Robert Half Assessment Test Accounting 3 — Questions and Answers
Question 1: A bank reconciliation is prepared to:
- Record payroll transactions
- Reconcile the difference between book and bank cash balances (Correct answer)
- Calculate accounts receivable aging
- Prepare the income statement
Correct answer: Reconcile the difference between book and bank cash balances
A bank reconciliation identifies and explains differences between the company's cash records and the bank statement balance.
Question 2: Which depreciation method results in the highest depreciation expense in the early years of an asset's life?
- Straight-line
- Units of production
- Double-declining balance (Correct answer)
- Sum-of-years'-digits — equally as the straight line
Correct answer: Double-declining balance
Double-declining balance is an accelerated method that front-loads depreciation, resulting in higher expense in early years.
Question 3: Petty cash is replenished when the fund runs low. The journal entry to replenish it includes:
- A debit to Cash and a credit to Petty Cash
- Debits to expense accounts and a credit to Cash (Correct answer)
- A debit to Petty Cash and a credit to Accounts Payable
- Debits to expense accounts and a credit to Petty Cash
Correct answer: Debits to expense accounts and a credit to Cash
Replenishment debits the various expense accounts for items purchased and credits Cash for the total amount reimbursed.
Question 4: What is the purpose of adjusting entries?
- To close temporary accounts at year-end
- To correct errors in the trial balance
- To update account balances before financial statements are prepared (Correct answer)
- To record cash receipts and payments
Correct answer: To update account balances before financial statements are prepared
Adjusting entries ensure revenues and expenses are recorded in the correct period under accrual accounting before statements are issued.
Question 5: Under the allowance method for bad debts, writing off an uncollectible account:
- Reduces net income
- Has no effect on net income or net accounts receivable (Correct answer)
- Increases the allowance account
- Decreases total assets
Correct answer: Has no effect on net income or net accounts receivable
The write-off debits Allowance for Doubtful Accounts and credits Accounts Receivable, leaving net AR and net income unchanged.
Question 6: Which of the following best describes a capital expenditure?
- A routine repair that maintains an asset's current condition
- An expense that benefits only the current period
- A cost that extends an asset's useful life or adds new capability (Correct answer)
- A payment made to shareholders
Correct answer: A cost that extends an asset's useful life or adds new capability
Capital expenditures are costs that provide future economic benefits by extending useful life or improving capacity, and are capitalized as assets.
Question 7: The current ratio is calculated as:
- Total Assets / Total Liabilities
- Current Assets / Current Liabilities (Correct answer)
- Net Income / Total Assets
- Current Liabilities / Current Assets
Correct answer: Current Assets / Current Liabilities
The current ratio = Current Assets ÷ Current Liabilities, measuring a company's short-term liquidity.
Robert Half Assessment Test Accounting 3
A bank reconciliation is prepared to: