accounts Payable and Accounts Receivable?
Answers:
a. Accounts receivable are amounts owed by the suppliers on account whereas the Accounts Payable are amounts owed to the customers on account.
a. Accounts receivable are amounts owed by the customers on account whereas the Accounts Payable are amounts owed to the suppliers on account.
a. Accounts receivable are amounts owed by the customers on account whereas the Accounts Payable are amounts owed to the bankers on account.
a. None of the above
21. What is the report generated to find the net purchases from each vendor regardless of how payments were recorded called?
Answers:
a. Inventory valuation summary
a. Expenses by vendor summary
a. Unpaid bills details
a. Purchases by vendor summary
22. Which of the following methods can be used to value inventory in QuickBooks?
Answers:
a. Double declining balance
a. Last in, first out (LIFO)
a. First in, first out (FIFO)
a. Average cost
23. When clients have customers who are also vendors, what is the best way to offset Accounts Payable against Accounts Receivable?
Answers:
a. Use the QuickBooks trade-off feature
a. Create a bank account through which you can clear the Payables and the Receivables
a. Use a single journal entry
a. Use multiple journal entries
24. Accrual Basis means __________.
Answers:
a. the most commonly used accounting method which reports income when earned and expenses when incurred,
a. the accounting method which reports income when received and expenses when paid.
a. the accounting method which reports income when earned and expenses when incurred.
a. All of the above
25. A good example of a typical prepaid expense is:
Answers:
a. Rent
a. Dividends
a. Insurance
a. Wages
26. Orleans & Co., a cash-basis taxpayer, prepares accrual-basis financial statements. In the current year balance sheet, Orleans’s deferred income tax liabilities increased in comparison with those reported for the previous year. Which of the following changes would cause this increase in deferred income tax liabilities?
I.An increase in prepaid insurance premium
II.An increase in rent receivable
III.An increase in warranty obligations
Answers:
a. I only
a. I and II only
a. II and III only
a. III only
27. What is the difference between billable and non-billable expenses?
Answers:
a. Billable expenses are the expenses incurred by you in carrying out your own business / performing your own duties and responsibilities and Non-billable expenses are the expenses incurred by you on behalf of your customer in performing duties / rendering services and supplying goods
a. Billable expenses are the expenses incurred by you on behalf of your customer in performing duties / rendering services and supplying goodsand Non-billable expenses are the expenses incurred by you in carrying out your own business / duties and performing your own responsibilities.
a. Neither of the above
28. From the Accounts Payable point of view, what are the main problems that arise between Accounts Payable and Purchasing?
Answers:
a. Missing information on Purchase Orders
a. Missing information about discounts
a. Delays
a. All of the above.
29. Debit memos are required for_______.
Answers:
a. the payment deductions taken on invoices.
a. the payments made on Purchase Orders
a. the payments received on Sales Orders
a. Both b and c
30. Tax Accounting Services pays off $200 on account. To record this transaction for Tax Accounting Services, the Cash account is credited and the __________ account is debited.
Answers:
a. Cash
a. Accounts Payable
a. Service Revenue
a. Accounts Receivable
31. In its 2007 income statement, Cere & Co. has reported an income of $300,000 before income taxes. Cere estimated that, because of permanent differences, taxable income for 2007 would be $280,000. During 2007, Cere made estimated tax payments of $50,000, which were debited to income tax expense; Cere is subject to a 30% tax rate. What amount should Cere report as income tax expense?
Answers:
a. $34,000
a. $50,000
a. $84,000
a. $90,000
32. Which of the following accounts has a debit balance?
Answers:
a. Accounts Payable account
a. Accrued taxes account
a. Accumulated depreciation account
a. Bad debt expense account
33. What is Accounts Payable Turnover Ratio?
Answers:
a. Net profit / Accounts Receivable
a. Cost of Goods Sold / Accounts Payable
a. 365 days / Accounts Payable Turnover
a. Total sales / Networth
34. How often should Payables be entered in the accounting system?
Answers:
a. Once a week
a. As soon as the invoices are brought to the AP department
a. Daily
a. As and when they are due
35. Which form is used to reimburse an individual for Travel and Entertainment expenses?
Answers:
a. Form W4
a. Expense Voucher
a. Form 1099Misc
a. Form 941
36. An Invoice statement is provided __________________
Answers:
a. for payment purposes
a. to ensure that the IRS department has received all the invoices sent
a. to check for outstanding credits.
a. to know the expenditure of the company for the particular month
37. What are the debit memo & the credit memo in Payables?
Answers:
a. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the supplier to the Company and the credit memo is raised by the Company to the supplier stating we are due to him. Both have positive amounts
a. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the supplier to the Company and the credit memo is raised by the Company to the supplier stating we are due to him. Both have negative amounts.
a. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the supplier to the Company and the credit memo is raised by the Company to the supplier stating we are due to him. Both may have positive and negative amounts
a. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the Company to the supplier and the credit memo is raised by the supplier to the Company stating we are due to him. Both have negative amounts
38. When an invoice is presented for payment, most companies match it against a purchase order and a receiving document, and if all three match, the invoice is paid on or after its due date. This is referred to as —————- .
