ACG Exam Questions and Answers
Graded A+
What constitutes accounting information that can significantly influence business decisions?
Information that has the potential to impact decisions within a business.
How would you describe stockholders' equity?
It represents the ownership claims ...
ACG Exam Questions and Answers
Graded A+
What constitutes accounting information that can significantly influence business decisions?
✔✔Information that has the potential to impact decisions within a business.
How would you describe stockholders' equity?
✔✔It represents the ownership claims on the company’s assets.
Which item would not be included on an income statement?
✔✔Payments to shareholders
If a company had retained earnings of $375,000 at the beginning of the year and ended the year
with the following balances, what is the final retained earnings amount?
✔✔$400,000
A transaction resulted in an increase of both assets and liabilities by $5,000. What might this
transaction have been?
✔✔Issuing a note payable to a creditor for a loan.
1
,Which type of account typically has a debit as its normal balance?
✔✔Cash
A corporation started the year with retained earnings of $282,000. It earned $40,000 in revenues,
incurred $24,000 in expenses, bought equipment for $10,000 with a note, and paid $4,000 in
dividends. What is the retained earnings balance at year-end?
✔✔$294,000 credit
What can cause a trial balance to still balance even if an entry was made twice?
✔✔A $1,000 journal entry recorded in duplicate.
How do adjusting entries affect financial statements?
✔✔They impact one account on the income statement and one on the balance sheet.
From which document can financial statements be directly prepared?
✔✔The adjusted trial balance.
2
,In a classified balance sheet, which type of assets is usually listed first?
✔✔Current assets
Given certain data, how is the current ratio calculated?
✔✔2.80
In a perpetual inventory system, which accounts are credited when a customer returns
merchandise purchased on credit?
✔✔(i) Accounts Receivable and (ii) Cost of Goods Sold
When a company incurs a shipping charge of $250 for delivering merchandise sold on credit,
how should this payment be recorded?
✔✔Debit freight-out for $250 and credit cash for $250.
Which expense is not categorized as an operating expense on a multi-step income statement?
✔✔Income tax expense
3
, Financial information for Edwards Incorporated indicates: $50,000. What does this amount
signify?
✔✔The specific financial context is not given, but it is a value related to the company’s financial
records.
As of December 31, if a company's inventory balance was $723,000, including $463,000 of
physical inventory, what would be the correct amount?
✔✔$593,000
On December 23, the company sold 100 units at $80 each with operating expenses of $1,000 and
a 25% tax rate. Using LIFO, what is the gross profit?
✔✔$3,655
A low days' sales in inventory might suggest what about a company's inventory?
✔✔The company likely has less capital tied up in inventory.
If a company using the periodic inventory method underestimates ending inventory, how will
this affect gross profit and retained earnings?
✔✔Gross profit is (i) understated; retained earnings are (ii) understated.
4
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