ACG 2021 FINAL REAL EXAM QUESTIONS + DETAILED ANSWERS -
LATEST VERSION - TOP RATED 2026/2027
1. What is true about the partnership form of business organization compared
to a corporation? ANSWER is tax advantaged in comparispm to a corporation
2. Which of the following is not an asset? ANSWER Accounts Payable
3. Which of the following describes that sequence in which financial
statements are prepared? ANSWER Income statement, Retained earnings
statement, and Balance sheet
4. In the annual report, where would a financial statement reader find out if
the company's financial statements give a fair depiction of its financial position
and operating results? ANSWER Auditor's report
5. A company has the following accounts and balances: Accounts payable-
$40,000; Accounts receivable- $70,000; Accumulated depreciation- $50,000;
Buildings- $500,000; Cash- $100,000; Common stock- $690,000; Equipment-
$120,000; Inventory- $200,000; Investment in bonds- $20,000; Land- $150,000;
Notes payable- $300,000; Patents- $10,000; Prepaid insurance- $20,000;
Retained earnings- $150,000; Trademarks- $40,000. What are its current assets
and property, plant, and equipment? ANSWER $390,000 and $720,000
6. Which of the following would increase a company's current ratio? ANSWER
Negotiate with a creditor to reclassify a note payable in 3 months into a note
payable due in 2 years
7. The effects of performing services for cash on the basic accounting equation
are to... ANSWER Increase assets and increase stockholders' equity
8. If a transaction affected two accounts and total assets decreased by $4,000,
then... ANSWER Total liabilities must have decreased by $4,000 or total
stockholders equity must have decreased by $4,000
, 9. At the start of the current year, investors contribute $10,000 to a newly
formed corporation. During the year, the corporation earned revenues of
$45,000, paid expenses of $22,000, and paid dividends to the owners of
$5,000. It also borrowed $10,000 by issuing a note. At the end of the year, the
balance in retained earnings will be... ANSWER $18,000 credit
10. Which of the following is the sequence of events for the recording process?
ANSWER Journalize, post, prepare a trial balance
11. In its first year, a company performed services for a customer and billed
the customer $14,000. In the second year, the customer pays the company for
the services rendered in the first year. In the first year, the company incurred
and paid $6,000 of wage expense. If the company uses the accrual-basis of
accounting, then it will report... ANSWER Revenue of $14.000 and expense of
$6,000 in the first year
12. Payments from customers received before performing service for the
customers are recorded as... ANSWER Liabilities
13. A corporation began the year with $3,500 of supplies on hand and
recorded as assets. On the last day of the accounting period, there are $1,100
of unused office supplies on hand. What should the accountant do? ANSWER
Debit supplies expense for $2,400 and credit Supplies for $2,400
14. Accrued expenses are expenses incurred that are not yet paid or recorded.
An adjusting entry made to record an accrued expense... ANSWER Debits an
expense account and credits a liability account
15. Which of the following accounts appears on the adjusted trial balance with
its beginning balance but appears on the balance sheet with its ending
balance? ANSWER Retained earnings
16. A corporation uses a perpetual inventory system. It purchased $3,000 of
merchandise on August 2 o account with terms of 1/10, n/30. It returned $250
of the merchandise of August 4. It pays on August 12. Which of the following is
part of the journal entry it records when it pays on August 12? ANSWER
Credit inventory for $27.50
17. A corporation has the following: Sales revenue- $430,000; Sales returns
and allowances- $20,000; Sales discounts, $10,000; Cost of goods sold-
$310,000; Operating expenses- $60,000; Other expenses- $10,000. How much
is its gross profit? ANSWER $90,000
LATEST VERSION - TOP RATED 2026/2027
1. What is true about the partnership form of business organization compared
to a corporation? ANSWER is tax advantaged in comparispm to a corporation
2. Which of the following is not an asset? ANSWER Accounts Payable
3. Which of the following describes that sequence in which financial
statements are prepared? ANSWER Income statement, Retained earnings
statement, and Balance sheet
4. In the annual report, where would a financial statement reader find out if
the company's financial statements give a fair depiction of its financial position
and operating results? ANSWER Auditor's report
5. A company has the following accounts and balances: Accounts payable-
$40,000; Accounts receivable- $70,000; Accumulated depreciation- $50,000;
Buildings- $500,000; Cash- $100,000; Common stock- $690,000; Equipment-
$120,000; Inventory- $200,000; Investment in bonds- $20,000; Land- $150,000;
Notes payable- $300,000; Patents- $10,000; Prepaid insurance- $20,000;
Retained earnings- $150,000; Trademarks- $40,000. What are its current assets
and property, plant, and equipment? ANSWER $390,000 and $720,000
6. Which of the following would increase a company's current ratio? ANSWER
Negotiate with a creditor to reclassify a note payable in 3 months into a note
payable due in 2 years
7. The effects of performing services for cash on the basic accounting equation
are to... ANSWER Increase assets and increase stockholders' equity
8. If a transaction affected two accounts and total assets decreased by $4,000,
then... ANSWER Total liabilities must have decreased by $4,000 or total
stockholders equity must have decreased by $4,000
, 9. At the start of the current year, investors contribute $10,000 to a newly
formed corporation. During the year, the corporation earned revenues of
$45,000, paid expenses of $22,000, and paid dividends to the owners of
$5,000. It also borrowed $10,000 by issuing a note. At the end of the year, the
balance in retained earnings will be... ANSWER $18,000 credit
10. Which of the following is the sequence of events for the recording process?
ANSWER Journalize, post, prepare a trial balance
11. In its first year, a company performed services for a customer and billed
the customer $14,000. In the second year, the customer pays the company for
the services rendered in the first year. In the first year, the company incurred
and paid $6,000 of wage expense. If the company uses the accrual-basis of
accounting, then it will report... ANSWER Revenue of $14.000 and expense of
$6,000 in the first year
12. Payments from customers received before performing service for the
customers are recorded as... ANSWER Liabilities
13. A corporation began the year with $3,500 of supplies on hand and
recorded as assets. On the last day of the accounting period, there are $1,100
of unused office supplies on hand. What should the accountant do? ANSWER
Debit supplies expense for $2,400 and credit Supplies for $2,400
14. Accrued expenses are expenses incurred that are not yet paid or recorded.
An adjusting entry made to record an accrued expense... ANSWER Debits an
expense account and credits a liability account
15. Which of the following accounts appears on the adjusted trial balance with
its beginning balance but appears on the balance sheet with its ending
balance? ANSWER Retained earnings
16. A corporation uses a perpetual inventory system. It purchased $3,000 of
merchandise on August 2 o account with terms of 1/10, n/30. It returned $250
of the merchandise of August 4. It pays on August 12. Which of the following is
part of the journal entry it records when it pays on August 12? ANSWER
Credit inventory for $27.50
17. A corporation has the following: Sales revenue- $430,000; Sales returns
and allowances- $20,000; Sales discounts, $10,000; Cost of goods sold-
$310,000; Operating expenses- $60,000; Other expenses- $10,000. How much
is its gross profit? ANSWER $90,000