Answers:
a. the two-way match
a. the three-way match
a. invoice cleared
a. invoice paid
39. Accounts Payable is _________.
Answers:
a. a file or an account that contains details of money that a person or company owes to its suppliers.
a. details of money or money’s worth that a person or company owns.
a. an expense account
a. a file or an account that contains details of money that a person or company owes to its customers
40. What is VAT?
Answers:
a. VAT is a tax calculated on the income earned
a. VAT is a consumer-oriented tax imposed on goods and services sold.
a. VAT is an item
a. VAT is a Credit card fee
41. Where do you record the payment terms for the money that a client owes to a vendor?
Answers:
a. In Sales Orders
a. In Checks
a. In Purchase Orders
a. In Bills
42. Using the following information, compute total liabilities.
Notes Receivable $30,000, Accounts Payable $20,000, Wages Payable $8,000 and Rent Expenses $40,000.
Answers:
a. $20,000
a. $28,000
a. $68,000
a. $98,000
43. How are prepaid expenses typically tracked?
Answers:
a. In an excel spreadsheet, with a monthly journal entry made to reflect the current month expenses
a. The procedure is fully automated in the accounting system; no one needs to do anything from month to month
a. The CFO will tell the accountant what needs to be booked
a. The auditors of the company do it
44. What is the Journal Entry for “The Company purchased $6,000 worth of merchandise on credit”?
Answers:
a. Dr Accounts Payable and Cr Merchandise
a. Dr Merchandise and Cr Accounts Payable
a. Dr Bank and Cr Accounts Payable
a. None of the above
45. An open credit is __________.
Answers:
a. money owed to the company
a. money owed by the company
a. money owed to the investors
a. None of the above
46. Accounts payable refer to the current _________.
Answers:
a. income of a business or an organization
a. assets of a business or an organization
a. expenses of a business or an organization
a. liabilities of a business or an organization
47. When an employer makes an end-of-period adjusting entry with a debit to the Supplies Expense, the credit entry is made to:
Answers:
a. Accounts Payable.
a. Supplies.
a. Cash.
a. Retained Earnings.
48. Can you collect and remit tax for a state even if not required to do so?
Answers:
a. No
a. Yes, the State Government will send you the amount without your getting registered with the state prior to collecting the tax.
a. Yes, you can voluntarily register to collect and remit tax. But, you must register with the state prior to collecting the tax.
49. What is the last date for filing claims for VAT refunds in all countries?
Answers:
a. December 31st of every year
a. January 31st of every year
a. There is no deadline for filing claims for VAT refunds
a. June 30th of every year
50. How are the A/P journal entries typically created?
Answers:
a. Hand written by the A/P staff and entered into the system by the accountant
a. The A/P staff is responsible for making journal entries
a. Entries are created and entered by a CPA
a. A/P software will generate journal entries based on preset coding
51. Buck & Co. receives deposits from its customers to protect itself against non-payments for future services. These deposits should be classified by the company as
Answers:
a. a liability
a. revenue
a. a deferred credit deducted from Accounts Receivable.
a. a contra account.
52. Which of the following is not an important step before approving a payment?
Answers:
a. Refer to the terms and conditions for making the payment (any credit period)
a. Check the bank balance before approving the invoice for payment.
a. Refer to the Sales Order issued.
a. Refer to the Goods / Services Received Note for having received goods / services as mentioned in the purchase order
53. Barnel Corp. owns and manages 19 apartment complexes. On signing a lease, each tenant has to pay the first and the last month’s rent and a $500 refundable security deposit. The security deposits are rarely refunded in total because cleaning costs of $150 per apartment are almost always deducted. About 30% of the time, the tenants are also charged for damages to the apartment, which typically costs $100 to repair. If a one year lease deed is signed on a $900 per month apartment, what amount would the company report as refundable security deposit?
