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Upwork Book keeping Test Answer - Part 1

Here You will find all the answers of Upwork Book keeping test, Please press CTRL + F to find your desired answers of the test questions:

The theoretically correct method of allocating under or over applied overhead is to:

a. allocate the amount to cost of goods sold
b. allocate the amount to finished goods
c. allocate the amount to work in process and finished goods
d. allocate the amount among work in process, finished goods, and cost of goods sold

The amount of cash reported in the financial statements is the closing balance of cash reported in the ___________.

a. check register before Bank Reconciliation
b. Bank Reconciliation
c. bank statement before Bank Reconciliation
d. None of the above

Lindy & Co. use an allowance method to account for bad debts. They estimate that 5% of the outstanding accounts receivable will be uncollectible. At the end of the year, they have outstanding accounts receivable of $750,000, and a debit balance in the Allowance for Uncollectible Accounts of $9,000. They should record an uncollectible accounts expense of:

a. $28,500
b. $37,500
c. $46,500
d. $55,500

Which of the following statements concerning job cost sheets is incorrect?

a. A job cost sheet would show the direct materials used on that specific job
b. A job cost sheet would reveal the selling costs associated with a particular job
c. The total costs recorded on a job cost sheet should also be reflected in the Work in Process account in the general ledger
d. The amount of overhead on a job cost sheet is the applied factory overhead rather than the actual factory overhead


If a bank account does not reconcile, what's the best thing to do?

a. Book the difference as an adjustment regardless of the magnitude
b. Let it remain unreconciled and hope it will clear up in the following month
c. Start from scratch to see if the discrepancy can be found

Refer to the given image:



On March 1, Zekew & Co. purchased $1,000 worth of merchandise, terms 1%10 net 30 days. They use the net method of recording purchases. Payment of the accounts payable was made on March 4. Which of the following journal entries would be appropriate for the March 4 transaction?

a. 1
b. 2
c. 3
d. 4

With the job order cost system, a credit balance in the Factory Overhead account at the end of an accounting period would indicate:

a. that an error in the job cost system has occurred
b. that the company lost money during the period
c. the presence of under-applied overhead
d. the presence of over-applied overhead

Refer to the given image:



The proper journal entry to record Ransom & Co.'s billing of clients for $500 of services rendered is:

a. 1
b. 2
c. 3
d. 4

The entry to record the payment of dividends is:

a. debit Cash, credit Dividend Expense
b. debit Dividend Expense, credit Cash
c. debit Dividends, credit Dividend Payable
d. debit Dividend Payable, credit Cash

A multiple-step income statement is thought to be more beneficial to financial users because of the revelation of important relationships. Which of the following is not separately identified in a multiple-step income statement? 

a. Gross profit
b. Net income
c. Income taxes
d. Total costs and expenses

A check issued by you, but not yet passed through the banking system, is: 

a. an outstanding check
b. a credit transfer
c. a dishonored check
d. a standing order

'2/10, net 30' is an example of:

a. Terms
b. Methods
c. Systems
d. None of the above

An increase in a firm's receivable turnover ratio means that:

a. it is collecting credit sales more quickly than before
b. cash sales have decreased
c. it has initiated more liberal credit terms
d. it's inventories have increased

An increase in a firm's receivable turnover ratio means that:

a. it is collecting credit sales more quickly than before
b. cash sales have decreased
c. it has initiated more liberal credit terms
d. it's inventories have increased

Which of the following statements is true?

a. Cash discounts are used to reduce the invoice price below the stated list price
b. The expression 2/30,n/60.means that a 2% cash discount is available if the invoice is paid within 30 to 60 days
c. Cash discounts may not be used in conjunction with trade discounts
d. Cash discounts normally apply to the invoice price of the merchandise, excluding freight charges

Which of the following inventory methods will always produce the same results under both a periodic and a perpetual system?

a. FIFO
b. LIFO
c. Average
d. All of these

The Factory Overhead account in a job costing system is credited for the

a. excess of applied overhead over actual overhead
b. actual overhead
c. applied overhead
d. indirect materials and indirect labor

