Robert Half Assessment Test Core Accounting Principles 2 — Questions and Answers
Question 1: Under the accrual basis of accounting, revenue is recognized when:
- Cash is received from the customer
- It is earned, regardless of when cash is received (Correct answer)
- The invoice is mailed to the customer
- Management approves the transaction
Correct answer: It is earned, regardless of when cash is received
Accrual accounting recognizes revenue when it is earned (goods delivered or services performed), not when cash changes hands.
Question 2: Which financial statement shows a company's financial position at a specific point in time?
- Income statement
- Statement of cash flows
- Balance sheet (Correct answer)
- Statement of retained earnings
Correct answer: Balance sheet
The balance sheet (statement of financial position) presents assets, liabilities, and equity as of a specific date.
Question 3: A company purchased equipment for $50,000 cash. How does this affect the accounting equation?
- Assets increase $50,000; liabilities increase $50,000
- Assets increase $50,000; equity decreases $50,000
- One asset increases $50,000; another asset decreases $50,000 (Correct answer)
- Assets decrease $50,000; equity decreases $50,000
Correct answer: One asset increases $50,000; another asset decreases $50,000
Buying equipment for cash swaps one asset (cash) for another (equipment), keeping total assets unchanged.
Question 4: The matching principle requires that:
- Assets equal liabilities plus equity
- Revenue equals expenses in each period
- Expenses are recorded in the same period as the revenue they helped generate (Correct answer)
- Cash inflows match cash outflows
Correct answer: Expenses are recorded in the same period as the revenue they helped generate
The matching principle ties expense recognition to the period in which the associated revenue is earned.
Question 5: Which of the following is an example of a contra asset account?
- Accounts payable
- Accumulated depreciation (Correct answer)
- Unearned revenue
- Notes payable
Correct answer: Accumulated depreciation
Accumulated depreciation offsets the gross cost of a fixed asset and carries a credit balance, making it a contra asset.
Question 6: When a company records depreciation expense, which accounts are affected?
- Cash decreases; accumulated depreciation increases
- Depreciation expense increases; accumulated depreciation increases (Correct answer)
- Fixed assets decrease; cash decreases
- Depreciation expense increases; fixed assets increase
Correct answer: Depreciation expense increases; accumulated depreciation increases
Depreciation debits Depreciation Expense and credits Accumulated Depreciation; the original asset cost is not directly reduced.
Question 7: If beginning inventory is $10,000, purchases are $40,000, and ending inventory is $8,000, what is cost of goods sold?
- $38,000
- $42,000 (Correct answer)
- $48,000
- $32,000
Correct answer: $42,000
COGS = Beginning Inventory + Purchases − Ending Inventory = $10,000 + $40,000 − $8,000 = $42,000.
Robert Half Assessment Test Core Accounting Principles 2
Under the accrual basis of accounting, revenue is recognized when: