D102 Financial Accounting - Set 4 - Part 1

Test your knowledge of technical writing concepts with these practice questions. Each question includes detailed explanations to help you understand the correct answers.

Question 1: Which financial statement reports a company's financial position at a specific point in time?

Income statement

Balance sheet

Statement of cash flows

Statement of retained earnings

Question 2: What happens when a company purchases inventory on account?

Assets and liabilities increase

Assets increase and equity decreases

Assets and liabilities decrease

Liabilities increase and expenses increase

Question 3: How are dividends classified on the statement of cash flows?

Operating activity

Financing activity

Investing activity

Non-cash activity

Question 4: What type of account is accumulated depreciation?

Asset

Contra-asset

Liability

Equity

Question 5: Which method of accounting for bad debts involves estimating uncollectible accounts in the same period as the related sales?

Direct write-off method

Allowance method

Percentage of completion method

Accrual method

Question 6: What is the effect on the accounting equation when a company issues bonds at a premium?

Assets and liabilities increase

Assets increase and equity increases

Liabilities decrease and equity increases

Assets decrease and liabilities increase

Question 7: Which of the following is not classified as a current asset?

Inventory

Cash

Accounts receivable

Goodwill

Question 8: What is the journal entry when a company records depreciation expense for the year?

Debit accumulated depreciation, credit depreciation expense

Debit depreciation expense, credit cash

Debit depreciation expense, credit accumulated depreciation

Debit equipment, credit accumulated depreciation

Question 9: What is the result of an adjusting entry to accrue interest expense?

Liabilities and equity increase

Assets increase and equity decreases

Liabilities increase and equity decreases

Liabilities and assets decrease

Question 10: Which method of depreciation results in higher depreciation expense in the earlier years of an asset's life?

Straight-line method

Double-declining balance method

Units-of-production method

Sum-of-the-years'-digits method

Question 11: What is the journal entry to record an expense incurred but not yet paid?

Debit cash, credit accounts payable

Debit expense, credit accounts payable

Debit expense, credit accounts receivable

Debit accounts payable, credit cash

Question 12: What is the purpose of the post-closing trial balance?

To ensure that the revenue and expense accounts have been properly closed

To summarize all of the transactions for the period

To test the equality of debits and credits after closing entries are made

To prepare financial statements for external users

Question 13: What is the result of recording revenue earned but not yet received?

Increase in liabilities and equity

Increase in assets and equity

Decrease in assets and liabilities

Decrease in equity and liabilities

Question 14: What is the primary purpose of adjusting entries?

To correct errors in the financial statements

To ensure that revenues and expenses are recorded in the correct accounting period

To close temporary accounts

To transfer net income to retained earnings

Question 15: How is the net income or loss from the income statement carried to the balance sheet?

As retained earnings

As capital stock

As accounts receivable

As cash

Question 16: What is the effect of declaring and paying dividends on the accounting equation?

Decreases assets and increases liabilities

Decreases assets and decreases equity

Increases assets and increases liabilities

Increases liabilities and decreases equity

Question 17: What type of account is unearned revenue classified as on the balance sheet?

Asset

Liability

Equity

Revenue

Question 18: Which of the following transactions increases both assets and equity?

Purchasing supplies on account

Issuing common stock

Borrowing cash from a bank

Paying dividends

Question 19: How are dividends paid to shareholders classified on the statement of cash flows?

Operating activity

Investing activity

Financing activity

Non-cash activity

Question 20: Which account is credited when a company purchases office equipment with cash?

Cash

Accounts payable

Office equipment

Accumulated depreciation

Need Guaranteed Results?

Our exam support service guarantees you'll pass your OA on the first attempt. Pay only after you pass!

Get Exam Support