Accounting for Business Final Exam
Questions
Course Introduction
Accounting for Business is an introductory course that provides students with a comprehensive understanding of the fundamental principles and practices of accounting as they apply to the business environment. The course covers essential topics such as the accounting cycle, financial statement preparation and analysis, recording of business transactions, and the use of accounting information for decision making. Students will also explore the roles of ethics, internal control, and technology in accounting, gaining practical skills through hands-on exercises and case studies. By the end of the course, learners will be equipped to interpret and utilize accounting information to support effective business management and strategic planning.
Recommended Textbook
Financial Accounting 10th Edition by Walter T. Harrison
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Chapter 1: The Financial Statements
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Sample Questions
Q1) David Company has total assets of $500,000 and total liabilities of $180,000.David Company's stockholders' equity must therefore be $680,000.
A)True
B)False
Answer: False
Q2) Characteristics of faithfully representative information do NOT include: A)complete. B)neutral.
C)accurate.
D)relevant. Answer: D
Q3) Property,plant and equipment does NOT include: A)buildings. B)land.
C)machinery.
D)patent. Answer: D
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Chapter 2: Transaction Analysis
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Sample Questions
Q1) Journal entries can have more than two accounts as long as the total debits equal the total credits.
A)True
B)False
Answer: True
Q2) Muddle Company performs a service for one of its customers and immediately collects the cash.This transaction will:
A)have no effect on liabilities.
B)decrease net income.
C)decrease Retained Earnings.
D)increase Accounts Receivable.
Answer: A
Q3) The double-entry system of accounting records the dual effects of transactions on the entity.
A)True
B)False
Answer: True
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Chapter 3: Accrual Accounting Income
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Sample Questions
Q1) The Houston Mavericks basketball team receives $5,000 for season tickets on August 1.By December 31,they have earned $2,000 of the revenue.The adjusting entry to be made on December 31 by the Houston Mavericks includes a:
A)credit to Unearned Revenue of $2,000.
B)debit to Unearned Revenue of $2,000.
C)debit to Ticket Revenue of $2,000.
D)credit to Prepaid Revenue of $3,000.
Answer: B
Q2) Brankov Company has current assets of $105,000 and current liabilities of $40,000.The company decides to issue stock and receives cash of $70,000.After this transaction,the company's current ratio will be:
A)0.68.
B)1.88.
C)3.62.
D)4.38.
Answer: D
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Chapter 4: Internal Control Cash
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Sample Questions
Q1) The objectives of internal control do NOT include:
A)safeguard assets.
B)encourage employees to follow company policy.
C)ensure accurate,reliable accounting records.
D)strong control environment.
Q2) Perpetrators of fraud usually commit fraud for their own short-term economic gain.
A)True
B)False
Q3) A company receives customer checks in the mail for credit sales.Which people are involved in processing the checks?
A)mailroom employee,treasurer,cashier in treasurer's department
B)mailroom employee,bookkeeper in accounting department,controller
C)mailroom employee,bookkeeper in accounting department,controller,treasurer
D)mailroom employee,bookkeeper in accounting department,controller,treasurer,cashier in treasurer's department
Q4) Collusion is the method used to defeat an internal controls system.
A)True
B)False
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Chapter 5: Short-Term Investments Receivables
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Sample Questions
Q1) Michael Company purchased a trading investment that had a carrying amount of $35,000 when they decided to sell it.Michael Company purchased the investment for $31,000.If Michael Company sold this investment for $45,000,Michael will have a(n):
A)Gain on Sale of Trading Security for $14,000.
B)Gain on Sale of Trading Security for $10,000.
C)Unrealized Loss on Trading Security of $4,000.
D)Unrealized Gain on Trading Security of $14,000.
Q2) The Allowance for Uncollectible Accounts has a normal debit balance because it is an asset account.
A)True B)False
Q3) The two major types of receivables are accounts receivable and trade receivables. A)True B)False
Q4) The higher the quick ratio,the easier it is to pay current liabilities. A)True B)False
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Chapter 6: Inventory Cost of Goods Sold
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Sample Questions
Q1) Under the average-cost inventory method,to determine the average cost per unit:
A)the cost of beginning inventory is divided by the number of units available.
B)the cost of beginning inventory plus the cost of purchases is divided by the number of units sold.
C)the cost of purchases for the period are divided by the number of units available.
D)the cost of beginning inventory plus the cost of purchases is divided by the number of units available.
Q2) To determine the cost of ending inventory under the LIFO method:
A)the latest purchase costs are used.
B)the specific unit cost of the inventory is used.
C)the average cost of the inventory is used.
D)the beginning inventory and earliest purchase costs are used.
Q3) Another term for gross profit is:
A)gross income.
B)gross sales.
C)gross margin.
D)gross operating income.
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Chapter 7: Plant Assets,natural Resources, Intangibles
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Sample Questions
Q1) Gary Kraen Company purchased equipment on May 1,2014 for $100,000.The residual value is $10,000 and the estimated useful life is 10 years.What is the Depreciation Expense for the year ending December 31,2015,if the company uses the double-declining-balance method?
A)$13,333
B)$16,000
C)$17,333
D)$20,000
Q2) Which of the following depreciation methods best applies to those assets that generate greater revenue earlier in their useful lives?
