NEW YORK STATE FBLA ACCOUNTING II

2009
PLEASE DO NOT OPEN THIS TEST UNTIL DIRECTED TO DO SO Test Directions 1. Complete the information requested on the answer sheet. PRINT YOUR NAME on the Name line. PRINT the name of the event, ACCOUNTING II on the Subject line. PRINT the name of your CHAPTER on the DATE line. 2. All answers will be recorded on the answer sheet. Please do not write on the test booklet. Scrap paper will be provided. 3. Read each question completely before answering. With a NO. 2 pencil, blacken in your choices completely on the answer sheet. Do not make any other marks on the answer sheet, or the scoring machine will reject it. 4. You will be given 60 minutes for the test. You will be given a starting signal and a signal after 50 minutes have elapsed.

1. Which of the following is NOT true? a. Assets = Liabilities + Owners Equity b. Assets Liabilities = Owners Equity c. Assets Owners Equity = Liabilities d. Assets + Liabilities = Owners Equity 2. The normal balance of a Cost of Merchandise account is the same as the normal balance of a __________ account. a. Expense b. Liability c. Revenue d. Stockholders equity 3. In the U.S., the __________ form of business organization is the most common. a. Corporation b. LLC c. Partnership d. Sole proprietorship 4. In the U.S., the __________ form of business organization is responsible for generating the greatest volume of sales. a. Corporation b. LLC c. Partnership d. Liability Use the information below to answer questions 5-7. Scofield, Inc. wrote a check for $775.38 to Skates Unlimited for merchandise purchased on account, $783.21, less a discount of $7.83. 5. What journal should this entry be recorded in? a. Cash payments journal b. General journal c. Purchases journal d. Sales journal 6. What account(s) should be debited? a. Accounts Payable b. Cash in Bank c. Purchases Discounts d. Purchases Discounts and Cash in Bank

7. What accounts(s) should be credited? a. Accounts Payable b. Cash in Bank c. Purchases Discounts d. Purchases Discounts and Cash in Bank Use the information below to answer questions 8-10. Haverly Sports recorded a bank service charge of $25, deducted from the monthly bank statement. 8. What journal should be used to record this entry? a. Cash payments journal b. Cash receipts journal c. Purchases journal d. Sales journal 9. What account should be debited? a. Accounts Payable b. Bankcard Fees Expense c. Cash in Bank d. Miscellaneous Expense 10. What account should be credited? a. Accounts Payable b. Bankcard Fees Expense c. Cash in Bank d. Miscellaneous Expense Use the information below to answer questions 11-14. Stark Unlimited returned $100 of damaged merchandise that had been purchased on account. 11. What journal should be used to record this entry? a. Cash receipts journal b. General journal c. Purchases journal d. Sales journal 12. What account should be debited? a. Accounts Payable b. Accounts Receivable c. Purchases Returns and Allowances d. Sales Returns and Allowances

13. Which account should be credited? a. Accounts Payable b. Accounts Receivable c. Purchases Returns and Allowances d. Sales Returns and Allowances 14. What should the source document be for this entry? a. Credit Memorandum b. Debit Memorandum c. Receipt d. Sales slip 15. Which account is always debited in the sales journal? a. Accounts Payable b. Accounts Receivable c. Cash in Bank d. Sales 16. A __________ is a working paper used to collect information from the general ledger. a. Income statement b. Trial balance c. Subsidiary ledger d. Worksheet 17. Net Sales minus cost of merchandise sold equals __________. a. Cost of merchandise available for sale b. Gross profit c. Net purchases d. Operating expenses Use the information below to answer questions 18-20. Shepard Suppliers issued a check to replenish the petty cash fund. The fund had a cash balance of $18 and petty cash vouchers as follows: supplies, $1; advertising expense, $29.40; delivery expense, $5; and miscellaneous expense, $23.60. The petty cash fund started with $75 in it. 18. What will be the effect on the Cash Short and Over account? a. There is a cash overage which results in a credit to Cash Short and Over. b. There is a cash overage which results in a debit to Cash Short and Over. c. There is a cash shortage which results in a credit to Cash Short and Over. d. There is a cash overage which results on a debit to Cash Short and Over.

