Robert Half Assessment Test Accounting 4 — Questions and Answers
Question 1: Which inventory costing method is NOT permitted under IFRS?
- FIFO
- Weighted Average
- LIFO (Correct answer)
- Specific Identification
Correct answer: LIFO
LIFO (Last-In, First-Out) is prohibited under IFRS because it can significantly understate inventory values and distort financial results.
Question 2: A company has net credit sales of $500,000 and average accounts receivable of $62,500. What is the accounts receivable turnover ratio?
- 4 times
- 6 times
- 8 times (Correct answer)
- 10 times
Correct answer: 8 times
AR Turnover = Net Credit Sales / Average AR = $500,000 / $62,500 = 8 times.
Question 3: What is the effect on the accounting equation when a company pays a previously recorded account payable?
- Assets increase; liabilities increase
- Assets decrease; liabilities decrease (Correct answer)
- Assets decrease; equity decreases
- No effect on the accounting equation
Correct answer: Assets decrease; liabilities decrease
Paying an account payable reduces Cash (asset) and reduces Accounts Payable (liability) by equal amounts, keeping the equation balanced.
Question 4: Which of the following would appear on a post-closing trial balance?
- Service Revenue
- Salaries Expense
- Dividends
- Retained Earnings (Correct answer)
Correct answer: Retained Earnings
After closing entries, only permanent (real) accounts remain — Retained Earnings is a permanent account that carries forward to the next period.
Question 5: Gross profit is calculated as:
- Net Sales minus Operating Expenses
- Net Sales minus Cost of Goods Sold (Correct answer)
- Revenue minus All Expenses
- Operating Income minus Interest Expense
Correct answer: Net Sales minus Cost of Goods Sold
Gross Profit = Net Sales − Cost of Goods Sold, representing profit before operating expenses are deducted.
Question 6: When a company issues common stock for cash, the journal entry includes:
- Debit Cash; Credit Accounts Payable
- Debit Common Stock; Credit Cash
- Debit Cash; Credit Common Stock (Correct answer)
- Debit Retained Earnings; Credit Common Stock
Correct answer: Debit Cash; Credit Common Stock
Issuing stock for cash debits Cash (asset increases) and credits Common Stock (equity increases).
Question 7: The matching principle in accounting states that:
- Assets must equal liabilities plus equity
- Revenue must equal expenses in every period
- Expenses should be recognized in the same period as the revenue they help generate (Correct answer)
- Financial statements must use the same format each period
Correct answer: Expenses should be recognized in the same period as the revenue they help generate
The matching principle requires that expenses be recorded in the same accounting period as the related revenues they helped produce.
Robert Half Assessment Test Accounting 4
Which inventory costing method is NOT permitted under IFRS?