Accounting and Auditing Page-3

21) A cash purchase of supplies would
(A) Decrease owner’s equity
(B) Increase liabilities
(C) Have no effect on total assets
(D) None of these

22) Quick assets include which of the following
(A) Cash
(B) Accounts Receivable
(C) Inventories
(D) Only (a) and (b)

23) Net income plus operating expenses is equal to
(A) Net sales
(B) Cost of goods available for sale
(C) Cost of goods sold
(D) Gross profit

24) The measurable value of an alternative use of resources is referred to as
(A) An opportunity cost
(B) An imputed cost
(C) A different cost
(D) A sunk cost

25) A cost center is
(A) A unit of production in relation to which costs are ascertained
(B) A location which is responsible for controlling direct costs
(C) Any location or department which incurs cost
(D) Part of the factory overhead system by which costs are gathered

26) A fixed cost
(A) May change in total when such change is not related to changes in production
(B) Will not change in total because it is not related to changes in production
(C) Is constant per unit for each unit of change in production
(D) May change in total, depending on production with the relevant range

27) The time lag between indenting and receiving material is called
(A) Lead time
(B) Idle time
(C) Stock out time
(D) None of these

28) Depreciation is based on
(A) Economic life of asset
(B) Declared life of asset by supplier
(C) Normal life of asset
(D) None of these

29) Random sampling in auditing means
(A) Selection through scientific sampling approach
(B) Selection through convenience sampling
(C) None of these

30) Acid test is the same as
(A) Quick test
(B) Liquid test
(C) None of these

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