This document contains 29 multiple choice questions about accounting concepts and principles from an ACC 290 final exam, including questions about: - Financial statements and the statement of cash flows - Basic accounting equations and debits and credits - Adjusting entries, trial balances, and calculating financial metrics like cost of goods sold - Inventory costing methods like FIFO and LIFO - Internal controls and the Sarbanes-Oxley Act

1. Acc 290 Final Exam MCQs
) Which financial statement is used to determine cash generated
from operations?
A. Income statement
B. Statement of operations
C. Statement of cash flows
D. Retained earnings statement
2) In terms of sequence, in what order must the four basic
financial statements be prepared?
A. Balance sheet, income statement, statement of cash flows,
and capital statement
B. Income statement, capital statement, statement of cash
flows, and balance sheet
C. Balance sheet, capital statement, statement of cash flows,
and income statement
D. Income statement, capital statement, balance sheet, and
statement of cash flows
3. In classifying transactions, which of the following is true in
regard to assets?

2. A. Normal balances and increases are debits
B. Normal balances and decreases are credits
C. Normal balances can either be debits or credits for assets
D. Normal balances are debits and increases can be debits or
credits
4. An increase in an expense account must be
A. debited
B. credited
C. either debited or credited, depending on the circumstances
D. capitalized
5. ABC Corporation issues 100 shares of $1 par common stock
at $5 per share, which of the following is the correct journal
entry?
C. Correct ANSWER (Go with this Option)
6. In the first month of operations, the total of the debit entries
to the cash account amounted to $1,400 and the total of the
credit entries to the cash account amounted to $600. The cash
account has a
A. $600 credit balance

3. B. $1,400 debit balance
C. $800 debit balance
D. $800 credit balance
7. Which ledger contains control accounts?
A. Accounts receivable subsidiary ledger
B. General ledger
C. Accounts payable subsidiary ledger
D. General revenue and expense ledger
8. Smith is a customer of ABC Corporation. Smith typically
purchases merchandise from ABC on account. Which ledger
would ABC use to keep track of the details of Smith’s account?
A. Accounts receivable subsidiary ledger
B. Accounts receivable control ledger
C. General ledger
D. Accounts payable subsidiary ledger
9. Under the cash basis of accounting

4. A. revenue is recognized when services are performed
B. expenses are matched with the revenue that is produced
C. cash must be received before revenue is recognized
D. a promise to pay is sufficient to recognize revenue
10. Under the accrual basis of accounting
A. cash must be received before revenue is recognized
B. net income is calculated by matching cash outflows against
cash inflows
C. events that change a company’s financial statements are
recognized in the period they occur rather than in the period in
which the cash is paid or received
D. the ledger accounts must be adjusted to reflect a cash basis
of accounting before financial statements are prepared under
generally accepted accounting principles
11. The Vintage Laundry Company purchased $6,500 worth of
laundry supplies on June 2 and recorded the purchase as an
asset. On June 30, an inventory of the laundry supplies
indicated only $2,000 on hand. The adjusting entry that should
be made by the company on June 30 is
A. debit Laundry Expense, $2,000; credit Laundry Expense
$2,000

5. B. debit Laundry Expense, $4,500; credit Laundry Supplies
Expense, $4,500
C. debit Laundry Supplies, $2,000; credit Laundry Supplies
Expense, $2,000
D. debit Laundry Supplies Expense, $4,500; credit Laundry
Supplies, $4,500
12. Greese Company purchased office supplies costing $4,000
and debited Office Supplies for the full amount. At the end of
the accounting period, a physical count of office supplies
revealed $1,100 still on hand. The appropriate adjusting journal
entry to be made at the end of the period would be
A. debit Office Supplies Expense, $1,100; credit Office
Supplies, $1,100
B. debit Office Supplies, $2,900; credit Office Supplies
Expense, $2,900
C. debit Office Supplies Expense, $2,900; credit Office
Supplies, $2,900
D. debit Office Supplies, $1,100; credit Office Supplies
Expense, $1,100
13. An adjusted trial balance
A. is prepared after the financial statements are completed
B. proves the equality of the total debit balances and total

