CAP Accounting Paraprofessional Skills and Knowledge Covered 4

Question 1

Which form must an employer file annually to report total wages paid and taxes withheld for all employees?

Accepted Answer

Form W-3

Answer

Form W-3 is the transmittal form filed with the Social Security Administration summarizing all W-2 forms for the year.

Question 2

The current ratio is calculated as:

Accepted Answer

Current Assets divided by Current Liabilities

Answer

Current Ratio = Current Assets ÷ Current Liabilities, measuring a company's ability to pay short-term obligations.

Question 3

Under accrual accounting, when is revenue recognized for a service business?

Accepted Answer

When the service is performed

Answer

Under accrual accounting and the revenue recognition principle, revenue is recognized when the service is performed, not when payment is received.

Question 4

A company purchases equipment for $50,000 with a $5,000 salvage value and a 5-year useful life. What is the annual straight-line depreciation?

Accepted Answer

$9,000

Answer

Straight-line depreciation = ($50,000 − $5,000) ÷ 5 years = $9,000 per year.

Question 5

Which of the following best describes the purpose of internal controls in an accounting system?

Accepted Answer

To safeguard assets and ensure accuracy of financial records

Answer

Internal controls are policies and procedures designed to protect assets, prevent fraud, and ensure the reliability of financial reporting.

(CAP) Certified Accounting Paraprofessional Practice Test