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Test your accounting skills.

Test Your Accounting Skills

Every May and December, accountants all over the United States sit for a national uniform examination in order to become accredited and to prove their competency in accounting. This examination is given by the Accreditation Council for Accountancy and Taxation (ACAT), a non-profit affiliate of the National Society of Public Accountants. ACAT's purpose is to encourage and promote the professional development of independent and small business accounting and tax practitioners.

In order to qualify for accreditation, you must pass the written examination. In order to maintain accreditation, you must meet bi-annual continuing education requirements.

Accreditation can give you a competitive edge. It shows you have proven your competence through testing. And since you can only maintain your accreditation by taking continuing education courses, it shows you are up-to-date in your field and committed to continually upgrading your knowledge and abilities.

Where do you stand? How up-to-date are your accounting skills? The following is a short test made up of questions taken from prior ACAT examinations. Try it and see how you do. Watch for the answers in next month's National Public Accountant.

For more information on ACAT and accreditation, call Susan Noell at the NSPA executive office. For information on review courses for the ACAT examinations as well as other accounting and tax correspondence courses, contact the NSPA Education Department. 1. An accrued revenue is:

A. A revenue for which cash has

been received but not yet

earned. B. A revenue that has not been

earned during an accounting

period but has been recorded

in advance. C. A revenue that has been earned

during an accounting period

but has not been received prior

to making adjusting entries

because payment is not due. D. A revenue that has been earned,

received and posted. 2. Busy, Inc., has three employees who are paid $100 per day for a five-day work week. They are paid every Friday. If the accounting period ends on Tuesday, Busy, Inc., should make the following entry to accrue wages. A. Salary Expense $1,500

Salaries Payable 1,500

B. Salary Expense 1,500
 Cash 1,500
C. Salary Expense 600
 Salaries Payable 600
D. Salary Expense 900
 Salaries Payable 900

3. The post closing trial balance of Green Company contains several errors. Which of the following items on that trial balance indicates an error? A. Commissions Earned is listed

with a credit balance of

$45,000 B. Supplies Expense is listed with

a debit balance of $5,467 C. Green, Withdrawals is listed

with a debit balance of

$14,000 D. All of the above E. None of the above indicates

errors 4. A computer that cost $10,250 and that had been depreciated $8,000 was traded in for a new computer priced at $11,400 less a $3,000 trade-in allowance for the old computer. The basis of the new machine for federal income tax purposes is:

A. $10,250 B. $8,400 C. $10,650 D. $11,400 5. In 1989, the assessed property tax valuation on a piece of land was $600,000, and the tax levy was $2 per $100 of assessed valuation. On January 1, 1990, the assessed valuation was increased to $750,000, an increase that was not expected to affect the levy. On July 1, 1990, the tax levy was set at $2.20 per $100. What amount of property tax expense should the company recognize for the month of January 1990? 6. Humpty invested $5,000 and Dumpty invested $10,000 in a partnership in which they agreed to share all income and loss by allowing a $9,000 per year salary allowance to Humpty and a $12,000 per year salary allowance to Dumpty plus interest on the partners' investments at 10%, with the balance to be shared equally. Under this agreement, the shares of the partners in a $21,000 net income are:

A. $10,500 to Humpty and

$10,500 to Dumpty B. $7,000 to Humpty and

$14,000 to Dumpty C. $9,000 to Humpty and

$12,000 to Dumpty D. $8,750 to Humpty and

$12,250 to Dumpty 7. On a balance sheet, what is the preferable presentation of notes or accounts receivable from officers or employees? A. As trade notes and receivables

if they otherwise qualify as

current assets. B. As assets but separately from

other receivables (current or

long-term). C. As offsets to capital D. By means of notes or

footnotes E. As long-term assets only 8. Make-It Corporation may purchase a new machine at a cost of $24,000. Over the next 10 years, Make-It has estimated that sales from the product produced by the new machine will be $8,000 a year.

Expenses associated with the manufacture of the new product are estimated to be direct materials, direct labor and factory overhead totalling $4,000 per year, plus depreciation of $2,000 per year. The tax rate is 40%. What is the payback period for the new machine? A. 3 years B. 6 years C. 7.5 years D. 12 years E. 20 years 9. If a company converted a short-term note payable into a long-term note payable, this transaction would:

A. Decrease only working

capital B. Decrease working capital and

the current ratio C. Increase only working

capital D. Increase working capital and

the current ratio E. Increase working capital and

decrease the current ratio. 10. Examine each of the following transactions. Determine where each should be reported on a Statement of Cash Flows. The possible locations are identified by items A through E. 1. Received cash dividends 2. Proceeds from the sale

(discounting) of a loan made by

the enterprise 3. Received a settlement on a

law suit A = Operating activities B = Investing activities C = Financing activities D = Schedule of Noncash

Investing and Financing Activities E = Not reported on a statement

or schedule A. 1 = B, 2 = A, 3 = A B. 1 = A, 2 = B, 3 = A C. 1 = B, 2 = C, 3 = E D. 1 = C, 2 = B, 3 = E E. 1 = A, 2 = A, 3 = E

Marlyn A. Schwartz Director of Education & Professional Development
COPYRIGHT 1990 National Society of Public Accountants
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

Article Details
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Author:Schwartz, Marlyn A.
Publication:The National Public Accountant
Date:Nov 1, 1990
Previous Article:Bank Account Manager.
Next Article:Regulating unlicensed accountants by administrative fines.

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