AIS100_Practice_Exam - 1 AIS 100 PRACTICE EXAM 1 I Multiple Choice(50 points 1 Adjustments for unearned revenue a Decrease liabilities and increase

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1 AIS 100 PRACTICE EXAM 1 I. Multiple Choice (50 points) 1. Adjustments for unearned revenue: a) Decrease liabilities and increase assets b) Decrease revenues and increase assets c) Decrease liabilities and increase revenues d) Decrease expenses and increase liabilities 2. Nevens Knickknacks purchased goods for inventory and paid the transportation costs. The journal entry for the freight costs will include a credit to cash and a debit to a) Merchandise inventory b) Freight-out c) Delivery expense d) Cost of goods sold 3. Financial information for Derr Drivers is presented below: Operating Expenses $ 45,000 Sales Returns and Allowances 13,000 Sales Discount 6,000 Sales 160,000 Cost of Goods Sold 77,000 What is the gross profit rate for Derr? a) 0.454 b) 0.546 c) 0.500 d) 0.538 4. With respect to the income statement, a) Sales discounts increase the amount of net sales b) Sales discounts are included in the calculation of gross profit c) Contra-revenue accounts increase the amount of operating expenses d) Contra-revenue accounts do not appear on the income statement 5. The ability of a business to pay obligations that are expected to become due within the next year or operating cycle is its a) Liquidity b) Profitability c) Leverage d) Capability 6. Employees at Heyerdahl Houseplants are paid $5,000 cash every Friday for working Monday through Friday. The calendar year accounting period ends on Wednesday, December 31. How much salary expense would be need to be recorded two days later on January 2? a) $5,000 b) $2,000 c) $3,000 d) $0 7. Dividends appear on a) The retained earnings statement only b) The income statement only c) The balance sheet only d) Both the retained earnings statement and the balance sheet
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2 8. If the retained earnings account increases from the beginning of the year to the end of the year, then which of the following MUST be true? a) Dividends are less than additional investments b) Net income is greater than dividends c) Additional investments are less than net losses d) Net loss is less than dividends 9. Which of the following is a constraint in accounting? a) Consistency b) Relevance c) Comparability d) Conservatism 10. A journal provides a) Information about a transaction in several different places b) A chronological record of transactions c) A list of all accounts used by the business d) The balances for each account 11. Current assets are a) Assets that are expected to be converted to cash or used in the business within a relatively short period of time b) The most recent assets purchased by a business c) Typically separated from other assets within the income statement d) Assets which are currently being used to produce a product or service 12. Chrudimsky Carpenters had the following transactions during 2005. Sales of $5,400 on account
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This note was uploaded on 04/01/2008 for the course ACCT 100 taught by Professor Punke during the Fall '08 term at Wisconsin.

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AIS100_Practice_Exam - 1 AIS 100 PRACTICE EXAM 1 I Multiple Choice(50 points 1 Adjustments for unearned revenue a Decrease liabilities and increase

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