6. credit balances of ledger accounts after all adjustments have
been made
C. is a required financial statement under generally accepted
accounting principles
D. cannot be used to prepare financial statements
14. Given the following adjusted trial balance:
Net income for the year is
A. $248
B. $135
C. $162
D. $49
15. Given the following adjusted trial balance, what will be the
totals for the debit and credit columns of the post-closing trial
balance?
A. $7,396
B. $7,118
C. $7,334
D. $7,170

7. 16. 3.2.1 Given the following adjusted trial balance:
A. $3,256
B. $3,170
C. $3,440
D. $3,354
17. Net income is recorded on the work sheet under the
A. debit column of the adjusted trial balance and the credit
column of retained earnings
B. debit column of the income statement and the credit column
of the balance sheet
C. credit column of the adjusted trial balance and the debit
column of retained earnings
D. credit column of the income statement and the debit column
of the balance sheet
18. At the beginning of the year, Uptown Athletic had an
inventory of $400,000. During the year, the company purchased
goods costing $1,500,000. If Uptown Athletic reported ending
inventory of $600,000 and sales of $2,000,000, their cost of
goods sold and gross profit rate would be

8. A. $900,000 and 65%
B. $1,300,000 and 35%
C. $900,000 and 35%
D. $1,300,000 and 65%
19. During the year, Sarah’s Pet Shop’s merchandise inventory
decreased by $30,000. If the company’s cost of goods sold for
the year was $450,000, purchases would have been
A. $480,000
B. $420,000
C. $390,000
D. Insufficient data to determine
20. At the beginning of the year, Wildcat Athletic had an
inventory of $200,000. During the year, the company purchased
goods costing $700,000. If Wildcat Athletic reported ending
inventory of $300,000 and sales of $1,000,000, their cost of
goods sold and gross profit rate would be
A. $400,000 and 60%
B. $600,000 and 40%
C. $400,000 and 40%

9. D. $600,000 and 60%
21. The entry to record of sale of $900 with terms of 2/10, n/30
will include a
A. debit to Sales Discount for $18
B. debit to Sales Revenue for $882
C. credit to Accounts Receivable for $900
D. credit to Sales Revenue for $900
22.Dobler Company uses a periodic inventory system. Details
for the inventory account for the month of January 2012 are as
follows:
An end of the month (1/31/2012), inventory showed that 140
units were on hand. If the company uses LIFO, what is the value
of the ending inventory?
A. $737
B. $700
C. $762
D. $1,380
23. The difference between ending inventory using LIFO and

10. ending inventory using FIFO is referred to as
A. FIFO reserve
B. inventory reserve
C. LIFO reserve
D. periodic reserve
24. A consistent application of an inventory costing method
enhances
A. conservatism
B. accuracy
C. comparability
D. efficiency
25. The accountant at Patton Company has determined that
income before income taxes amounted to $11,000 using the
FIFO costing assumption. If the income tax rate is 30% and the
amount of income taxes paid would be $300 greater if the LIFO
assumption were used, what would be the amount of income
before taxes under the LIFO assumption?
A. $11,300
B. $12,000

11. C. $10,000
D. $10,700
26. A very small company would have the most difficulty in
implementing which of the following internal control activities?
A. Separation of duties
B. Limited access to assets
C. Periodic independent verification
D. Sound personnel procedures
27. A system of internal control
A. is infallible
B. can be rendered ineffective by employee collusion
C. invariably will have costs exceeding benefits
D. is premised on the concept of absolute assurance
28. The custodian of a company asset should
A. have access to the accounting record for that asset

12. B. be someone outside the company
C. not have access to the accounting record for that asset
D. be an accountant
29. The Sarbanes Oxley Act (2002) applies to
A. U.S. companies but not international companies
B. international companies but not U.S. companies
C. U.S. and Canadian companies but not other international
companies
D. U.S. and international companies