19. What will be the effect on the Petty Cash Fund account? a. Petty Cash Fund if credited for $2. b. Petty Cash Fund is credited for $59. c. Petty Cash Fund is debited for $75. d. There is no effect on the Petty Cash Fund account. 20. What will be the effect of the Cash in Bank account? a. Cash in Bank is credited for $2. b. Cash in Bank is credited for $57. c. Cash in Bank is credited for $59. d. Cash in Bank is credited for $75. Use the information below to answer questions 21-24. Dec Jan 31 23 McIver Entertainment estimates that the uncollectible account expense for the period is $1,016.65. McIver Entertainment decides to write off the account of Lila Benninger as uncollectible. The amount Lila owed was $80.

21. The __________ principle requires an adjusting entry to be made on December 31. a. Conservatism b. Consistency c. Matching d. Revenue recognition 22. What account should be debited on December 31? a. Accounts Payable b. Accounts Receivable c. Allowance for Uncollectible Accounts d. Uncollectible Accounts Expense 23. What account should be credited on December 31? a. Accounts Payable b. Accounts Receivable c. Allowance for Uncollectible Accounts d. Uncollectible Accounts Expense 24. What account should be debited on January 23? a. Accounts Payable b. Accounts Receivable c. Allowance for Uncollectible Accounts d. Uncollectible Accounts Expense

Use the information below to answer questions 25-26. Sales Sales Discounts Sales Returns and Allowances Transportation In $412,750 $ 2.063 $ 4.027 $ 2.554

Over the past few years Hoyles actual uncollectible accounts expense average 0.25% of net sales. 25. What is Hoyles net sales for the year? a. $404,106 b. $406,660 c. $418,840 d. $421,394 26. What is Hoyles estimated uncollectible accounts expense for the year? a. $1,010.27 b. $1,016.65 c. $1,047.10 d. $1,053.49 Use the information below regarding the issuance of a promissory note to answer questions 27-28. Date of Issue Term Principal Interest Rate November 22 75 days $5,400 10%

27. What is the maturity date of the note? a. February 3 b. February 4 c. February 5 d. February 6 28. What is the maturity value of the note? a. $5,411.10 b. $5,510.96 c. $5,512.50 d. $5,940.00

Use the information below to answer questions 29-31. Dens Tires received a check for $650.44 from Amy France for the principal ($642.00) plus interest ($8.44) due on a 60-day note receivable. 29. What account(s) should be debited? a. Cash in Bank b. Interest Income c. Notes Receivable d. Notes Receivable and Interest Income 30. What account(s) should be credited? a. Cash in Bank b. Interest Income c. Notes Receivable d. Notes Receivable and Interest Income 31. What is the interest rate on the note? a. 6% b. 7% c. 8% d. 9% Use the information below to answer questions 32-33. Beth Taylor dishonored her $2,000.00, 9.5%, 30-day note. 32. What is the effect on the Notes Receivable Past Due account? a. Credit of $2,000.00 b. Credit of $2,015.62 c. Debit of $2,000.00 d. Debit of 42,015.62 33. What is the effect on the Notes Receivable account? a. Credit of $2,000.00 b. Credit of $2,015.62 c. Debit of $2,000.00 d. Debit of $2,015.62

Use the information below to answer questions 34-38. July July 15 30 OLeary accepted a 10%, 60-day note for $1,500 from Heather Cook. OLeary Enterprises discounted a note receivable at the Bank of Richmondville, discount rate 10.5%.

34. What is the maturity date of the note dated July 15? a. September 12 b. September 13 c. September 14 d. September 15 35. What is the maturity value of the note dated July 15? a. $1,524.66 b. $1,525.00 c. $1,525.89 d. $1,650.00 36. What is the discount period is __________ days? a. 15 b. 20 c. 45 d. 60 37. What is the bank discount? a. $6.58 b. $19.74 c. $173.25 d. $250.00 38. What are the proceeds after discounting the note? a. $1,275.00 b. $1,504.92 c. $1,518.08 d. $1,544.40 39. In a __________ inventory system, the business keeps a constant, up-to-date record of the amount of merchandise on hand. a. Limited b. Periodic c. Perpetual d. Physical

