Accounting Concepts and Methods
Test Bank
Course Introduction
This course provides an introduction to the fundamental concepts, principles, and methods used in accounting. Students will explore the accounting cycle, double-entry bookkeeping, preparation of financial statements, and the interpretation of financial information. Emphasis is placed on understanding assets, liabilities, equity, revenue, and expense recognition, as well as foundational methods in recording, summarizing, and communicating financial data for business decision-making. The course also covers basic internal controls, ethics in accounting, and the regulatory environment, equipping students with the skills needed to analyze financial information in both personal and professional contexts.
Recommended Textbook
Accounting 9th Canadian Edition Volume I by Charles T. Horngren
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11 Chapters
1790 Verified Questions
1790 Flashcards
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Chapter 1: Accounting and the Business Environment
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161 Verified Questions
161 Flashcards
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Sample Questions
Q1) A proprietor makes a cash withdrawal from the proprietorship.How does this affect the accounting equation?
A) This has no effect on assets, liabilities, or owner's equity.
B) Assets decrease; owner's equity decreases.
C) Assets increase; liabilities decrease.
D) Assets decrease; owner's equity increases.
Answer: B
Q2) David has decided to open an auto-detailing business.He will pick up an automobile from the client,take it to his parents' garage,detail it,and return it to the client.If he does all of the work himself and takes no legal steps to form a special organization,which type of business organization,in effect,has he chosen?
A) Limited liability company
B) Partnership
C) Corporation
D) Proprietorship
Answer: D
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Page 3
Chapter 2: Recording Business Transactions
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163 Verified Questions
163 Flashcards
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Sample Questions
Q1) An owner invests $20,000 in her new business by depositing the cash in the business's checking account.Which account is credited?
A) Accounts receivable
B) Cash
C) Capital
D) Accounts payable
Answer: C
Q2) Journalizing a transaction means:
A) calculating the balance in an account.
B) finding the account number in the chart of accounts.
C) recording the transaction, including a brief explanation.
D) copying the information from the journal to the ledger.
Answer: C
Q3) A chart of accounts is the book holding all of the company's accounts.
A)True
B)False
Answer: False
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Page 4
Chapter 3: The Adjusting Process
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160 Verified Questions
160 Flashcards
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Sample Questions
Q1) The table below represents Able Company's supplies account.Please supply the missing amount. \(\begin{array}{|l|r|}
\hline\text { Beginning supplies } & 5,000 \\
\hline\text { Supplies purchased } & 6,000 \\
\hline \text { Supplies expense } & 8,000 \\
\hline \text { Ending supplies } & 7\\\hline \end{array}\)
A) $9,000
B) $1,000
C) $3,000
D) $11,000
Answer: C
Q2) Prepaid insurance is an asset account.
A)True
B)False
Answer: True
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Chapter 4: Completing the Accounting Cycle
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165 Verified Questions
165 Flashcards
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Sample Questions
Q1) Which of the following statements is TRUE concerning the worksheet?
A) The worksheet is a ledger.
B) The worksheet is a document used to summarize data to prepare the financial statements.
C) The worksheet is a financial statement.
D) The worksheet is a journal.
Q2) Which of the following statements is TRUE concerning the worksheet?
A) The worksheet helps accountants make the adjusting entries.
B) The worksheet helps accountants close the accounts.
C) The worksheet helps accountants prepare the financial statements.
D) The worksheet helps accountants do all of the above.
Q3) Interest expense in the worksheet's trial balance column is $3,000.Interest expense in the income statement column is $7,000.Which of the following entries would have caused this difference?
A) A $7,000 credit to Interest expense in the worksheet's adjustments column
B) A $7,000 credit to Interest payable in the worksheet's adjustments column
C) A $4,000 debit to Interest expense in the worksheet's adjustments column
D) A $4,000 credit to Interest expense in the worksheet's adjustments column
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6
Chapter 5: Merchandising Operations
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168 Verified Questions
168 Flashcards
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Sample Questions
Q1) If a physical count of inventory indicates that the Inventory account is overstated,an additional adjusting entry is required.
A)True
B)False
Q2) Everett paid transportation costs of $100 to ship the goods to the customer.Please provide the journal entry to record transportation costs.
\[\begin{array} { | l | r | r | }
\hline \quad\quad\quad&\quad&\quad \\ \hline \\
\hline
\end{array}\]
Q3) Please provide the journal entry to record Sales revenue.
\[\begin{array} { | l | r | r | }
\hline \quad\quad\quad&\quad&\quad \\ \hline \\
\hline \end{array}\]
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Chapter 6: Merchandising Inventory
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156 Verified Questions
156 Flashcards
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Sample Questions
Q1) What would the company's Inventory amount be on the December 31,2013 balance sheet if the perpetual Last-In,First-Out costing method is used? (Answers are rounded to the nearest dollar.)