Answers:
a. $1,400
a. 4500
a. $350
a. $320
54. The correct journal entry to record a return of inventory purchased on credit basis using a perpetual inventory system includes:
Answers:
a. debit Inventory, credit Accounts Payable
a. debit Cost of Goods Sold, credit Inventory
a. debit Accounts Receivable, credit Sales Revenue
a. debit Accounts Payable, credit Inventory
55. Hudson Hotels collects 15 % as city sales tax on room rentals, in addition to $2 per room, per night, as occupancy tax. Sales tax for each month is due at the end of the following month, and occupancy tax are due 15 days after the end of each calendar quarter. On January 3, 2008, Hudson paid its November 2007 sales tax and occupancy tax for the fourth quarter of 2007. Additional information pertaining to Hudson’s operations is as follows:
II.An increase in rent receivable
III.An increase in warranty obligations
Answers:
a. I only
a. I and II only
a. II and III only
a. III only
27. What is the difference between billable and non-billable expenses?
Answers:
a. Billable expenses are the expenses incurred by you in carrying out your own business / performing your own duties and responsibilities and Non-billable expenses are the expenses incurred by you on behalf of your customer in performing duties / rendering services and supplying goods
a. Billable expenses are the expenses incurred by you on behalf of your customer in performing duties / rendering services and supplying goodsand Non-billable expenses are the expenses incurred by you in carrying out your own business / duties and performing your own responsibilities.
a. Neither of the above
28. From the Accounts Payable point of view, what are the main problems that arise between Accounts Payable and Purchasing?
Answers:
a. Missing information on Purchase Orders
a. Missing information about discounts
a. Delays
a. All of the above.
29. Debit memos are required for_______.
Answers:
a. the payment deductions taken on invoices.
a. the payments made on Purchase Orders
a. the payments received on Sales Orders
a. Both b and c
30. Tax Accounting Services pays off $200 on account. To record this transaction for Tax Accounting Services, the Cash account is credited and the __________ account is debited.
Answers:
a. Cash
a. Accounts Payable
a. Service Revenue
a. Accounts Receivable
31. In its 2007 income statement, Cere & Co. has reported an income of $300,000 before income taxes. Cere estimated that, because of permanent differences, taxable income for 2007 would be $280,000. During 2007, Cere made estimated tax payments of $50,000, which were debited to income tax expense; Cere is subject to a 30% tax rate. What amount should Cere report as income tax expense?
Answers:
a. $34,000
a. $50,000
a. $84,000
a. $90,000
32. Which of the following accounts has a debit balance?
Answers:
a. Accounts Payable account
a. Accrued taxes account
a. Accumulated depreciation account
a. Bad debt expense account
33. What is Accounts Payable Turnover Ratio?
Answers:
a. Net profit / Accounts Receivable
a. Cost of Goods Sold / Accounts Payable
a. 365 days / Accounts Payable Turnover
a. Total sales / Networth
34. How often should Payables be entered in the accounting system?
Answers:
a. Once a week
a. As soon as the invoices are brought to the AP department
a. Daily
a. As and when they are due
35. Which form is used to reimburse an individual for Travel and Entertainment expenses?
Answers:
a. Form W4
a. Expense Voucher
a. Form 1099Misc
a. Form 941
36. An Invoice statement is provided __________________
Answers:
a. for payment purposes
a. to ensure that the IRS department has received all the invoices sent
a. to check for outstanding credits.
a. to know the expenditure of the company for the particular month
37. What are the debit memo & the credit memo in Payables?
Answers:
a. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the supplier to the Company and the credit memo is raised by the Company to the supplier stating we are due to him. Both have positive amounts
a. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the supplier to the Company and the credit memo is raised by the Company to the supplier stating we are due to him. Both have negative amounts.
a. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the supplier to the Company and the credit memo is raised by the Company to the supplier stating we are due to him. Both may have positive and negative amounts
a. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the Company to the supplier and the credit memo is raised by the supplier to the Company stating we are due to him. Both have negative amounts
38. When an invoice is presented for payment, most companies match it against a purchase order and a receiving document, and if all three match, the invoice is paid on or after its due date. This is referred to as —————- .
Answers:
a. the two-way match
a. the three-way match
a. invoice cleared
a. invoice paid
39. Accounts Payable is _________.
Answers:
a. a file or an account that contains details of money that a person or company owes to its suppliers.
a. details of money or money’s worth that a person or company owns.
a. an expense account
a. a file or an account that contains details of money that a person or company owes to its customers
40. What is VAT?
Answers:
a. VAT is a tax calculated on the income earned
a. VAT is a consumer-oriented tax imposed on goods and services sold.
a. VAT is an item
a. VAT is a Credit card fee
41. Where do you record the payment terms for the money that a client owes to a vendor?
Answers:
a. In Sales Orders
a. In Checks
a. In Purchase Orders
a. In Bills
42. Using the following information, compute total liabilities.
Notes Receivable $30,000, Accounts Payable $20,000, Wages Payable $8,000 and Rent Expenses $40,000.