Failure to record the receipt of a utility bill for services already received will result in ___________.

a. an overstatement of assets
b. an overstatement of liabilities
c. an overstatement of equity
d. an understatement of assets

Of the following manufacturing operations, which is best suited to the utilization of a job order system? 

a. Helicopter manufacturing
b. Soft drink bottling operation
c. Crude oil refining
d. Plastic molding operation

Lundstrom & Co. began making sales on credit during 20X1. The Co. used the direct write-off method for uncollectible accounts. A material amount of uncollectible accounts resulting from the sales made during 20X1 were written off during 20X2. What was the effect of this write-off on the net income for 20X1 and 20X2?

       20X1             20X2 
a. Overstate      Overstate
b. Overstate      Understate
c. Understate   Overstate
d. Understate    Understate

Why would a company choose to invoice customers weekly rather than monthly? 

a. It keeps the accounting staff busy
b. It increases cash flow
c. Customers expect it
d. It is required by law

If you want to make sure that your money should remain safe when checks sent are lost in the post, you should: 

a. cross your checks 'Account Payee only, Not Negotiable'
b. not use the postal service in future
c. always pay by cash
d. always take the money in person

How does a company ensure that their physical inventory matches what is there in the account books?

a. It assumes it to be correct if it has been received properly in the system
b. It holds the warehouse manager accountable
c. It counts every item daily
d. It uses some form of  physical inventory count - either annual or cyclical

Using the following information, determine the adjusted bank balance: bank statement balance $5,000, bank service charges $15, NSF check $500, checks outstanding $1,000, deposits in transit $2,000.

a. $6,000
b. $5,000
c. $5,485
d. None of the above

The basic sequence in the accounting process can best be described as:

a. Transaction, journal entry, source document, ledger account, trial balance
b. Source document, transaction, ledger account, journal entry, trial balance
c. Transaction, source document, journal entry, trial balance, ledger account
d. Transaction, source document, journal entry, ledger account, trial balance

Which of these items would be accounted for as an expense?

a. Repayment of a bank loan
b. Dividends to stockholders
c. Purchase of land
d. Payment of the current period's rent

Refer to the given image:



Hefty & Co. wants to know the effect of different inventory methods on financial statements. Given below is the information about the opening inventory and purchases for the current year.
Sales during the year were 2,700 units at $5.00. If they used the first-in, first-out method, the closing inventory would be:

a. $2,780
b. $3,960
c. $9,700
d. $10,880

The correct journal entry to reconcile an NSF check returned by the bank is:

a. Debit Accounts Receivable, Credit NSF
b. Debit Cash, Credit Accounts Receivable
c. Debit NSF Expense, Credit Cash
d. Debit Accounts Receivable, Credit Cash

The sales account and the purchase account should include:

a. only cash sales and purchases of merchandise
b. only credit sales and credit purchases of merchandise
c. both cash and credit sales and credit purchases of merchandise
d. not only merchandise transactions, but also purchases and other assets used in the business

Refer to the given image:



Hefty Co. wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year.
Sales during the year were 2,700 units at $5.00. If Hefty used the periodic LIFO method, cost of goods sold would be:

a. $2,780
b. $3,960
c. $9,700
d. $10,880

Using the following information, determine the adjusted book balance: cash account balance on the books $27,000, bank service charges $200, NSF check $2,000, checks outstanding $3,000, deposits in transit $1,000.

a. $24,800
b. $25,800
c. $25,000
d. None of the above

Which of the following statements concerning job costing systems is incorrect?

a. Cost drivers are those items which cause actual overhead to exceed applied overhead
b. Job costing systems are appropriate to both manufacturing and service businesses
c. Traditionally, direct labor has been a very popular overhead application base
d. In a service business, indirect costs of providing a service are treated as overhead and applied in a manner similar to that for factory overhead

Home Depot. Inc. had net purchases of $50,000, closing inventory of $25,000, net sales of $100,000, and gross profit of $32,000. How much was their opening inventory?

a. $7,000
b. $43,000
c. $93,000
d. $143,000

In which section of the balance sheet should inventory accounts be classified?

