ACCOUNTING COMPETENCY QUIZ
Applicant Name_________________________________
DATE: ___/___/___
1. The basic accounting equation is Assets = Liabilities + __________.
2. The accounting equation should remain in balance because every transaction affects how many accounts?
Only One
Only Two
Two Or More
3. The segregation or separation of duties and the safeguarding of checks are two examples of an important topic
known as __________ controls.
4. The two main methods of bookkeeping and accounting are 1) the cash method, and 2) the __________
method.
5. Under the accrual basis of accounting, revenues are recognized in the accounting period in which
Cash Is Received
Revenues Are Earned
6. Resources owned by a company (such as cash, accounts receivable, vehicles) are reported on the balance sheet
and are referred to as __________.
7. Which of the following is a category or element of the balance sheet?
Expenses
Gains
Liabilities
Losses
8. Obligations (amounts owed) are reported on the balance sheet and are referred to as __________.
9. The financial statement with a structure that is similar to the accounting equation is the __________.
10. The financial statement that reports the assets, liabilities, and stockholders' (owner's) equity at a specific date is
Balance Sheet
Income Statement
Statement Of Cash Flows
11. Revenues minus expenses equals __________.
12. Which of the following is an asset account?
Accounts Payable
Prepaid Insurance
Unearned Revenue
13. Which of the following is a contra account?
Accumulated Depreciation
Mary Smith, Capital
14. Expenses can be found in the:
Statement of Owner’s Equity
Income Statement
Balance Sheet
15. Net Sales minus the Cost of Goods Sold equals
Gross Profit
Income From Operations
Net Income
16. Which term is associated with "left" or "left-side"?
Debit
Credit
17. Which term is associated with "right" or "right-side"?
Debit
Credit
18. What is the normal balance for an asset account?
Debit
Credit
19. What is the normal balance for liability accounts?
Debit
Credit
20. What is the normal balance for stockholders' equity and owner's equity accounts?
Debit
Credit
21. When cash is received, the account Cash will be
Debited
Credited
22. When a company pays a bill, the account Cash will be
Debited
Credited
23. What will usually cause an asset account to increase?
Debit
Credit
24. What will usually cause the liability account Accounts Payable to increase?
Debit
Credit
25. Entries to expenses such as Rent Expense are usually
Debits
Credits
26. Entries to revenues accounts such as Service Revenues are usually
Debits
Credits
27. A __________ balance is typical for Accounts Payable.
Debit
Credit
28. The balance in Accounts Payable is decreased with a __________ entry.
Debit
Credit
29. The owner invests personal cash in the business.
Assets…………………………………
Liabilities…………………………….
Owner's (or Stockholders') Equity…
Increase
Increase
Increase
Decrease
Decrease
Decrease
No Effect
No Effect
No Effect
30. Which of the following will cause owner's equity to decrease?
Net Income
Net Loss
Revenue
31. Paying the insurance premium on December 20 for the six-month period beginning 12 days later should result
in a debit balance in the asset account __________ Insurance.
32. Sorting a company's accounts receivable into classifications such as current, 1-30 days past due, and 31-60
days past due is known as the __________ of accounts receivables.
33. A $1,000 invoice from a supplier has terms of 2/10, n/30. The amount that should be remitted to the supplier if
the amount is paid within the discount period is $__________.
34. The Philip Company received a bill for natural gas. The bill is for $550 and is payable in 30 days. The
accounting entry is:
Debit accounts receivable $550; Credit service revenue $550
Debit accounts payable $550; Credit cash $550
Debit natural gas expense $550; Credit accounts payable $550
Debit natural gas expense $550; Credit cash $550
35. A company wrote a check for $76 and it cleared the bank for $76. However, the company recorded the check
in its Cash account as $67. What is this most common type of accounting error that is divisible by 9 called?
__________ error.
36. On December 1 a company borrowed $100,000 at 12% per year. The interest will be paid quarterly, with the
first payment due on March 1. What should the company report on its income statement for December?
Nothing
Interest Expense of $1,000
37. On December 31, if net income equals $15,000 and the ending owner’s equity is $20,000, and Forbes invested
an additional $2,600 in his business, while withdrawing $6,000 during the year, the beginning owner’s equity
for this year was:
$7,100
$7,400
$8,400
$7,430
38. A truck was purchased on July 1 for $20,000. The estimated salvage value is $2,000. The estimated useful life
is 3 years. Using straight-line method of depreciation, the amount of depreciation in the adjusting entry at
fiscal year-end on December 31 is:
Depreciation Expense-Truck $555.56
Accumulated Depreciation-Truck $555.56
Accumulated Depreciation- Truck $1,500
Depreciation Expense- Truck $1,500
Depreciation Expense- Truck $500
Accumulated Depreciation- Truck $500
Depreciation Expense- Truck $3,000
Accumulated Depreciation- Truck 3,000
39. A company paid in advance $4,800 for two years of prepaid insurance, which started on May 1. The adjusting
entry on fiscal year ending December 31 of that year is:
Debit Insurance Expense; Credit Prepaid Insurance, $1,200
Debit Insurance Expense; Credit Prepaid Insurance, $800
Debit Prepaid Insurance; Credit Insurance Expense , $1,600
Debit Insurance Expense; Credit Prepaid Insurance, $1,600
40. Rowe Inc. has a contract to construct a building for a price of $100. So far it has spent $60 of costs and it
estimates an additional $20 will be needed to finish the building. How much profit can be recognized using the
percentage of completion method?
$ 0
$ 15
$ 20
$ 40
41. From merchandiser’s income statement you know that Sales revenue is $ 650,000 and the gross margin is
20%. What is the cost of Goods Sold?
$ 650,000
$ 130,000
$ 520,000
$ 26,000
42. The Internal Revenue Service form to be issued for amounts paid to independent contractors (that are not
corporations) for services provided is
Form 1099-MISC
Form W-2
Form W-3
43. The Internal Revenue Service form used to request a taxpayer identification number from a vendor is
Form 1099-MISC
Form W-9
Form W-3
44. The federal form on which an employee indicates the number of exemptions/dependents to be used in
calculating the amount of federal income tax withholding for the employee is the __________form.
45. An example of a court-ordered employee withholding is __________.
46. A cost paid by the employer to cover an employee’s work-related injury is __________ insurance.
47. An employee is hired at a pay rate of $10 per hour. During the past week, the employee worked 50 hours. The
employee’s gross wages for the past week are:
$400
$450
$500
$550
48. The combination of the Social Security tax and the Medicare tax is referred to by the acronym __________.
49. The 2014 rate for the Social Security tax (excluding the Medicare tax) that is withheld from employees'
salaries and wages up to a specified annual amount is __________%.
50. The combined rate for the Social Security tax and the Medicare tax to be withheld from each employee's gross
wages up to $117,000 in 2014 is __________%.
51. What is the total amount of FICA that needs to be remitted by an employer in 2014 for an employee earning
$50,000?
$1,450
$3,825
$6,200
$7,650
Use the following information for the next two Questions:
An employer has computed the following amounts for its employee Mary during a week in January: gross wages
$500.00; FICA tax withheld $38.25; federal income tax withholding $67.25; State income tax withholding $20.00;
unemployment taxes $24.00; worker compensation insurance $5.00. The company does not provide health
insurance, paid vacations, or any other benefits.
52. The amount of Mary’s net pay is
$352.75
$357.75
$374.50
53. The employer’s total expense for Mary’s employment during the week is
$505.00
$529.00
$567.25
$605.50