Robert Half Assessment Test Accounting 5 — Questions and Answers
Question 1: A company borrows $10,000 from a bank on a 6-month, 8% note payable. How much interest will accrue over the 6-month term?
- $800
- $400 (Correct answer)
- $480
- $600
Correct answer: $400
Interest = Principal × Rate × Time = $10,000 × 8% × (6/12) = $400.
Question 2: Which of the following is classified as an operating activity on the statement of cash flows?
- Purchase of equipment
- Payment of dividends
- Collection of accounts receivable (Correct answer)
- Issuance of long-term bonds
Correct answer: Collection of accounts receivable
Collecting accounts receivable is a cash inflow from operating activities because it relates to the company's primary revenue-generating operations.
Question 3: What does the term 'net realizable value' refer to in the context of inventory?
- The original cost of inventory
- The estimated selling price minus costs to complete and sell (Correct answer)
- The replacement cost of inventory
- The book value after depreciation
Correct answer: The estimated selling price minus costs to complete and sell
Net realizable value (NRV) is the estimated selling price in the ordinary course of business less the estimated costs of completion and selling.
Question 4: Which ratio measures a company's ability to pay interest on its outstanding debt?
- Debt-to-equity ratio
- Times interest earned ratio (Correct answer)
- Current ratio
- Return on assets
Correct answer: Times interest earned ratio
Times Interest Earned = EBIT / Interest Expense, measuring how many times operating income covers interest obligations.
Question 5: Deferred revenue on the balance sheet represents:
- Revenue earned but not yet collected
- Cash received for services not yet performed (Correct answer)
- An expense paid in advance
- Revenue recognized in a prior period
Correct answer: Cash received for services not yet performed
Deferred revenue is a liability representing cash received from customers before the company has fulfilled its obligation to provide goods or services.
Question 6: Under the perpetual inventory system, Cost of Goods Sold is recorded:
- Only at the end of the accounting period
- Each time a sale is made (Correct answer)
- When physical inventory is counted
- When cash is collected from the customer
Correct answer: Each time a sale is made
A perpetual inventory system updates inventory and records COGS at the point of each sale, maintaining a continuous running balance.
Question 7: Which of the following transactions would increase total stockholders' equity?
- Declaration of a cash dividend
- Purchase of treasury stock
- Net loss for the period
- Net income for the period (Correct answer)
Correct answer: Net income for the period
Net income increases Retained Earnings, which is a component of stockholders' equity, thereby increasing total equity.
Robert Half Assessment Test Accounting 5
A company borrows $10,000 from a bank on a 6-month, 8% note payable.
How much interest will accrue over the 6-month term?