a. Current assets
b. Investments
c. Property, plant, and equipment
d. Intangible assets

Under normal circumstances, the Work in Process account used in a job costing system:

a. will include charges for direct labor, direct materials, and applied overhead
b. will include only charges for direct materials and applied overhead.  The labor is charged to expense as incurred
c. will include charges for direct labor, direct materials, and actual overhead
d. will include only charges for direct labor and direct materials

Johnson Manufacturing Ltd. use the job order cost system. Overhead is applied at the rate of $20 per direct labor hour. Job #777 includes $2,000 of direct labor cost and 150 direct labor hours. $1,500 of indirect labor cost was actually incurred. The proper journal entry to record the wage related cost is:

a. Debit Work in Process, $3,500; credit Wages Payable, $3,500
b. Debit Wage Expense, $3,500; credit Wages Payable, $3,500
c. Debit Work in Process, $2,000; debit Factory Overhead, $1,500; credit Wages Payable, $3,500
d. Debit Work in Process, $3,500; credit Factory Overhead, $1,500; credit Wage Expense, $2,000

The following statements are true regarding the Cash short and Over account except

a. "Cash Short and Over also acts as an internal control device."
b. "There is rarely a difference between actual cash receipts and that day's record of cash receipts."
c. "A large balance signals the accountant to investigate."
d. "Honest errors can result in an entry to this account."

Trade accounts receivable:

a. arise from the sale of a company's products or services
b. are reported in the non-current asset section of the balance sheet
c. include deposits with utilities
d. generally comprise the minority of the total receivables balance

Which of the following errors will be disclosed in the preparation of a trial balance?

a. Recording transactions in the wrong account
b. Duplication of a transaction in the accounting records
c. Posting only the debit portion of a particular journal entry
d. Recording wrong amount for a transaction to both the account debited and the account credited

Which of the following is a liability?

a. Creditors for Goods
b. Machinery
c. Cash at Bank
d. Motor Vehicles

Refer to the given image:



Lynn Lippincott invested land valued at $5,000 in her business. This transaction would be recorded by:

a. 1
b. 2
c. 3
d. 4

Gerald's had opening total stockholders' equity of $160,000. During the year, total assets increased by $240,000 and total liabilities increased by $120,000. Their net income was $180,000. No additional investments were made. However, some amount was paid as dividend during the year. What was the amount of the dividend paid?

a. $20,000
b. $60,000
c. $140,000
d. $220,000

Documents used to control a bank account include the following except

a. a bank statement
b. electronic funds transfer (EFT)
c. prenumbered checks
d. a signature card

If the supplies account (assets), before adjustment on May 31, indicated a balance of $2,250, and the supplies on hand on May 31 totaled $950, the adjusting entry would be:

a. Debit supplies, $1,300; credit supplies expense, $1,300
b. Debit supplies, $950; credit supplies expense, $950
c. Debit supplies expense, $950; credit supplies, $950
d. Debit supplies expense, $1,300; credit supplies, $1,300

The trial balance __________.

a. is a formal financial statement
b. is used to prove that there are no errors in the journal or ledger
c. provides a listing of every account in the chart of accounts
d. provides a listing of the balance of each account in active use

Which of the following best describes the meaning of 'Purchases'?

a. Goods paid for
b. Goods bought for resale
c. Items bought
d. Goods bought on credit

Wilson & Co. owns land which has cost it $100,000. If a "quick sale" of the land were necessary to generate cash, the Co. feels it would receive only $80,000. The Co. continues to report the asset on the balance sheet at $100,000. Under which of the following concepts is it justified?

a. The historical-cost principle.
b. The objectivity principle.
c. Neither of the above.
d. Both "a" and "b"

Sorting the accounts Payable into current, 1-30 days past due, 31-60 days past due, and so on, is known as:

a. Aging Report
b. Pending Report
c. Payable Report
d. Other Report

What is the primary goal of an Accounts Payable department?