A) $490
B) $554
C) $560
D) $540
Q2) Using the LIFO costing method will always produce the same results whether a company uses perpetual or periodic inventory.
A)True
B)False
Q3) If Santa Fe uses average-cost,how much was the Cost of goods sold for the month?
A) $1,400
B) $1,850
C) $1,380
D) $1,615
Q4) Ending inventory equals the cost of goods available for sale less beginning inventory.
A)True
B)False
Page 8
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Chapter 7: Internal Control and Cash
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161 Flashcards
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Sample Questions
Q1) Which of the following is TRUE about a bank reconciliation?
A) A bank reconciliation should not be prepared by an employee who handles cash transactions.
B) A bank reconciliation cannot be prepared with online banking.
C) A bank reconciliation is a financial statement.
D) A bank reconciliation guarantees that no errors have been made.
Q2) Which of the following describes the internal control procedure separation of duties?
A) Cashiers must not have access to accounting records.
B) External auditors will monitor internal controls.
C) The information system is critical.
D) Prenumber invoices and other documents.
Q3) Which of the following should the purchasing agent NOT be able to do?
A) Prepare the purchase order.
B) Approve the payment.
C) Contact the supplier of the goods.
D) Negotiate prices with suppliers.
Q4) Cash is the most liquid of all company assets.
A)True
B)False
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Chapter 8: Receivables
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166 Flashcards
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Sample Questions
Q1) The direct write-off method is used primarily by large,publicly owned companies.
A)True
B)False
Q2) On which of the following dates does a three-month note dated November 12 mature?
A) February 10
B) February 12
C) February 13
D) February 11
Q3) A company uses the direct write-off method to account for uncollectible receivables.Uncollectible account expense will be estimated as a percentage of sales.
A)True
B)False
Q4) Which of the following statements is TRUE?
A) Accounts receivable are more liquid than cash.
B) Notes receivable are always due in 30 days.
C) Notes receivable are longer in term than accounts receivable.
D) Accounts receivable are liabilities.
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Page 10
Chapter 9: Plant Assets and Intangibles
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Sample Questions
Q1) An asset costs $80,000 and has a salvage value of $7,000.It has a four-year life.Using double-declining-balance depreciation,Year 2 depreciation would be:
A) $15,000.00.
B) $15,437.50.
C) $20,000.00.
D) $18,250.00.
Q2) A loss on the sale of a plant asset is recorded when the sales price exceeds the book value.
A)True
B)False
Q3) Which of the following depreciation methods allocates a fixed amount of depreciation to miles driven,hours used,or some other measure of the asset's utilization?
A) Straight-line
B) Declining-balance
C) Units-of-production
D) Double-declining-balance
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11
Chapter 10: Current Liabilities and Payroll
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159 Flashcards
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Sample Questions
Q1) Art Parrish,the sole employee of Parrish Sales,has gross salary for March of $4,000.The entire amount is under the OASDI limit of $106,800,and thus subject to FICA.His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA.The fourth journal entry in the payroll cycle to record the employer's payroll taxes should include which of the following?
A) Credit to Payroll tax expense
B) Debit to FICA tax payable
C) Credit to FICA tax payable
D) Credit to Cash
Q2) Tom's gross pay for the week is $800.Tom's deduction for federal income tax is based on a rate of 18%.Tom has no voluntary deductions.Tom's yearly pay is under the limit for OASDI.What is the amount of FICA withheld from Tom's pay?
A) $67.80
B) $61.20
C) $65.00
D) $533.60
Q3) Unearned revenue is an obligation to provide goods or services to the customer.
A)True
B)False
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Page 12
Chapter 11: Long-Term Liabilities, bonds Payable, and
Classification of Liabilities on the Balance Sheet
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161 Flashcards
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Sample Questions
Q1) Blanding Company issues $1,000,000 of 8%,10-year bonds at 98 on February 28,2014.The bond pays interest on February 28 and August 31.The market rate of interest on the issuance date was 10%.The journal entry to record the issuance would include a:
A) debit to Cash for $1,000,000.
B) credit to Bonds payable for $980,000.
C) credit to Discount on bonds payable for $20,000.
D) debit to Cash for $980,000.
Q2) The current portion of notes payable is the principal amount that will be paid within one year of the balance sheet date.
A)True
B)False
Q3) After the first interest payment on June 30,2014,what was the balance in the discount account?
A) Debit of $540
B) Debit of $600
C) Debit of $660
D) Credit of $60
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Page 13