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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 ...

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  • August 7, 2024
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  • 2024/2025
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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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