Answers:
a. $20,000
a. $28,000
a. $68,000
a. $98,000
43. How are prepaid expenses typically tracked?
Answers:
a. In an excel spreadsheet, with a monthly journal entry made to reflect the current month expenses
a. The procedure is fully automated in the accounting system; no one needs to do anything from month to month
a. The CFO will tell the accountant what needs to be booked
a. The auditors of the company do it
44. What is the Journal Entry for “The Company purchased $6,000 worth of merchandise on credit”?
Answers:
a. Dr Accounts Payable and Cr Merchandise
a. Dr Merchandise and Cr Accounts Payable
a. Dr Bank and Cr Accounts Payable
a. None of the above
45. An open credit is __________.
Answers:
a. money owed to the company
a. money owed by the company
a. money owed to the investors
a. None of the above
46. Accounts payable refer to the current _________.
Answers:
a. income of a business or an organization
a. assets of a business or an organization
a. expenses of a business or an organization
a. liabilities of a business or an organization
47. When an employer makes an end-of-period adjusting entry with a debit to the Supplies Expense, the credit entry is made to:
Answers:
a. Accounts Payable.
a. Supplies.
a. Cash.
a. Retained Earnings.
48. Can you collect and remit tax for a state even if not required to do so?
Answers:
a. No
a. Yes, the State Government will send you the amount without your getting registered with the state prior to collecting the tax.
a. Yes, you can voluntarily register to collect and remit tax. But, you must register with the state prior to collecting the tax.
49. What is the last date for filing claims for VAT refunds in all countries?
Answers:
a. December 31st of every year
a. January 31st of every year
a. There is no deadline for filing claims for VAT refunds
a. June 30th of every year
50. How are the A/P journal entries typically created?
Answers:
a. Hand written by the A/P staff and entered into the system by the accountant
a. The A/P staff is responsible for making journal entries
a. Entries are created and entered by a CPA
a. A/P software will generate journal entries based on preset coding
51. Buck & Co. receives deposits from its customers to protect itself against non-payments for future services. These deposits should be classified by the company as
Answers:
a. a liability
a. revenue
a. a deferred credit deducted from Accounts Receivable.
a. a contra account.
52. Which of the following is not an important step before approving a payment?
Answers:
a. Refer to the terms and conditions for making the payment (any credit period)
a. Check the bank balance before approving the invoice for payment.
a. Refer to the Sales Order issued.
a. Refer to the Goods / Services Received Note for having received goods / services as mentioned in the purchase order
53. Barnel Corp. owns and manages 19 apartment complexes. On signing a lease, each tenant has to pay the first and the last month’s rent and a $500 refundable security deposit. The security deposits are rarely refunded in total because cleaning costs of $150 per apartment are almost always deducted. About 30% of the time, the tenants are also charged for damages to the apartment, which typically costs $100 to repair. If a one year lease deed is signed on a $900 per month apartment, what amount would the company report as refundable security deposit?
Answers:
a. $1,400
a. 4500
a. $350
a. $320
54. The correct journal entry to record a return of inventory purchased on credit basis using a perpetual inventory system includes:
Answers:
a. debit Inventory, credit Accounts Payable
a. debit Cost of Goods Sold, credit Inventory
a. debit Accounts Receivable, credit Sales Revenue
a. debit Accounts Payable, credit Inventory
55. Hudson Hotels collects 15 % as city sales tax on room rentals, in addition to $2 per room, per night, as occupancy tax. Sales tax for each month is due at the end of the following month, and occupancy tax are due 15 days after the end of each calendar quarter. On January 3, 2008, Hudson paid its November 2007 sales tax and occupancy tax for the fourth quarter of 2007. Additional information pertaining to Hudson’s operations is as follows:
2007 Room Rentals Room Nights
October $100,000 $1,100
November $110,000 $1,200
December $150,000 $1,800
October $100,000 $1,100
November $110,000 $1,200
December $150,000 $1,800
What amounts should Hudson report as sales tax payable and occupancy tax payable in its December 31, 2007 balance sheet?
Sales Tax Occupancy Taxes
Answers:
a. $39,000 $6,000
a. $39,000 $8,200
a. $54,000 $6,000
a. $54,000 $8,200
56. Why do companies use the government listed mileage rate for the reimbursement of traveling expenses rather than paying actualexpenses?
Answers:
a. It is cheaper than paying people for gas
a. It is simpler for the employer and fairly reimburses the employees for the expenditure on gas and the wear and tear of the vehicle
a. It is required by the tax law
a. It limits the company’s liability if the person is involved in an accident while driving for work purposes
57. Ross & Co. pays all salaried employees on Monday for the 5-day work week ended the previous Friday. The last payroll recorded for the year ended December 31, 2004 was for the week ended December 25, 2004. The payroll for the week ended January 1, 2005 included regular weekly salaries of $80000 and vacation pay of $ 25000 for the vacation time earned in 2004 but not taken by December 31, 2004. Ross had an accrued liability of $20000 for vacation pay as on December 31, 2003. In its December 31, 2004 balance sheet, what amount should Ross report as accrued salary and vacation pay?