40. In which section of the income statement does Merchandise Inventory appear? a. Cost of merchandise b. Gross profit c. Operating Expenses d. Revenue 41. In which section of the balance sheet does Merchandise Inventory appear? a. Assets b. Liabilities c. Owners Equity d. Retained Earnings 42. Which inventory costing method values inventory at the most recent costs? a. FIFO b. LIFO c. Specific identification d. Weighted average 43. In a period of rising costs, the __________ method of inventory costing yields the smallest gross profit. a. FIFO b. LIFO c. Specific identification d. Weighted average Use the information below to answer questions 44-45. Net Sales Beginning Inventory at Cost Beginning Inventory at Retail Net Purchases at Cost Net Purchases at Retail Gross Profit as a Percentage of Net Sales $244,500 $181,000 $278,400 $ 85,900 $132,200 34%

44. If the retail method is used, what is the cost of the ending inventory? a. $83,130 b. $94,656 c. $107,965 d. $110,492 45. If the gross profit method is used, what is the cost of the ending inventory? a. $83,130 b. $94,656 c. $107,965 d. $110,492

Use the information below to answer questions 46-50. Kalisz Publications bought a new printing press for $71,560. Kalisz also paid $510 in transportation charges, $952 to install the press, and $815 to make the electrical connections. The machine has an estimated useful life of nine years and an estimated salvage value of $1,000. 46. What amount is debited to the Equipment account? a. $71,560 b. $72,070 c. $72,837 d. $73,837 47. What is the depreciable cost of the press? a. $70,560 b. $71,070 c. $71,837 d. $72,837 48. If the straight-line method of depreciation is used, what is the annual depreciation? a. $7,840 b. $7,897 c. $7,982 d. $8,093 49. If the declining-balance method is used, what is the annual depreciation in the second year? a. $12,368 b. $12,761 c. $15,902 d. $16,408 50. If the sum-of-the-years-digits method is used, what is the annual depreciation in the third year? a. $4,704 b. $4,856 c. $10,976 d. $11,330 51. Bonds that are back by corporate assets are called __________ bonds. a. Coupon b. Registered c. Secured d. Unsecured

Use the information below to answer question 52. Head Industries recorded the adjusting entry to amortize $500 of a bond discount. 52. What entry should be recorded? a. Debit Bond Interest Expense; Credit Discount on Bonds Payable b. Debit Cash in Bank; Credit Discount on Bonds Payable c. Debit Discount on Bonds Payable; Credit Bond Interest Expense d. Debit Discount on Bonds Payable; Credit Cash in Bank Use the information below to answer questions 53-54. Aarons Apparel redeemed an $850,000 bond issue at the call price of 102. 53. What is the effect of this transaction on the Cash in Bank account? a. Credit of $850,000 b. Credit of $867,000 c. Debit of $850,000 d. Debit of $867,000 54. What is the effect on the Bonds Payable account? a. Credit of $850,000 b. Credit of $867,000 c. Debit of $850,000 d. Debit of $867,000 55. The Bond Sinking Fund account is classified as a(n) __________. a. Asset b. Liability c. Other Revenue d. Stockholders Equity 56. Which of the following is NOT an advantage of the corporate form of business organization? a. Ease of transferring ownership b. Government regulation c. Limited liability d. Unlimited life

57. When a corporation decides to issue additional shares of stock, current stockholders have the right to subscribe to additional shares in proportion to their ownership in the corporation. This is called a __________ right. a. Dividend b. Preemptive c. Purchasing d. Stockholders 58. The maximum number of shares of stock a corporation may issue is called __________ capital stock. a. Authorized b. Common c. Participating d. Outstanding 59. Stock that provides for dividends that exceed the set percentage of the par value is called __________ preferred stock. a. Cumulative b. Noncumulative c. Nonparticipating d. Participating 60. __________ value is the value assigned to a share of no-par stock by the board of directors. a. Contract b. Legal c. Par d. Stated 61. The date of __________ is when a corporation determines which stockholders are entitled to a dividend. a. Authorization b. Declaration c. Payment d. Record Use the information below to answer questions 62-64. Oct 11 Riley, Inc.s board of directors declared a 10% common stock dividend of 2,584 shares to common stockholders of record as of November 1, payable on November 16. The stock has a par value of $25. The market value of the stock is $28 per share.