A)Straight-line method
B)Depletion method
C)Double-declining-balance method
D)Units-of-production method
Q3) Return on assets measures:
A)how much the entity earned for each dollar of assets invested.
B)return on sales times total asset turnover.
C)profitability of a company's core business operations.
D)A and B.
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Page 9
Chapter 8: Long-Term Investments: The Time Value of Money
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Sample Questions
Q1) When computing the present value of an ordinary annuity,it is not necessary to know the number of discount periods.
A)True
B)False
Q2) The Allowance to Adjust Investment in Available-for-Sale Securities to Market is:
A)a required account used with Investment in Available-for-Sale Securities.
B)an optional account to Investment in Available-for-Sale Securities.
C)always added to the Investment in Available-for-Sale Securities.
D)always subtracted from the Investment in Available-for-Sale Securities.
Q3) An investor purchased bonds and intends to hold them until the maturity date which is 10 years into the future.The bonds were purchased at a discount and pay interest semiannually.Which journal entry or entries is(are)needed at each interest date?
A)receipt of interest revenue only
B)amortization of bond discount only
C)amortization of bond premium only
D)A and B
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Chapter 9: Liabilities
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Sample Questions
Q1) The journal entry to record the conversion of bonds payable into common stock will include a:
A)debit to Bonds Payable and a credit to Common Stock.
B)debit to Bonds Payable and a credit to Cash.
C)debit to Cash and a credit to Common Stock.
D)debit to Cash and a credit to Paid-in Capital in Excess of Par.
Q2) Which of the following statements about capital leases is INCORRECT?
A)Under a capital lease,the lessee does not report the leased asset on the financial statements.
B)A capital lease can transfer title of the leased asset to the lessee at the end of the lease term.
C)A capital lease may contain a bargain purchase option.
D)Under a capital lease,the lessee records a lease liability at the beginning of the lease term.
Q3) The carrying amount of bonds at maturity should be equal to the face value of the bonds.
A)True
B)False
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Chapter 10: Stockholders Equity
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Sample Questions
Q1) On February 1,a corporation has 30,000 shares of $1 par value common stock issued and outstanding.The corporation also has Additional Paid-in Capital of $100,000 and Retained Earnings of $100,000.On February 1,the corporation declared a 2-for-1 stock split.After the split,what is the total par value of the common stock and the total stockholders' equity,respectively?
A)0; $230,000
B)$30,000; $230,000
C)$60,000; $260,000
D)$130,000; $260,000
Q2) A company sells 1,000,000 shares of $0.50 par value preferred stock.The selling price for the stock was $3,000,000.The stated dividend is $1 per share and the stock is cumulative.What journal entry is needed for the sale?
A)debit Cash $3 million and credit Preferred Stock $3,000,000
B)debit Cash $3 million,credit Preferred Stock $500,000 and credit Paid-in Capital in Excess of Par-Preferred $2.5 million
C)debit Cash $3 million and credit Paid-in Capital in Excess of Par-Preferred $3 million
D)debit Cash $3 million and credit Retained Earnings $3 million
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Page 12
Chapter
11:
the Income Statement, the Statement of Comprehensive Income
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Sample Questions
Q1) Common stock should be purchased if the estimated value of a company exceeds its current market value.
A)True
B)False
Q2) Taxable income should always match pretax accounting income.
A)True
B)False
Q3) The gain or loss on the disposal of a business segment is shown on the income statement as:
A)an extraordinary item.
B)part of discontinued operations
C)part of income from operations.
D)other gains or losses.
Q4) Sales revenue less cost of goods sold is called:
A)gross profit.
B)net income.
C)net profit.
D)net sales.
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Chapter 12: The Statement of Cash Flows
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Sample Questions
Q1) The statement of cash flows will NOT report:
A)cash payments in the current year.
B)cash receipts in the current year.
C)noncash investing and financing activities.
D)revenues and expenses for the current year.
Q2) When converting net income to net cash provided by operating activities on the statement of cash flows,indirect method,which of the following is NOT added to net income?
A)Gain on sale of land
B)Decrease in inventory
C)Decrease in accounts receivable
D)Depreciation expense
Q3) The statement of cash flows will NOT help predict future cash flows. A)True
B)False
Q4) Most of the time,net income will be the same as net cash provided by operating activities.
A)True
B)False
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Chapter 13: Financial Statement Analysis
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Sample Questions
Q1) If a company has sales of $250 in 2015 and $225 in 2016,the percentage decrease from 2015 to 2016 is 10%.
A)True
B)False
Q2) On a statement of cash flows(indirect method),which item is reported as a line item under Cash From Operating Activities?
A)Sale of securities
B)Purchase of fixed assets
C)Purchase of securities
D)Amortization Expense
Q3) How is the trend percentage for sales in 2015 computed? The base year is 2000.
A)Year 2015 sales ÷ Year 2000 sales
B)(Year 2015 sales - Year 2000 sales)÷ Year 2000 sales
C)(Year 2015 sales - Year 2000 sales)÷ Year 2015 sales
D)(Year 2015 sales ÷ Year 2000 sales)× 100
Q4) An efficient capital market is one in which market prices are above stated cost.
A)True
B)False
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