Answers:
a. $64000
a. $69000
a. $84000
a. $89000
58. What is the best way to reimburse Travel and Entertainment to the employees who do not wish to use the electronic form of reimbursement?
Answers:
a. The reimbursement should be included in the normal paycheck.
a. The reimbursement should be ignored
a. The reimbursement should be made by cash
a. All of the above
59. On July 1, 2006, Ran County issued reality tax assessments for its fiscal year ended June 30, 2007. The assessments were to be paid in two equal installments. On September 1, 2006, Day & Co. purchased a warehouse in Ran County. The purchase price was reduced by a credit for accrued realty taxes. The company did not record the entire year’s real estate tax obligations, but instead records tax expenses at the end of each month by adjusting prepaid real estate taxes payable, as appropriate. On November 1, 2006, it paid the first installment of $12000 for realty taxes. What amount of this payment should it record as a debit to real estate taxes payable?
Answers:
a. $4,000
a. $8,000
a. $10,000
a. $12,000
60. What does the acronym EFT stand for?
Answers:
a. Electronic File Transfer
a. Electronic Funds Transfer
a. Both a and b
a. Electronic Fund Tour
61. When a deposit is used as payment, what is the journal entry from the customer’s (the person who made the deposit) perspective?
Answers:
a. Debit Cash, credit Service Expense
a. Debit Accounts Payable, credit Cash
a. Debit Service Expense, credit Cash
a. Debit Service Expense, credit Other Advances
62. Under which head does VAT reflect in the Balance Sheet?
Answers:
a. Equity
a. Creditors
a. Fixed Asset
a. Current Asset
63. SFAS 109 establishes standards of financial accounting and reporting for income taxes that are currently payable and for
Answers:
a. the tax consequences of revenues and expenses included in taxable income in a different year from the year in which they are recognized for financial reporting purposes.
a. the method of accounting for the US Federal investment tax credit.
a. the discounting of income taxes.
a. the accounting for income taxes in general in interim periods.
64. Recording expenditure made, but not yet paid, to a vendor is an example of:
Answers:
a. a prepaid income transaction
a. an unearned expense transaction
a. an accrued liability transaction
a. an accrued payable transaction
65. Receipts from cash sales of $7,500 were recorded incorrectly as $5,700. What entry is required in the depositor’s accounts?
Answers:
a. Debit Cash: Credit Accounts Receivable
a. Debit Sales: Credit Cash
a. Debit Accounts Receivable: Credit Cash
a. Debit Cash: Credit Cash Sales
66. What is the mode of making payment to the employees for reimbursing travel and entertainment expenses?
Answers:
a. Check
a. Automated Clearing House (ACH)
a. Direct deposit
a. All of the above
67. Accounts Payable affect net income.
Answers:
a. True
a. False
68. What is nexus?
Answers:
a. Nexus is the sales tax collected from Hotels
a. Nexus is the determining factor of whether an out-of-state business selling products in a state is liable for collecting the tax on sales in the state.
a. Nexus is the sales tax collected on the traveling expenditure incurred in the same state
a. Nexus is the determining factor of whether a state business selling goods in the state is liable for collecting the tax on sales in the state.
69. Which of the following will not result in the recognition of a deferred tax asset?
Answers:
a. An operating loss carry forward.
a. Immediate expensing of organizational costs.
a. Subscriptions revenue received in advance.
a. Receipt of municipal bond interest.
70. Excess payment made to the supplier will appear as a _____.
Answers:
a. debit balance in the supplier’s account.
a. credit balance in the supplier’s account.
a. debit balance in the customer’s account
a. credit balance in the customer’s account.
71. At what stage in the Accounts Payable process is cash affected?
Answers:
a. When an invoice is entered into the accounting system
a. When a credit memo is generated
a. When checks are printed
a. Accounts Payable never handles cash
72. $1,000 worth of supplies are purchased on account. What is the Journal Entry to be posted?
Answers:
a. Dr A/P account and Cr Supplies account
a. Dr Purchase account and Cr A/P account
a. Dr Supplies account and Cr A/P account
a. Dr A/P account and Cr Purchase account
73. Under generally accepted accounting principles, which approach is used to determine income tax expense?
Answers:
a. Asset and liability approach.
a. “With and Without” approach.
a. Net-of-tax approach.
a. Deferred approach.
74. Under the state law, Acme may pay 3% of eligible gross wages or it may reimburse the state directly for actual unemployment claims. The Company believes that actual unemployment claims will be 2% of the eligible gross wages and has chosen to reimburse the state. Eligible gross wages are defined as the first $10000 of the gross wages paid to each employee. The Company had five employees, each of whom earned $20000 during 2007. In its December 31, 2007 balance sheet, what amount should it report as accrued liability for unemployment claims?
