Practice Quiz

CLEP Financial Accounting Exam Prep - Question List

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1. Jenny’s Bakery recently delivered a bad batch of cakes to a local restaurant. Jenny quickly refunded the cost of the cakes to the restaurant. Her accountant made a __________ to her Refunds of Sales account for this transaction:
  1. note
  2. debit
  3. credit
  4. cost adjustment
  5. deposit
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2. Big Bertha’s Birds decided to purchase Ken’s Canaries. Ken’s Canaries has a book value of $550,000. Big Bertha paid $655,000 in stock and cash under the purchase method. How much goodwill would Big Bertha be required to put on its balance sheet?
  1. $550,000
  2. $655,000
  3. $155,000
  4. $105,000
  5. $100,000
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3. Big Bertha’s Birds purchased Finkel’s Finches for $100,000 and the book value was $50,000. If Big Bertha’s amortized the goodwill off its balance sheet for the maximum time period allowed, what would the annual charge against earnings be?
  1. $50,000
  2. $1,000
  3. $1,500
  4. .8%
  5. $1,250
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4. What is a classified balance sheet?
  1. A balance sheet that divides long term and short term assets into separate categories.
  2. A balance sheet that is not for distribution outside of the company.
  3. A balance sheet that classifies expenses according to function.
  4. A balance sheet that classifies revenue per the income stream.
  5. A balance sheet that divides direct and indirect expenses.
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5. Dilbert’s Doughnuts purchases land and finances that purchase by issuing a long-term bond at par. Dilbert does not have to pay interest for at least 12 months according to the terms. This purchase will lead to which of the following for Dilbert’s accounting?
  1. Decrease in liabilities
  2. Decrease in net income
  3. Increase in assets
  4. Decrease in assets
  5. Increase in net income
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