Quiz-1

Financial Management ENMG 658/BTEC 680
Quiz 1
Name: Ram Charan Sreeramakavacham
1. Which one of the following balance sheet accounts is not considered an

asset?
A) Accounts Payable C) Cash

B) Accounts Receivable D) Fixed Assets
2. Which of the following balance sheet accounts is not considered a

liability?
A) Accounts Receivable
B) Long term Bank Notes
C) Short term Bank Notes
D) Accounts Payable
3. If total assets equal $300,000 and total liabilities equal $10,000, the total
owners' equity must equal:
A) $290,000
B) $310,000
C) Cannot be determined from the information given.
D) Some other amount.
4. If a company collects cash for products it sold to its customers on

account, the accounting entry would be:
A) an increase to accounts receivable and an increase to cash

B) a decrease to accounts payable and an increase cash
C) an increase to cash and a decrease in accounts receivable
D) an increase to accounts payable and an increase to cash
5. If a company purchases inventory from its vendor on account, the
accounting entry would be:
A) a decrease to accounts payable and an increase to inventory

B) an increase to accounts payable and an increase to inventory
C) a decrease to accounts payable and a decrease to inventory
D) a decrease to accounts receivable and an increase to inventory
6. Assets are considered long-term assets because they take this amount of
time to be converted into cash:
A) Less than a year or less

B) More than 3 months
C) More than a year
D) More than a month
7. Accumulated depreciation is shown on which financial statement:
A) Balance Sheet added to gross fixed assets

B) Income Statement added to depreciation expense
C) Income Statement subtracted from depreciation expense
D) Balance Sheet subtracted from gross fixed assets
8. A company purchased a piece of equipment costing $20,000 with an

estimated useful life of 4 years. Using Straight Line depreciation methods,
what is the net book value of the asset after year 3?
A) $5,000
B) $10,000
C) $15,000
D) Some other number
9. What will cause the balance sheet to be out of balance:
A) Net income or loss has not been closed to retained earnings

B) Cost of goods sold has not been closed to retained earnings
C) Depreciation expense has not been closed to retained earnings
D) Revenue has not been closed to retained earnings
10. If a company sells a product to a customer on credit, the accounting

entry would be:
A) a decrease to accounts receivable and a decrease to inventory

B) an increase to accounts receivable and an increase to inventory
C) an increase to revenue and an increase to accounts payable
D) an increase to revenue and an increase to accounts receivable
11. A net loss will occur when:
A) Revenue is less than expenses

B) Revenue is more than expenses
C) Revenue is more than cost of goods sold
D) Revenue is less than cost of goods sold
12. Gross margin is the difference between:
A) Revenue and all expenses

B) Revenue and net income
C) Revenue and the cost of goods sold
D) The cost of goods purchased and the cost of goods sold
Use the information below to answer questions 13 – 15:
Revenue or Sales - $1,000,000

Direct Labor - $300,000
Direct Materials - $50,000
General & Administrative Expenses - $25,000
13. Calculate the cost of goods sold:
A) $375,000 B) $350,000 C) $300,000 D) $1,375,000
14. Calculate the gross margin.
A) $350,000 B) $700,000 C) $650,000 D) $625,000
15. Calculate the Gross Margin as a percentage of sales:
A) cannot be determined B) 65% C) 62.5% D) 70%
16. An increase in Accounts Payable from one year to the next would be
reflected on the Cash Flow statement as:
A) reflected as a negative change in the Investing Activities section

B) reflected as a positive change in the Investing Activities section
C) reflected as a positive change in the Operating Activities section
D) reflected as a negative change in the Operating Activities section
17. A decrease in Accounts Receivable from one year to the next would be
reflected on the Cash Flow statement as:
A) reflected as a negative change in the Operating Activities section

B) reflected as a positive change in the Operating Activities section
C) reflected as a negative change in the Investing Activities section
D) reflected as a positive change in the Investing Activities section
18. The United States practices which type of principles for recording
accounting transactions:
A) Financial Accounting Standards Board (FASB)

B) Sarbanes-Oxley Act
C) Generally Accepted Accounting Principles (GAAP)
D) The Going Concern Concept
19. What is the accounting equation?
A) Revenue = Expenses
B) Assets = Liabilities + Owners’ Equity
C) Assets + Liabilities = Owners’ Equity
D) Assets + Owners’ Equity = Liabilities
20. If revenue is $3,000,000 and expenses are $3,500,000, the company will
have?
A) Net income of $3,000,000

B) Net income of $500,000
C) Net loss of $3,000,000
D) Net loss of $500,000

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Financial Management ENMG 658/BTEC 680

1. Which one of the following balance sheet accounts is not considered an

A) Accounts Payable C) Cash

2. Which of the following balance sheet accounts is not considered a

4. If a company collects cash for products it sold to its customers on

A) an increase to accounts receivable and an increase to cash

A) a decrease to accounts payable and an increase to inventory

A) Less than a year or less

7. Accumulated depreciation is shown on which financial statement:

A) Balance Sheet added to gross fixed assets

8. A company purchased a piece of equipment costing $20,000 with an

A) Net income or loss has not been closed to retained earnings

10. If a company sells a product to a customer on credit, the accounting

A) a decrease to accounts receivable and a decrease to inventory

11. A net loss will occur when:

A) Revenue is less than expenses

12. Gross margin is the difference between:

A) Revenue and all expenses

Revenue or Sales - $1,000,000

13. Calculate the cost of goods sold:

A) $375,000 B) $350,000 C) $300,000 D) $1,375,000

14. Calculate the gross margin.

A) $350,000 B) $700,000 C) $650,000 D) $625,000

15. Calculate the Gross Margin as a percentage of sales:

A) cannot be determined B) 65% C) 62.5% D) 70%

A) reflected as a negative change in the Investing Activities section

A) reflected as a negative change in the Operating Activities section

A) Financial Accounting Standards Board (FASB)

19. What is the accounting equation?

A) Net income of $3,000,000

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