Answers:
a. $1000
a. $1500
a. $2000
a. $3000
75. On December 31, 2007, Deal Inc. failed to accrue the December 2007 sales salaries that were payable on January 6,2008. What will be the effect of the failure to accrue sales salaries on the working capital and cash flows from operating activities in Deal’s 2007 financial statements?
Answers:
a. $39,000 $6,000
a. $39,000 $8,200
a. $54,000 $6,000
a. $54,000 $8,200
56. Why do companies use the government listed mileage rate for the reimbursement of traveling expenses rather than paying actualexpenses?
Answers:
a. It is cheaper than paying people for gas
a. It is simpler for the employer and fairly reimburses the employees for the expenditure on gas and the wear and tear of the vehicle
a. It is required by the tax law
a. It limits the company’s liability if the person is involved in an accident while driving for work purposes
57. Ross & Co. pays all salaried employees on Monday for the 5-day work week ended the previous Friday. The last payroll recorded for the year ended December 31, 2004 was for the week ended December 25, 2004. The payroll for the week ended January 1, 2005 included regular weekly salaries of $80000 and vacation pay of $ 25000 for the vacation time earned in 2004 but not taken by December 31, 2004. Ross had an accrued liability of $20000 for vacation pay as on December 31, 2003. In its December 31, 2004 balance sheet, what amount should Ross report as accrued salary and vacation pay?
Answers:
a. $64000
a. $69000
a. $84000
a. $89000
58. What is the best way to reimburse Travel and Entertainment to the employees who do not wish to use the electronic form of reimbursement?
Answers:
a. The reimbursement should be included in the normal paycheck.
a. The reimbursement should be ignored
a. The reimbursement should be made by cash
a. All of the above
59. On July 1, 2006, Ran County issued reality tax assessments for its fiscal year ended June 30, 2007. The assessments were to be paid in two equal installments. On September 1, 2006, Day & Co. purchased a warehouse in Ran County. The purchase price was reduced by a credit for accrued realty taxes. The company did not record the entire year’s real estate tax obligations, but instead records tax expenses at the end of each month by adjusting prepaid real estate taxes payable, as appropriate. On November 1, 2006, it paid the first installment of $12000 for realty taxes. What amount of this payment should it record as a debit to real estate taxes payable?
Answers:
a. $4,000
a. $8,000
a. $10,000
a. $12,000
60. What does the acronym EFT stand for?
Answers:
a. Electronic File Transfer
a. Electronic Funds Transfer
a. Both a and b
a. Electronic Fund Tour
61. When a deposit is used as payment, what is the journal entry from the customer’s (the person who made the deposit) perspective?
Answers:
a. Debit Cash, credit Service Expense
a. Debit Accounts Payable, credit Cash
a. Debit Service Expense, credit Cash
a. Debit Service Expense, credit Other Advances
62. Under which head does VAT reflect in the Balance Sheet?
Answers:
a. Equity
a. Creditors
a. Fixed Asset
a. Current Asset
63. SFAS 109 establishes standards of financial accounting and reporting for income taxes that are currently payable and for
Answers:
a. the tax consequences of revenues and expenses included in taxable income in a different year from the year in which they are recognized for financial reporting purposes.
a. the method of accounting for the US Federal investment tax credit.
a. the discounting of income taxes.
a. the accounting for income taxes in general in interim periods.
64. Recording expenditure made, but not yet paid, to a vendor is an example of:
Answers:
a. a prepaid income transaction
a. an unearned expense transaction
a. an accrued liability transaction
a. an accrued payable transaction
65. Receipts from cash sales of $7,500 were recorded incorrectly as $5,700. What entry is required in the depositor’s accounts?
Answers:
a. Debit Cash: Credit Accounts Receivable
a. Debit Sales: Credit Cash
a. Debit Accounts Receivable: Credit Cash
a. Debit Cash: Credit Cash Sales
66. What is the mode of making payment to the employees for reimbursing travel and entertainment expenses?
Answers:
a. Check
a. Automated Clearing House (ACH)
a. Direct deposit
a. All of the above
67. Accounts Payable affect net income.
Answers:
a. True
a. False
68. What is nexus?
Answers:
a. Nexus is the sales tax collected from Hotels
a. Nexus is the determining factor of whether an out-of-state business selling products in a state is liable for collecting the tax on sales in the state.
a. Nexus is the sales tax collected on the traveling expenditure incurred in the same state
a. Nexus is the determining factor of whether a state business selling goods in the state is liable for collecting the tax on sales in the state.
69. Which of the following will not result in the recognition of a deferred tax asset?
Answers:
a. An operating loss carry forward.
a. Immediate expensing of organizational costs.
a. Subscriptions revenue received in advance.
a. Receipt of municipal bond interest.
70. Excess payment made to the supplier will appear as a _____.
Answers:
a. debit balance in the supplier’s account.
a. credit balance in the supplier’s account.
a. debit balance in the customer’s account
a. credit balance in the customer’s account.