62. The entry should be recorded in the __________ journal. a. Cash payments b. Cash receipts c. General d. Sales 63. What is the correct entry to record this transaction? a. Debit Common Stock, $64,600; Credit Cash in Bank, $64,600 b. Debit Retained Earnings, $64,600, and Paid in Capital in Excess of Par Common, $7,752; Credit Capital Stock, $72,352 c. Debit Retained Earnings, $72,352; Credit Common Stock Dividend Distributable, $64,600, and Paid in Capital in Excess of ParCommon, $7,752 d. Debit Retained Earnings, $72,352; Credit Common Stock, $72,325 64. What would the source document be for this transaction? a. Check stub b. Invoice c. Memorandum d. Minute book 65. Stock that was issued and then reacquired by a corporation is called __________ stock. a. Authorized b. Cumulative c. Outstanding d. Treasury Use the information below to answer question 66. Clayton Industries appropriated $50,000 of retained earnings for a building. 66. What is the correct entry to record this transaction? a. Debit Building; Credit Retained Earnings b. Debit Retained Earnings; Credit Building c. Debit Retained Earnings; Credit Retained Earnings Appropriated for Building d. Debit Retained Earnings Appropriated for Building; Credit Retained Earnings 67. The __________ to financial statements contain addition information about the accounting policies followed by the organization and about significant matters not disclosed in the financial statements. a. Addendums b. Disclosures c. Memorandums d. Notes

68. __________ analysis is the comparison of the same items on a companys financial statements for two or more periods. a. Base year b. Horizontal c. Ratio d. Vertical Use the information below to answer questions 69-71. Cash in Bank Marketable Securities Accounts Receivable (Net) Merchandise Inventory Prepaid Expenses Accounts Payable Notes Payable (1 year) Salaries Payable 69. What is the working capital? a. $222,000 b. $280,000 c. $601,000 d. $881,000 70. What is the current ratio? a. 2.51:1 b. 3.15:1 c. 4.01:1 d. 5:29:1 71. What is the quick ration? a. 2.51:1 b. 3.15:1 c. 4.01:1 d. 5.29:1 72. Items reported on a corporate income statement that are not reported on a partnership income statement include __________. a. Federal income taxes b. Federal income taxes and cash short and over c. Net sales, net purchases, and federal income taxes d. Other revenue, other expenses, and federal income taxes $149,000 $ 73,000 $480,000 $171,000 $ 8,000 $250,000 $ 25,000 $ 5,000

73. The bank statement balance shows a checking account balance of $5,500. There are outstanding checks totaling $600, an outstanding deposit of $500, and a bank service charge of $15. The checking account balance should be __________. a. $5,285 b. $5,300 c. $5,500 d. $5,700 74. The total of the Federal Income Tax column of a payroll register is credited to a(n) __________ account. a. Asset b. Expense c. Liability d. Revenue 75. A deduction that a vendor allows on the invoice amount to encourage prompt payment is a __________. a. Cash discount b. List price c. Trade discount d. Trade price 76. Which of the following is a financing activity? a. Borrowing money b. Purchasing land for building construction c. Selling old equipment d. Selling services to customers 77. Which of the following is an investing activity? a. Borrowing money b. Issuing common stock c. Purchasing inventory d. Purchasing production equipment 78. Which of the following closing entries is usually recorded first? a. Closing expense accounts b. Closing Income Summary c. Closing revenue accounts d. Closing withdrawals 79. The last account listed on the post-closing trial balance for a sole-proprietorship is __________. a. Capital b. Common stock c. Income Summary d. Withdrawals

80. Which of the following is true about an adjusting entry? a. A permanent account and a temporary account are always effected. b. It is only required to satisfy the realization principle. c. Only a permanent account is adjusted. d. Only a temporary account is adjusted. 81. An item of merchandise was sold with an invoice price of $400 and credit terms of 2/10, n/30. The entry to record the sale would include a credit to Sales for __________. a. $392.00 b. $396.00 c. $400.00 d. $404.00 82. Each employer must file a federal tax return showing the federal income tax and social security and Medicare taxes due to the government on Form __________. a. 940 b. 941 c. W-2 d. W-3 83. A journal amount column headed with an account title is a __________ column. a. General amount b. General credit c. General debit d. Special amount 84. Dividends can be distributed to stockholders of a corporation by __________. a. A majority vote of the stockholders b. Formal action by the board of directors c. The chairman of the board of a corporation d. The president of the corporation 85. A corporation reports owners equity on a balance sheet in _________. a. A capital stock account and a dividends account b. An account for each owner c. Earnings retained in the business and capital stock d. Retained earnings 86. Issuance of capital stock during the current year is reported on the __________. a. Balance sheet b. Income statement c. Retained earnings statement d. Statement of stockholders equity

