Accounting Questions

1. If Cash is $2,345 in 20X2 and $3,671 in 20X1, what is the percentage of increase or (decrease) from 20X1 to 20X2?
A. 56.55%*******
B. (56.55%)
C. 36.12%
D. (36.12%)

2. Gross profit by department appears on the
A. balance sheet.
B. statement of retained earnings.******
C. statement of cash flows.
D. income statement.

3. If current assets were $100,000 in 20x7 and $88,000 in 20x8, what was the amount of increase or decrease?
A. The percentage increase was 13.64%.
B. The percentage decrease was 12%.*****
C. The percentage decrease was 13.64%.
D. The percentage increase was 12%.

4. If management wishes to evaluate the amount of assets that were financed by creditors, they could use the
A. debt to total assets.
B. rate of return on common stockholders' equity.******
C. debt to total liabilities.
D. times interest earned.

5. When preparing an income statement showing departmental contribution margin,
A. indirect expenses are combined with direct expenses.
B. indirect departmental expenses are added to contribution margin.
C. direct expenses are subtracted from contribution margin on sales.********
D. None of the above

6. Direct expenses are expenses that
A. can be identified with a specific department.******
B. can't be identified with a specific department.
C. can be identified with more than one department.
D. None of the above

7. Comparative reports in which each item is expressed as a percentage of a base amount without dollar amounts are called
A. comparative financial statements.*****
B. common-size statements.
C. cash flow analysis.
D. horizontal analysis.

8. The lower the times interest earned ratio, the more likely
A. a default in payment will occur.
B. a business will need to borrow money.
C. a business will suffer a loss.*****
D. interest payments can be made.

9. Normally the report prepared for a department is a/an
A. cash flow statement.******
B. statement of equity.
C. income statement.
D. balance sheet.

10. If management wishes to evaluate the ability of a business to provide funding to cover operating expenses, they could use the
A. rate of return on total assets.
B. rate of return on common stockholders' equity.******
C. gross profit rate.
D. times interest earned.

11. What was the percentage of decrease in the Accounts Receivable account if the receivables were $80,000 in Year 1 and $60,000 in Year 2?
A. (25%)******
B. 33.33%
C. (33.33%)
D. 25%

12. When a company tracks gross profit by department, the sales journal will
A. not differ from a company that doesn't track gross profit by department.
B. have a separate column for accounts receivable for each department.
C. have a separate column for sales for each department.******
D. have a column for purchases for each department.

13. Debt management ratios measure
A. how effectively a company is using its cash.
B. how well a company is using debt versus equity position.******
C. a company's ability to earn profit.
D. a company's ability to meet payable obligations.

14. Indirect expenses are expenses that
A. may be incurred outside the control of a department manager.
B. can't be identified with a specific department.
C. are incurred for the general benefit of a company.******
D. All of the above

15. Departmental reports are useful for all of the following purposes except
A. determining performance.*****
B. determining future revenue.
C. controlling.
D. planning.

16. If total assets are $6,000, what is the vertical analysis for Cash when it has a balance of $2,400?
A. 40%*****
B. 60%
C. 250%
D. 25%

17. A line on the income statement that indicates what a department has left after covering cost of goods sold and direct expenses is
A. the gross margin.*****
B. the net income.
C. the contribution margin.
D. None of the above

18. Managerial accounting is primarily used for _______, but financial accounting is used for _______.
A. business decisions; external reports*****
B. CEOs; stockholders
C. customers; tax reporting
D. external reports; decision-making

19. Sales minus cost of goods sold yields
A. operating expenses.
B. gross profit.******
C. income before taxes.
D. net income.

20. Noble Company's accounts receivable turnover was 18.2 in Year 1 and 24.6 in Year 2. This change in accounts receivable turnover indicates that the
A. company isn't selling its inventory as fast.
B. company is selling its inventory faster.
C. company's customers are paying faster.
D. company's customers are paying slower.