accounting-quiz.md

Accounting

Q1. Which statement is not an advantage of robotic process automation (RPA)?

• Bots are more creative than humans
• Bots do no need to take time off
• Bots improve efficiency
• Bots can eliminate human errors

Q2. What effect does a contra asset account have on a balance sheet?

• A contra asset is not an accounting term
• A contra asset has a credit balance and therefore a negative effect on total assets
• A contra asset with a positive balance will increase overall liabilities
• A contra asset has a debit balance and therefore a positive effect on total assets

Q3. Internal controls may be preventative, detective, corrective, or directive. Which is a detective control?

• data backups
• physical inventory check
• employee background checks
• physical locks on inventory warehouse

Q4. On March 15, a business receives an invoice from the power company for utilities used in February. The retailer pays the invoice on April 1. The business uses accrual-based accounting. Which month should the business recognize the expense?

• April
• March
• no record required
• February

Q5. Which choice is a general guideline for adequate separation of duties to prevent both fraud and error?

• A person who has control over an asset should not safeguard that asset.
• A person who has temporary or permanent custody of an asset should not account for that asset.
• A person who has record-keeping responsibility should not make journal entries.
• A person who has operational responsibility should not authorize transactions for the area.

Q6. What does the cost of a unit of product under absorption costing method consist of?

• direct materials, direct and indirect labor, and fixed overhead
• direct materials, indirect labor, and variable and fixed overhead
• direct materials, direct labor, and both variable and fixed overhead
• direct materials, direct and indirect labor, and variable overhead

Q7. Which answer best describes accruals and deferrals?

• Accruals are past cash receipts and payments, while deferrals are expected future cash receipts and payments.
• Both accruals and deferrals are both expected future cash receipts and payments.
• Accruals are expected future cash receipts and payments, while deferrals are past cash receipts and payments.
• Both accruals and deferrals are not expected past cash receipts and payments.

Q8. What do you call a situation where more than one person collaborates to circumvent existing internal controls?

• assigned responsibility
• segregation of duties
• fraud prevention
• collusion

Q9. Which is not an example of an internal control activity?

• review of manufacturing plan
• segregation of duties
• bank reconciliations
• approval process

Q10. Which budgeting approach request justification of all expenditures?

• zero-based budgeting
• master budgeting
• rolling budgets
• bottom-up budgeting

Q11. What does the discontinued operations section of the income statement refer to?

• disposal of a major product line or major geographical area of operations
• sale of unused or obsolete equipment and discontinued inventory
• a plant shutdown or decommissioning of a facility
• net income or loss for products completed and sold

Q12. How are the three financial statements (income, statement, balance sheet, and cash flow statement) linked?

• Only the assets are reflected in the cash flow statement, and the net income expenses correlate with the liabilities.
• The net income goes to retained earnings, but the cash flow remains independent.
• The gross profit goes to retained earning, and the shareholder equity total is added to the cash flow statement
• The net income goes to the retained earning and to the cash flow statement

Q13. Which is not one of the four perspectives of the balanced scorecard?

• internal business
• learning and growth
• quantitative
• customer

Q14. What would be deducted from the balance per books when doing a bank reconciliation?

• deposits in transit
• bank service fees
• outstating checks
• electronic fund transfers/payments

Q15. What situation could be the results of the three retails store employees sharing the same cash register?

• a thorough internal control activity
• a violation of assignment of responsibility
• a violation of segregation of duties
• a support process to avoid fraud

Q16. A firm has $1,000 in debt and $3,000 in assets. What is the firm's debt-to-equity ratio?

• 3
• 2
• 0.5
• 0.33

Q17. An external auditor is required to be independent when performing

• all attestation services
• all professional services
• all tax services
• all consulting engagements

Q18. Proper segregation of functional responsibilities calls for separation of

• custody, payment, and recording
• authorization, custody, and execution
• authorization, custody, and recording
• custody, execution, and payment

Q19. What does the degree of operating leverage represent?

• how much the value of capital assets will change in response to a change in sales
• how much the operating income of a company will change in response to a change in sales
• the valuation of assets to determine how much additional debt the company can borrow
• how much the sales of a company will change in response to a change in operating income

Q20. Which characteristic would concern an auditor about the risk of material misstatements arising from fraudulent financial reporting?

• limited employee turnover within the accounting and finance department
• management's disregard of regulations and regulatory authorities
• regularly reported bank reconciliations, including deposits in transit
• capital assets sold at a loss before being depreciated fully

Q21. An employee who makes a sale, ships the goods, and bills the customer violates which control activity?

• assignment of responsibility
• audit verification
• segregation of duties
• review and reconciliation

Q22. What trait distinguishes auditors from accountants?

• The auditor can interpret accounting principles applicable to the country in which the client operates.
• The auditor has extensive education beyond what is required for an accountant
• The auditor can adapt to a rapidly changing profession.
• The auditor has expertise in the gathering and interpretation of audit evidence.

Q23. What is the purpose of an operational audit?

• assessing the company's compliance with environmental laws and regulations
• evaluating whether the organization is meeting the metrics set by management in order to achieve the goals and objectives set forth by the board of directors
• assessing the organization's control mechanisms for overall efficiency and reliability
• evaluating compliance with applicable laws, regulations, policies, and procedures

Q24. Which statement is false?

• The balanced scorecard aligns an organization's operational activities with its mission.
• The balanced scorecard focuses on these four primary areas: financial, customer, internal process, and learning and growth.
• The balanced scorecard measures, tracks, and reports on a balance of qualitative and financial data and metrics.
• The balanced scorecard ensures the organization's profitability aligns with director compensation and dividend expectations.

Q25. Which choice is not a component of internal control?

• information and communication
• risk mitigation
• monitoring
• control environment

Q26. What is the difference between the cost of an asset and the accumulated depreciation for that asset?

• depreciation value
• prepaid asset
• depreciation expense
• book value

Q27. A company budgeted 1,200 washers, but only 1,000 are produced. It costs $10 to produce a widget. What is the materials variance?

• 200
• 2000
• 350
• 20

Q29. Who does an audit committee report to?

• external auditors
• senior management
• board of directors
• union of employee representatives

Q30. A business purchased office equipment by issuing aone-year note payable. The entire amount of the note is due at the end of one year. How do you record this transaction?

• Debt asset, credit equity
• Debt liablity, credit asset.
• Debit asset, credit liability
• Debit equity, credit asset.

Q31. Which section of a financial annual report describes the corporation's accounting methods?

• Notes to the financial statements
• An auditor's report
• Listing of the stockholders
• Management discussion and analysis