87. Expenses incurred for the business as a whole and not under the control of one department head are called __________. a. Administrative expenses b. Direct expenses c. Indirect expenses d. Selling expenses 88. Which of the following is NOT considered a cause of unethical behavior? a. Excessive emphasis on profits b. Making decisions based on the principles of right and wrong c. Misplaced business loyalty d. Unwillingness to take a stand 89. The rules that specify acceptable accounting practices are referred to as __________. a. AICPA b. FASB c. GAAP d. SEC 90. What area of accounting is involved with cost accounting? a. Financial accounting b. Limited accounting c. Managerial accounting d. Tax accounting 91. A corporations accumulate net income is referred to as __________. a. Contributed capital b. Dividends c. Paid-in capital d. Retained earnings Use the information below to answer questions 92-93. Total payroll consists of computer systems, $4,500; network systems, $6,200; and administrative, $3,600. Deductions are made as follows: Employee income taxfederal $2,450 Employee income taxstate 7.0% of payroll Social security tax 6.5% of payroll Medicare tax 1.5% of payroll Health insurance $780 92. The total amount withheld for social security tax is __________. a. $92.50 b. $929.50 c. $1,088.75 d. $9,295.00

93. The total amount withheld for Medicare tax is __________. a. $2.14 b. $21.45 c. $177.75 d. $214.50 94. Income Summary is a __________. a. Permanent account that contains a credit for the sum of all expenses and debit for the sum of all revenues b. Permanent account that contains a credit for the sum of all revenues and a debit for the sum of all expenses c. Temporary account that contains a credit for the sum of all expenses and debit for the sum of all revenues d. Temporary account that contains a credit for the sum of all revenues and a debit for the sum of all expenses 95. Which of the following is NOT a benefit of using a worksheet? a. It can be used in place of annual financial statements. b. It is helpful in showing the effects of what if transactions. c. It is useful in preparing interim financial statements when the journalizing and posting of adjusting entries are postponed until the year-end. d. It links accounts and adjustments to their impacts on financial statements. 96. On a balance sheet, Trademarks would be categorized as a(n) __________. a. Current asset b. Intangible asset c. Long-term investment d. Long-term liability 97. The time period that can pass before a customers payment is due is called a __________. a. Credit period b. Debit period c. Discount period d. Sales period 98. Which of the following is NOT withheld from employees pay each payroll period? a. Federal income tax b. Federal unemployment tax c. Medicare tax d. Social Security tax

99. Title to goods does not pass from vendor to buyer until goods are received when the terms are __________. a. 2/10, n/30 b. FOB destination c. FOB shipping d. n/30 100. If a plant asset has been fully depreciated, its book value is the __________. a. Depreciable base b. Original cost of the asset c. Salvage value d. Trade-in value

ANSWER KEY 57. D 58. A 59. D 60. A 61. A 62. A 63. D 64. A 65. D 66. C 67. B 68. A 69. C 70. B 71. B 72. D 73. B 74. A 75. D 76. B 77. C 78. D 79. C 80. C 81. B 82. B 83. C 84. B 85. A 86. D 87. C 88. D 89. A 90. B 91. A 92. C 93. B 94. B 95. C 96. A 97. A 98. A 99. B 100. 1. A 2. D 3. D 4. D 5. B 6. D 7. C 8. A 9. B 10. C 11. A 12. B 13. B 14. A 15. D 16. D 17. D 18. C 19. C 20. D 21. D 22. C 23. D 24. B 25. C 26. B 27. A 28. A 29. A 30. C 31. A 32. A 33. D 34. C 35. A 36. A 37. C 38. B 39. D 40. B 41. C 42. D 43. A 44. B 45. C 46. C 47. D 48. B 49. D 50. D 51. A 52. B 53. A 54. B 55. B 56. C