Accounting Practice Questions: Test Your Knowledge | LearnByTeaching.ai

Which of the following correctly represents the basic accounting equation?

A company pays $12,000 for a one-year insurance policy on January 1. What adjusting entry is needed on March 31?

Which account has a normal debit balance?

Under accrual accounting, when should revenue be recognized?

A company records a $5,000 sale on account. Which entry is correct?

Which of the following is NOT a step in the accounting cycle?

Depreciation of a building is an example of which type of adjusting entry?

A company receives $6,000 in advance for services to be performed over the next six months. At the end of month one, the correct adjusting entry is:

Which closing entry is correct at year-end for a company with $50,000 in Service Revenue?

An error that overstates ending inventory will have what effect on net income for the current period?

Which financial statement reports an entity's financial position at a specific point in time?

In the indirect method statement of cash flows, depreciation expense is:

A company has current assets of $80,000 and current liabilities of $50,000. The current ratio is:

Which of the following transactions would appear in the financing activities section of the statement of cash flows?

A company has net income of $200,000, total assets of $1,000,000, and total equity of $600,000. What is the return on equity (ROE)?

On the indirect method cash flow statement, an increase in accounts receivable during the period is:

Earnings per share (EPS) is calculated as:

Which of the following would be classified as an operating activity under GAAP?

A debt-to-equity ratio of 2.0 means that:

Which of the following is a limitation of the balance sheet?

Which of the following is a variable cost?

A product has a selling price of $50, variable costs of $30, and total fixed costs of $100,000. What is the break-even point in units?

In job order costing, manufacturing overhead is typically applied to jobs using:

Which of the following is a period cost rather than a product cost?

A favorable direct materials price variance indicates that:

The contribution margin ratio is 40% and fixed costs are $200,000. What sales revenue is needed to break even?

In process costing, equivalent units of production are used because:

Which budget is prepared first in the master budgeting process?

A segment has revenues of $300,000, variable costs of $180,000, direct fixed costs of $80,000, and allocated common fixed costs of $60,000. Should the segment be dropped?

What does a static budget variance measure?

What is the primary purpose of an external audit of financial statements?

An auditor issues a qualified opinion when:

Which of the following is an example of a preventive internal control?

In the context of audit risk, inherent risk refers to:

Which type of evidence generally provides the highest level of audit assurance?

For individual taxpayers in the United States, the standard deduction in a given tax year:

A deferred tax liability arises when:

PCAOB standards apply to audits of:

Which of the following transactions creates a permanent difference between book income and taxable income?

An auditor discovers a potential going concern issue. The appropriate action is to: