Accounting ii (written)

NEW YORK STATE FBLA

ACCOUNTING II

2009

PLEASE DO NOT OPEN THIS TEST UNTIL DIRECTED TO DO SO

Test Directions

1.Complete the information requested on the answer sheet.

PRINT YOUR NAME on the “Name” line.PRINT the name of the event, ACCOUNTING II on the “Subject” line.PRINT the name of your CHAPTER on the “DATE” line.

2.All answers will be recorded on the answer sheet.Please do not write on the test booklet.Scrap paper will be provided.

3.Read each question completely before answering. With a NO. 2 pencil, blacken in your choices completely on the answer sheet. Do not make any other marks on the answer sheet, or the scoring machine will reject it.

4.You will be given 60 minutes for the test. You will be given a starting signal and a signal after 50 minutes have elapsed.

1. Which of the following is NOT true?a. Assets = Liabilities + Owner’s Equityb. Assets – Liabilities = Owner’s Equityc. Assets – Owner’s Equity = Liabilitiesd. Assets + Liabilities = Owner’s Equity

2. The normal balance of a Cost of Merchandise account is the same as the normal balance of a __________ account.

a. Expenseb. Liabilityc. Revenued. Stockholder’s equity

3. In the U.S., the __________ form of business organization isthe most common.

a. Corporationb. LLCc. Partnershipd. Sole proprietorship

4. In the U.S., the __________ form of business organization isresponsible for generating the greatest volume of sales.

a. Corporationb. LLCc. Partnership

d. Liability

Use the information below to answer questions 5-7.

Scofield, Inc. wrote a check for $775.38 to Skates Unlimitedfor merchandise purchased on account, $783.21, less a discount of $7.83.

5. What journal should this entry be recorded in?a. Cash payments journalb. General journalc. Purchases journald. Sales journal

6. What account(s) should be debited?a. Accounts Payableb. Cash in Bankc. Purchases Discountsd. Purchases Discounts and Cash in Bank

7. What accounts(s) should be credited?a. Accounts Payableb. Cash in Bankc. Purchases Discountsd. Purchases Discounts and Cash in Bank


Haverly Sports recorded a bank service charge of $25, deducted from the monthly bank statement.

8. What journal should be used to record this entry?a. Cash payments journalb. Cash receipts journalc. Purchases journald. Sales journal

9. What account should be debited?a. Accounts Payableb. Bankcard Fees Expensec. Cash in Bankd. Miscellaneous Expense

10. What account should be credited?a. Accounts Payableb. Bankcard Fees Expensec. Cash in Bankd. Miscellaneous Expense


Stark Unlimited returned $100 of damaged merchandise that had been purchased on account.

11. What journal should be used to record this entry?a. Cash receipts journalb. General journalc. Purchases journald. Sales journal

12. What account should be debited?a. Accounts Payableb. Accounts Receivablec. Purchases Returns and Allowancesd. Sales Returns and Allowances

13. Which account should be credited?a. Accounts Payableb. Accounts Receivablec. Purchases Returns and Allowances d. Sales Returns and Allowances

14. What should the source document be for this entry?a. Credit Memorandumb. Debit Memorandum

c. Receiptd. Sales slip

15. Which account is always debited in the sales journal?a. Accounts Payableb. Accounts Receivablec. Cash in Bankd. Sales

16. A __________ is a working paper used to collect information from the general ledger.

a. Income statementb. Trial balancec. Subsidiary ledgerd. Worksheet

17. Net Sales minus cost of merchandise sold equals __________.

a. Cost of merchandise available for saleb. Gross profitc. Net purchasesd. Operating expenses


Shepard Suppliers issued a check to replenish the petty cashfund. The fund had a cash balance of $18 and petty cash vouchers as follows: supplies, $1; advertising expense, $29.40; delivery expense, $5; and miscellaneous expense, $23.60. The petty cash fund started with $75 in it.

18. What will be the effect on the Cash Short and Over account?

a. There is a cash overage which results in a credit to Cash Short and Over.

b. There is a cash overage which results in a debit to Cash Short and Over.

c. There is a cash shortage which results in a credit to Cash Short and Over.

d. There is a cash overage which results on a debit to Cash Short and Over.

19. What will be the effect on the Petty Cash Fund account?a. Petty Cash Fund if credited for $2.b. Petty Cash Fund is credited for $59.c. Petty Cash Fund is debited for $75.d. There is no effect on the Petty Cash Fund account.

20. What will be the effect of the Cash in Bank account?a. Cash in Bank is credited for $2.b. Cash in Bank is credited for $57.c. Cash in Bank is credited for $59.d. Cash in Bank is credited for $75.


Dec 31 McIver Entertainment estimates that the uncollectible account expense for the period is $1,016.65.

Jan 23 McIver Entertainment decides to write off the account of Lila Benninger as uncollectible. The amount Lila owed was $80.

21. The __________ principle requires an adjusting entry tobe made on December 31.

a. Conservatismb. Consistencyc. Matchingd. Revenue recognition

22. What account should be debited on December 31?a. Accounts Payableb. Accounts Receivablec. Allowance for Uncollectible Accountsd. Uncollectible Accounts Expense

23. What account should be credited on December 31?a. Accounts Payableb. Accounts Receivablec. Allowance for Uncollectible Accountsd. Uncollectible Accounts Expense

24. What account should be debited on January 23?a. Accounts Payableb. Accounts Receivablec. Allowance for Uncollectible Accountsd. Uncollectible Accounts Expense


Sales $412,750Sales Discounts $ 2.063Sales Returns and Allowances $ 4.027Transportation In $ 2.554

Over the past few years Hoyle’s actual uncollectible accounts expense average 0.25% of net sales.

25. What is Hoyle’s net sales for the year?a. $404,106b. $406,660c. $418,840d. $421,394

26. What is Hoyle’s estimated uncollectible accounts expense for the year?

a. $1,010.27b. $1,016.65c. $1,047.10d. $1,053.49

Use the information below regarding the issuance of a promissory note to answer questions 27-28.

Date of Issue November 22Term 75 daysPrincipal $5,400Interest Rate 10%

27. What is the maturity date of the note?a. February 3b. February 4c. February 5d. February 6

28. What is the maturity value of the note?a. $5,411.10b. $5,510.96c. $5,512.50d. $5,940.00


Den’s Tires received a check for $650.44 from Amy France forthe principal ($642.00) plus interest ($8.44) due on a 60-day note receivable.

29. What account(s) should be debited?a. Cash in Bankb. Interest Incomec. Notes Receivabled. Notes Receivable and Interest Income

30. What account(s) should be credited?a. Cash in Bankb. Interest Income

c. Notes Receivabled. Notes Receivable and Interest Income

31. What is the interest rate on the note?a. 6%b. 7%c. 8%d. 9%


Beth Taylor dishonored her $2,000.00, 9.5%, 30-day note.

32. What is the effect on the Notes Receivable Past Due account?

a. Credit of $2,000.00b. Credit of $2,015.62c. Debit of $2,000.00d. Debit of 42,015.62

33. What is the effect on the Notes Receivable account?a. Credit of $2,000.00b. Credit of $2,015.62c. Debit of $2,000.00d. Debit of $2,015.62


July 15 O’Leary accepted a 10%, 60-day note for $1,500 from Heather Cook.

July 30 O’Leary Enterprises discounted a note receivable at the Bank of Richmondville, discount rate 10.5%.

34. What is the maturity date of the note dated July 15?a. September 12b. September 13c. September 14d. September 15

35. What is the maturity value of the note dated July 15?a. $1,524.66b. $1,525.00c. $1,525.89d. $1,650.00

36. What is the discount period is __________ days?a. 15b. 20c. 45d. 60

37. What is the bank discount?a. $6.58b. $19.74c. $173.25d. $250.00

38. What are the proceeds after discounting the note?a. $1,275.00b. $1,504.92c. $1,518.08d. $1,544.40

39. In a __________ inventory system, the business keeps a constant, up-to-date record of the amount of merchandise on hand.

a. Limitedb. Periodicc. Perpetuald. Physical

40. In which section of the income statement does Merchandise Inventory appear?

a. Cost of merchandiseb. Gross profitc. Operating Expensesd. Revenue

41. In which section of the balance sheet does Merchandise Inventory appear?

a. Assetsb. Liabilitiesc. Owner’s Equityd. Retained Earnings

42. Which inventory costing method values inventory at the most recent costs?

a. FIFOb. LIFOc. Specific identificationd. Weighted average

43. In a period of rising costs, the __________ method of inventory costing yields the smallest gross profit.

a. FIFOb. LIFOc. Specific identificationd. Weighted average


Net Sales $244,500Beginning Inventory at Cost $181,000Beginning Inventory at Retail $278,400Net Purchases at Cost $ 85,900Net Purchases at Retail $132,200Gross Profit as a Percentage of Net Sales 34%

44. If the retail method is used, what is the cost of the ending inventory?

a. $83,130b. $94,656c. $107,965d. $110,492

45. If the gross profit method is used, what is the cost ofthe ending inventory?

a. $83,130b. $94,656c. $107,965d. $110,492


Kalisz Publications bought a new printing press for $71,560.Kalisz also paid $510 in transportation charges, $952 to install the press, and $815 to make the electrical connections. The machine has an estimated useful life of nine years and an estimated salvage value of $1,000.

46. What amount is debited to the Equipment account?a. $71,560b. $72,070c. $72,837d. $73,837

47. What is the depreciable cost of the press?a. $70,560b. $71,070c. $71,837d. $72,837

48. If the straight-line method of depreciation is used, what is the annual depreciation?

a. $7,840b. $7,897

c. $7,982d. $8,093

49. If the declining-balance method is used, what is the annual depreciation in the second year?

a. $12,368b. $12,761c. $15,902d. $16,408

50. If the sum-of-the-years’-digits method is used, what isthe annual depreciation in the third year?

a. $4,704b. $4,856c. $10,976d. $11,330

51. Bonds that are back by corporate assets are called __________ bonds.

a. Couponb. Registeredc. Securedd. Unsecured

Use the information below to answer question 52.

Head Industries recorded the adjusting entry to amortize $500 of a bond discount.

52. What entry should be recorded?a. Debit Bond Interest Expense; Credit Discount on Bonds

Payableb. Debit Cash in Bank; Credit Discount on Bonds Payablec. Debit Discount on Bonds Payable; Credit Bond Interest

Expensed. Debit Discount on Bonds Payable; Credit Cash in Bank


Aaron’s Apparel redeemed an $850,000 bond issue at the call price of 102.

53. What is the effect of this transaction on the Cash in Bank account?

a. Credit of $850,000b. Credit of $867,000c. Debit of $850,000d. Debit of $867,000

54. What is the effect on the Bonds Payable account?a. Credit of $850,000b. Credit of $867,000c. Debit of $850,000d. Debit of $867,000

55. The Bond Sinking Fund account is classified as a(n) __________.

a. Assetb. Liabilityc. Other Revenued. Stockholder’s Equity

56. Which of the following is NOT an advantage of the corporate form of business organization?

a. Ease of transferring ownershipb. Government regulationc. Limited liabilityd. Unlimited life

57. When a corporation decides to issue additional shares of stock, current stockholders have the right to subscribe to additional shares in proportion to their ownership in thecorporation. This is called a __________ right.

a. Dividendb. Preemptivec. Purchasingd. Stockholder’s

58. The maximum number of shares of stock a corporation mayissue is called __________ capital stock.

a. Authorizedb. Commonc. Participating d. Outstanding

59. Stock that provides for dividends that exceed the set percentage of the par value is called __________ preferred stock.

a. Cumulativeb. Noncumulativec. Nonparticipatingd. Participating

60. __________ value is the value assigned to a share of no-par stock by the board of directors.

a. Contractb. Legalc. Pard. Stated

61. The date of __________ is when a corporation determineswhich stockholders are entitled to a dividend.

a. Authorizationb. Declarationc. Paymentd. Record


Oct 11 Riley, Inc.’s board of directors declared a 10% common stock dividend of 2,584 shares to common stockholders of record as of November 1, payable

on November 16. The stock has a par value of $25.The market value of the stock is $28 per share.

62. The entry should be recorded in the __________ journal.a. Cash paymentsb. Cash receiptsc. Generald. Sales

63. What is the correct entry to record this transaction?a. Debit Common Stock, $64,600; Credit Cash in Bank,

$64,600b. Debit Retained Earnings, $64,600, and Paid in Capital

in Excess of Par—Common, $7,752; Credit Capital Stock, $72,352

c. Debit Retained Earnings, $72,352; Credit Common Stock Dividend Distributable, $64,600, and Paid in Capital inExcess of Par—Common, $7,752

d. Debit Retained Earnings, $72,352; Credit Common Stock, $72,325

64. What would the source document be for this transaction?a. Check stubb. Invoicec. Memorandumd. Minute book

65. Stock that was issued and then reacquired by a corporation is called __________ stock.

a. Authorizedb. Cumulativec. Outstandingd. Treasury

Use the information below to answer question 66.

Clayton Industries appropriated $50,000 of retained earningsfor a building.

66. What is the correct entry to record this transaction?a. Debit Building; Credit Retained Earningsb. Debit Retained Earnings; Credit Buildingc. Debit Retained Earnings; Credit Retained Earnings

Appropriated for Buildingd. Debit Retained Earnings Appropriated for Building;

Credit Retained Earnings

67. The __________ to financial statements contain additioninformation about the accounting policies followed by the organization and about significant matters not disclosed in the financial statements.

a. Addendumsb. Disclosuresc. Memorandumsd. Notes

68. __________ analysis is the comparison of the same itemson a company’s financial statements for two or more periods.

a. Base yearb. Horizontalc. Ratiod. Vertical


Cash in Bank $149,000Marketable Securities $ 73,000Accounts Receivable (Net) $480,000Merchandise Inventory $171,000Prepaid Expenses $ 8,000Accounts Payable $250,000Notes Payable (1 year) $ 25,000Salaries Payable $ 5,000

69. What is the working capital?a. $222,000b. $280,000c. $601,000d. $881,000

70. What is the current ratio?a. 2.51:1b. 3.15:1c. 4.01:1d. 5:29:1

71. What is the quick ration?a. 2.51:1b. 3.15:1c. 4.01:1d. 5.29:1

72. Items reported on a corporate income statement that arenot reported on a partnership income statement include __________.

a. Federal income taxesb. Federal income taxes and cash short and overc. Net sales, net purchases, and federal income taxesd. Other revenue, other expenses, and federal income taxes

73. The bank statement balance shows a checking account balance of $5,500. There are outstanding checks totaling $600, an outstanding deposit of $500, and a bank service charge of $15. The checking account balance should be __________.

a. $5,285b. $5,300c. $5,500d. $5,700

74. The total of the Federal Income Tax column of a payrollregister is credited to a(n) __________ account.

a. Assetb. Expensec. Liabilityd. Revenue

75. A deduction that a vendor allows on the invoice amount to encourage prompt payment is a __________.

a. Cash discountb. List pricec. Trade discountd. Trade price

76. Which of the following is a financing activity?a. Borrowing moneyb. Purchasing land for building constructionc. Selling old equipmentd. Selling services to customers

77. Which of the following is an investing activity?a. Borrowing moneyb. Issuing common stockc. Purchasing inventoryd. Purchasing production equipment

78. Which of the following closing entries is usually recorded first?

a. Closing expense accountsb. Closing Income Summaryc. Closing revenue accountsd. Closing withdrawals

79. The last account listed on the post-closing trial balance for a sole-proprietorship is __________.

a. Capitalb. Common stockc. Income Summaryd. Withdrawals

80. Which of the following is true about an adjusting entry?

a. A permanent account and a temporary account are always effected.

b. It is only required to satisfy the realization principle.

c. Only a permanent account is adjusted.d. Only a temporary account is adjusted.

81. An item of merchandise was sold with an invoice price of $400 and credit terms of 2/10, n/30. The entry to recordthe sale would include a credit to Sales for __________.

a. $392.00b. $396.00c. $400.00d. $404.00

82. Each employer must file a federal tax return showing the federal income tax and social security and Medicare taxes due to the government on Form __________.

a. 940b. 941c. W-2d. W-3

83. A journal amount column headed with an account title isa __________ column.

a. General amountb. General creditc. General debitd. Special amount

84. Dividends can be distributed to stockholders of a corporation by __________.

a. A majority vote of the stockholdersb. Formal action by the board of directorsc. The chairman of the board of a corporationd. The president of the corporation

85. A corporation reports owners’ equity on a balance sheetin _________.

a. A capital stock account and a dividends accountb. An account for each ownerc. Earnings retained in the business and capital stockd. Retained earnings

86. Issuance of capital stock during the current year is reported on the __________.

a. Balance sheetb. Income statementc. Retained earnings statementd. Statement of stockholders’ equity

87. Expenses incurred for the business as a whole and not under the control of one department head are called __________.

a. Administrative expensesb. Direct expensesc. Indirect expensesd. Selling expenses

88. Which of the following is NOT considered a cause of unethical behavior?

a. Excessive emphasis on profitsb. Making decisions based on the principles of right and

wrongc. Misplaced business loyaltyd. Unwillingness to take a stand

89. The rules that specify acceptable accounting practices are referred to as __________.

a. AICPAb. FASBc. GAAPd. SEC

90. What area of accounting is involved with cost accounting?

a. Financial accountingb. Limited accountingc. Managerial accountingd. Tax accounting

91. A corporation’s accumulate net income is referred to as__________.

a. Contributed capitalb. Dividendsc. Paid-in capitald. Retained earnings


Total payroll consists of computer systems, $4,500; network systems, $6,200; and administrative, $3,600. Deductions aremade as follows:

Employee income tax—federal $2,450 Employee income tax—state 7.0% of payroll Social security tax 6.5% of payroll Medicare tax 1.5% of payroll Health insurance $780

92. The total amount withheld for social security tax is __________.

a. $92.50b. $929.50c. $1,088.75d. $9,295.00

93. The total amount withheld for Medicare tax is __________.

a. $2.14b. $21.45c. $177.75d. $214.50

94. Income Summary is a __________.

a. Permanent account that contains a credit for the sum ofall expenses and debit for the sum of all revenues

b. Permanent account that contains a credit for the sum ofall revenues and a debit for the sum of all expenses

c. Temporary account that contains a credit for the sum ofall expenses and debit for the sum of all revenues

d. Temporary account that contains a credit for the sum ofall revenues and a debit for the sum of all expenses

95. Which of the following is NOT a benefit of using a worksheet?

a. It can be used in place of annual financial statements.b. It is helpful in showing the effects of “what if”

transactions.c. It is useful in preparing interim financial statements

when the journalizing and posting of adjusting entries are postponed until the year-end.

d. It links accounts and adjustments to their impacts on financial statements.

96. On a balance sheet, Trademarks would be categorized as a(n) __________.

a. Current assetb. Intangible assetc. Long-term investmentd. Long-term liability

97. The time period that can pass before a customer’s payment is due is called a __________.

a. Credit periodb. Debit periodc. Discount periodd. Sales period

98. Which of the following is NOT withheld from employees’ pay each payroll period?

a. Federal income taxb. Federal unemployment taxc. Medicare tax

d. Social Security tax

99. Title to goods does not pass from vendor to buyer untilgoods are received when the terms are __________.

a. 2/10, n/30b. FOB destinationc. FOB shippingd. n/30

100. If a plant asset has been fully depreciated, its book value is the __________.

a. Depreciable baseb. Original cost of the assetc. Salvage valued. Trade-in value

ANSWER KEY

57. D58. A59. D60. A61. A62. A63. D64. A65. D66. C67. B68. A69. C70. B71. B72. D73. B74. A75. D76. B77. C78. D79. C80. C81. B82. B83. C84. B85. A86. D87. C88. D89. A90. B91. A92. C93. B94. B

1. A2. D3. D4. D5. B6. D7. C8. A9. B10. C11. A12. B13. B14. A15. D16. D17. D18. C19. C20. D21. D22. C23. D24. B25. C26. B27. A28. A29. A30. C31. A32. A33. D34. C35. A36. A37. C38. B

45. C46. C47. D48. B49. D50. D51. A52. B53. A54. B55. B56.C

Accounting ii (written)

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