71. At what stage in the Accounts Payable process is cash affected?
Answers:
a. When an invoice is entered into the accounting system
a. When a credit memo is generated
a. When checks are printed
a. Accounts Payable never handles cash
72. $1,000 worth of supplies are purchased on account. What is the Journal Entry to be posted?
Answers:
a. Dr A/P account and Cr Supplies account
a. Dr Purchase account and Cr A/P account
a. Dr Supplies account and Cr A/P account
a. Dr A/P account and Cr Purchase account
73. Under generally accepted accounting principles, which approach is used to determine income tax expense?
Answers:
a. Asset and liability approach.
a. “With and Without” approach.
a. Net-of-tax approach.
a. Deferred approach.
74. Under the state law, Acme may pay 3% of eligible gross wages or it may reimburse the state directly for actual unemployment claims. The Company believes that actual unemployment claims will be 2% of the eligible gross wages and has chosen to reimburse the state. Eligible gross wages are defined as the first $10000 of the gross wages paid to each employee. The Company had five employees, each of whom earned $20000 during 2007. In its December 31, 2007 balance sheet, what amount should it report as accrued liability for unemployment claims?
Answers:
a. $1000
a. $1500
a. $2000
a. $3000
75. On December 31, 2007, Deal Inc. failed to accrue the December 2007 sales salaries that were payable on January 6,2008. What will be the effect of the failure to accrue sales salaries on the working capital and cash flows from operating activities in Deal’s 2007 financial statements?
Working Capital Cash Flows from Operating Activities
Answers:
a. Overstated No effect
a. Overstated Overstated
a. No effect Overstated
a. No effect No effect
76. What are the steps involved in setting up QuickBooks to track 1099 information?
Answers:
a. Turn on the Tax: 1099 preference
a. Link 1099 categories to QuickBooks accounts
a. Designate which vendors should receive 1099s
a. All of the above
77. What is the use of an Accounts Payable ledger?
Answers:
a. An Accounts Payable ledger helps you to control your expenditures and payables
a. An Accounts Payable ledger helps you to know the income earned
a. An Accounts Payable ledger shows the amount to be paid to the employees
a. None of the above
78. What should be submitted to the VAT authorities to obtain a refund of VAT?
Answers:
a. The original invoice, together with an application form and other supporting documents relating to the expenditure incurred must be submitted.
a. The original purchase order together with an application form and other supporting documents relating to the expenditure incurred must be submitted.
a. The original Receipt together with an application form and other supporting documents relating to the expenditure incurred must be submitted
a. Both the original purchase order and the invoice should be submitted
79. Making insurance payments in advance is an example of:
Answers:
a. an accrued receivable transaction.
a. an accrued liability transaction.
a. an unearned revenue transaction.
a. a prepaid expense transaction
80. Is a sales tax return required to be filed even if the sales are equal to zero?
Answers:
a. Yes
a. No
a. Depends on the expenditure made
a. Varies from state to state.
81. What is Accounts Payable aging report?
Answers:
a. Sorting of a company’s Accounts Payable by the bill date.
a. Sorting of a company’s Accounts Payable by the due date.
a. Sorting of a company’s Accounts Payable by the posted date.
a. None of the above.
82. What is the standard method used for the employees to submit an account of the travel expenses incurred by them?
Answers:
a. They needn’t as they are given a company credit card for the purpose
a. They have to submit a written and signed letter stating the total expenses to be reimbursed
a. They submit an envelope containing the receipts of the expenses incurred
a. They have to submit a report of the expenses approved by the employees’ supervisor
83. Payments for expenses incurred on corporate cards should be made directly to_____.
Answers:
a. the EFT
a. the IRS
a. the state Taxes
a. the credit card company
84. The ratio derived by dividing Cost of Goods Sold by Account Payable is known as _______.
Answers:
a. the Current Ratio
a. the Quick Ratio
a. the Networth Ratio
a. the Accounts Payable Turnover Ratio
85. Why are per diem’s used in lieu of having employees detail all actual spending for meals?
Answers:
a. Companys like to treat their employees while they travel for the company
a. Reasonable amounts are fixed and it limits the amount the company will have to spend
a. Employees always lose receipts and that makes the process of reimbursement tough
a. It saves on paperwork
86. The Provisions of SFAS 109, Accounting for Income Taxes, are applicable to:
Answers:
a. all foreign, state, and local taxes.
a. domestic Federal income taxes.
a. an enterprise’s foreign operations accounted for by the cost method.
a. financial statements of foreign enterprises required to pay US. Federal income taxes.
