Practice Quiz

CPA Accountant Review Questions - Question List

Select how would you like to study

Study Mode Free Daily Question Test Mode
16. Larry the Lawyer is going to represent Bart’s Brewskies in an upcoming litigation. Bart is being sued for representing his brewskies as being non-alcoholic, when in fact, they were 80-proof. Larry has asked Bart for a retainer of $1,000 before he’ll even meet with Bart. Assuming the accrual basis of accounting is in play, that $1,000 is considered (for Larry):
  1. Revenue and a receipt
  2. An accounts receivable
  3. A receipt
  4. Revenue
  5. An accounts payable
See answer
17. Jim’s Jeans is being sued by a former employee for $100,000. The employee is claiming age discrimination. She is twenty-four and was terminated when Jim decided that he wanted all employees to be over the age of sixty-five. Jim’s attorney has told him that the employee has a strong case and will probably win. How does this impact Jim’s accounting records?
  1. A note is made on the Balance Sheet regarding the lawsuit.
  2. There is no impact on the financial statement unless the employee wins the suit.
  3. A loss of $100,000 appears in the owner’s equity section on the balance sheet.
  4. An entry will appear on the statement of cash flows.
  5. A contingent liability of $100,000 appears on the income statement as an expense.
See answer
18. Which of the following is subtracted from net sales to determine gross profit?
  1. Cost of goods sold
  2. Expenses
  3. Both cost of goods sold and expenses
  4. Cost of goods sold, expenses, and taxes
  5. Taxes
See answer
19. Jim’s Jeans decided to shut down their Jimmy Jean Division. Where on the income statement would this closing be addressed?
  1. Under extraordinary items at the bottom of the income statement.
  2. As a note on the operating income section of the income statement.
  3. Under discontinued operations at the bottom of the income statement.
  4. As a deduction in the Net Profit section of the income statement.
  5. An entry would be on the operating income section of the income statement.
See answer
20. Larry, who uses the accrual basis of accounting, hired an extra driver to help him make deliveries in December. The extra driver only works from December 1st through the 31st . Larry pays the driver on January 5th, but the expense is shown on the December income statement. Why?
  1. Cost benefit analysis
  2. Matching principle
  3. Cost principle
  4. Going concern principle
  5. Gross profit margin analysis
See answer

Select how would you like to study

Study Mode Free Daily Question Test Mode