a. To pay invoices immediately to avoid collection calls
b. To short pay invoices, knowing that some clients will not notice
c. To maintain an accurate AP record and pay invoices according to the company policy
d. To tell people who call that their check is in the mail, when it is not, in order to buy time

By which of the following formulas should interest on a loan be computed?

a. (principal x rate)/time
b. (principal x rate x time)
c. (principal x time)/rate
d. (principal x time)/time

Of the following account types, which would be increased by a debit?

a. Liabilities and expenses
b. Assets and equity
c. Assets and expenses
d. Equity and revenues

Which of the following transactions would have no impact on the stockholders' equity? 

a. Purchase of land from the proceeds of a bank loan
b. Dividends to stockholders
c. Net loss
d. Investments of cash by stockholders

What are the adjustments most common to bank reconciliation?

a. Interest earned and bank fees
b. Bank errors
c. Unidentified transactions
d. Checks cleared but not in the accounting system

What is the purpose of applying overhead costs to work in process?

a. To meet the legal requirements of the IRS
b. To reduce the Expense line on the profit & loss statement
c. To accurately apply costs to WIP so that the cost of the finished product reflects all the costs incurred to produce it
d. To hide costs from the auditors

Russell Merchandising Ltd. uses the perpetual inventory system.  Which of the following statements would be correct?

a. When they record a sale, it should also debit inventory
b. When they record a sale, it should also credit inventory
c. When they record a sale, it should also credit cost of goods sold
d. When they record a sale, it should also debit cost of goods available for sale

Refer to the given image:



The proper journal entry to record $1,000 of Dividend paid by Myer's Corporation Ltd. is:

a. 1
b. 2
c. 3
d. 4

Account books are typically closed on a _________ basis.

a. Weekly
b. Monthly
c. Quarterly
d. Yearly

The correct journal entry to reconcile the interest earned on a bank balance is:

a. Debit Cash, Credit Interest Revenue
b. Debit Cash, Credit Accounts Payable
c. Debit Cash, Credit Accounts Receivable
d. Debit Accounts Receivable, Credit Cash

Which of the following would not be included in a balance sheet?

a. Accounts receivable
b. Accounts payable
c. Sales
d. Cash

How often can a company change its inventory valuation methodology and still be compliant with GAAP?

a. Once per month
b. Any number of times; there are no rules
c. Once per year, but not every year
d. Never; you decide once and only once

Under normal circumstances, the Work in Process account used in a job costing system: 

a. will include charges for direct labor, direct materials, and applied overhead.
b. will include only charges for direct materials and applied overhead.  The labor is charged to expense as incurred.
c. will include charges for direct labor, direct materials, and actual overhead.
d. will include only charges for direct labor and direct materials

The best inventory method to adopt for a company that sells a product in large quantities, for example nails, would be:

a. FIFO
b. LIFO
c. Average Cost
d. Specific Cost

Purchasers of merchandise may be dissatisfied with the quality of goods purchased on account, and return the goods to the seller with an indication that payment will not be forthcoming. In such a case, the document prepared by the purchaser is called:

a. a debit memorandum
b. a credit memorandum
c. a receiving report
d. an invoice

Remington Inc. has provided the following information about its balance sheet:

Cash                                   $ 100
Accounts receivable           $  500
Stockholders' equity           $  700
Accounts payable               $  200
Bank loans                          $ 1,000

Based on the information provided, how much do their liabilities amount to?

a. $200
b. $900
c. $1,200
d. $1,700

Retained earnings will change over time because of several factors. Which of the following factors would explain an increase in them (Retained Earnings)?

a. Net loss
b. Net income
c. Dividends
d. Investments by stockholders

The purpose of Accrued Expenses is:

a. to accurately reflect expenses in the periods during which they are incurred
b. to keep account of the vendors who never send invoices
c. to make the financial statements more complicated
d. to reflect the amounts owed to the company

Which of the following is NOT a fundamental of accounting?

a. Materiality
b. Timeliness
c. Matching
d. Magnitude

If merchandise purchased on account is returned, the buyer may inform the seller of the details by issuing:

a. a credit memorandum
b. a bill
c. a debit memorandum
d. an invoice

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