87. What type of people does the Accounts Payable interface with most often?
Answers:
a. Customers
a. Vendors
a. Other employees
a. IRS
88. Who can use a company’s Travel & Entertainment Cards, though the liability lies with the employees?
Answers:
a. Vendors
a. Customers
a. Employees
a. All of the above
89. On February 1, Royal Company Ltd. purchased $2,000 worth of merchandise, terms 2/10, n/30. The company uses the gross method of recording purchases. Payment for the Accounts Payable was made on February 26. Which of the following journal entries is appropriate for the February 26 transaction?
Answers:
a. Debit Purchases a/c… $2,000 and credit Account Payable a/c… $2,000
a. Debit Accounts Payable a/c… $1960 and credit Cash a/c… $1,960
a. Debit Accounts Payable a/c… $2,000 and credit Cash a/c… $2,000
a. Debit Accounts Payable & Purchase Discount a/c for $1,960 & $40 and credit Cash a/c for $2,000
Answers:
a. Overstated No effect
a. Overstated Overstated
a. No effect Overstated
a. No effect No effect
76. What are the steps involved in setting up QuickBooks to track 1099 information?
Answers:
a. Turn on the Tax: 1099 preference
a. Link 1099 categories to QuickBooks accounts
a. Designate which vendors should receive 1099s
a. All of the above
77. What is the use of an Accounts Payable ledger?
Answers:
a. An Accounts Payable ledger helps you to control your expenditures and payables
a. An Accounts Payable ledger helps you to know the income earned
a. An Accounts Payable ledger shows the amount to be paid to the employees
a. None of the above
78. What should be submitted to the VAT authorities to obtain a refund of VAT?
Answers:
a. The original invoice, together with an application form and other supporting documents relating to the expenditure incurred must be submitted.
a. The original purchase order together with an application form and other supporting documents relating to the expenditure incurred must be submitted.
a. The original Receipt together with an application form and other supporting documents relating to the expenditure incurred must be submitted
a. Both the original purchase order and the invoice should be submitted
79. Making insurance payments in advance is an example of:
Answers:
a. an accrued receivable transaction.
a. an accrued liability transaction.
a. an unearned revenue transaction.
a. a prepaid expense transaction
80. Is a sales tax return required to be filed even if the sales are equal to zero?
Answers:
a. Yes
a. No
a. Depends on the expenditure made
a. Varies from state to state.
81. What is Accounts Payable aging report?
Answers:
a. Sorting of a company’s Accounts Payable by the bill date.
a. Sorting of a company’s Accounts Payable by the due date.
a. Sorting of a company’s Accounts Payable by the posted date.
a. None of the above.
82. What is the standard method used for the employees to submit an account of the travel expenses incurred by them?
Answers:
a. They needn’t as they are given a company credit card for the purpose
a. They have to submit a written and signed letter stating the total expenses to be reimbursed
a. They submit an envelope containing the receipts of the expenses incurred
a. They have to submit a report of the expenses approved by the employees’ supervisor
83. Payments for expenses incurred on corporate cards should be made directly to_____.
Answers:
a. the EFT
a. the IRS
a. the state Taxes
a. the credit card company
84. The ratio derived by dividing Cost of Goods Sold by Account Payable is known as _______.
Answers:
a. the Current Ratio
a. the Quick Ratio
a. the Networth Ratio
a. the Accounts Payable Turnover Ratio
85. Why are per diem’s used in lieu of having employees detail all actual spending for meals?
Answers:
a. Companys like to treat their employees while they travel for the company
a. Reasonable amounts are fixed and it limits the amount the company will have to spend
a. Employees always lose receipts and that makes the process of reimbursement tough
a. It saves on paperwork
86. The Provisions of SFAS 109, Accounting for Income Taxes, are applicable to:
Answers:
a. all foreign, state, and local taxes.
a. domestic Federal income taxes.
a. an enterprise’s foreign operations accounted for by the cost method.
a. financial statements of foreign enterprises required to pay US. Federal income taxes.
87. What type of people does the Accounts Payable interface with most often?
Answers:
a. Customers
a. Vendors
a. Other employees
a. IRS
88. Who can use a company’s Travel & Entertainment Cards, though the liability lies with the employees?
Answers:
a. Vendors
a. Customers
a. Employees
a. All of the above
89. On February 1, Royal Company Ltd. purchased $2,000 worth of merchandise, terms 2/10, n/30. The company uses the gross method of recording purchases. Payment for the Accounts Payable was made on February 26. Which of the following journal entries is appropriate for the February 26 transaction?
Answers:
a. Debit Purchases a/c… $2,000 and credit Account Payable a/c… $2,000
a. Debit Accounts Payable a/c… $1960 and credit Cash a/c… $1,960
a. Debit Accounts Payable a/c… $2,000 and credit Cash a/c… $2,000
a. Debit Accounts Payable & Purchase Discount a/c for $1,960 & $40 and credit Cash a/c for $2,000
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