Accounting for Decision Making Exam Review
Course Introduction
Accounting for Decision Making provides students with a comprehensive understanding of how accounting information supports business decision processes. The course covers key concepts in financial and managerial accounting, emphasizing the interpretation and analysis of accounting data for planning, control, and strategic decision-making purposes. Students learn to evaluate costs, assess financial performance, use budgeting techniques, and apply relevant information to solve business problems. Through real-world case studies and practical exercises, the course develops analytical skills essential for effective decision-making in todays dynamic business environment.
Recommended Textbook
Financial Accounting 5th Canadian Edition by Walter T. Harrison
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13 Chapters
1520 Verified Questions
1520 Flashcards
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Page 2
Chapter 1: The Financial Statements
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139 Verified Questions
139 Flashcards
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Sample Questions
Q1) What is a not-for-profit organization?
Answer: A not-for-profit organization is organized for some other purpose than the earning of profit. Many examples are possible. For example, The Salvation Army or the University of Toronto are organized for the purpose of providing services to community stakeholders.
Many business students will eventually find employment in not-for-profit organizations or the public sector and a knowledge of accounting is just as important in these types of organizations as it is in multinational public corporations.
Q2) The accounting equation can be stated as:
A) Assets + Liabilities = Shareholders' equity
B) Assets = Liabilities + Shareholders' equity
C) Assets = Liabilities - Shareholders' equity
D) Assets + Shareholders' equity = Liabilities
Answer: B
Q3) Retained earnings represent cash that is available to a company for future operations and expansion.
A)True
B)False
Answer: False
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Chapter 2: Recording Business Transactions
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164 Verified Questions
164 Flashcards
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Sample Questions
Q1) Which of the following accounts normally has a debit balance?
A) Dividends
B) Retained Earnings
C) Share capital
D) Revenue
Answer: A
Q2) Accounts receivable normally has a credit balance.
A)True
B)False
Answer: False
Q3) Prepare journal entries in good form for the following transactions at Snacktime Corp.:
a. Jill (owner) invested cash of $25,000 receiving common shares in exchange.
b. Purchased inventory on credit, for $9,000.
c. Paid $3,000 for rent of the Snack shop.
d. Received $4,700 for services rendered.
Answer:
11ea84f5_9cde_c366_9a63_75b7fcaec8a6_TB4002_00_TB4002_00_TB4002_00
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4
Chapter 3: Accrual Accounting and the Financial Statements
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) Which of the following combinations of ratios is preferable?
A) a high current ratio and a low debt ratio
B) a low current ratio and a high debt ratio
C) a high current ratio and a high debt ratio
D) a low current ratio and a low debt ratio
Answer: A
Q2) One of the most widely used financial ratios is the current ratio.
A)True
B)False
Answer: True
Q3) To obtain a new customer, a business sells merchandise to the customer for $100. Normally, the merchandise sells for $120. For this sale, the business should record revenue of $100, not $120.
A)True
B)False
Answer: True
Q4) The term liquidity refers to non-current items such as a building.
A)True
B)False Answer: False
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Chapter 4: Internal Control and Cash
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) List and describe at least five characteristics of an effective system of internal control. What is one inherent limitation/weakness of any system of internal control?
Q2) Define internal control. Who is responsible for establishing an effective system of internal control? What are two major constraints of any system of internal control?
Q3) Fraudulent financial reporting is a type of fraud than impacts on financial statements. Why do managers undertake this type of fraudulent activity?
Q4) The asset requiring the highest level of internal control is:
A) Cash
B) Accounts Receivable
C) Inventory
D) Capital Assets
Q5) In a bank reconciliation, bank service charges are:
A) added to the bank balance on the bank statement
B) deducted from the bank balance on the bank statement
C) added to the bank balance in the general ledger
D) deducted from the bank balance in the general ledger
Q6) Differentiate between the role of an external and internal auditor.
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Page 6
Chapter 5: Short-Term Investments and Receivables
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) There are two basic ways to estimate uncollectible receivables: the percentage-of-sales method and the aging-of-receivables method.
A)True
B)False
Q2) Which of the following ratios is considered to be a more stringent measure of a company's ability to pay its current liabilities than the current ratio?
A) acid-test ratio
B) equity ratio
C) debt ratio
D) days' sales in receivables
Q3) Allowance for Doubtful Accounts is a contra account to short term investments.
A)True
B)False
Q4) One of the benefits of extending credit to customers is the possibility of increased sales.
A)True
B)False
Q5) What are 'held-for-trading investments'?
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Chapter 6: Inventory and Cost of Goods Sold
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106 Verified Questions
106 Flashcards
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Sample Questions
Q1) FIFO tends to increase cost of goods sold when:
A) costs are increasing
B) costs are declining
C) costs are constant
D) FIFO will always yield the lowest possible cost of goods sold
Q2) What is the major expense shown on the income statement for a merchandising business?
Q3) If ending inventory for the year ended December 31, 2013, is understated, this error will cause owners' equity to be:
A) overstated at the end of 2013 and understated at the end of 2014
B) understated at the end of 2013 and overstated at the end of 2014
C) correctly stated at the end of 2013 and overstated at the end of 2014
D) understated at the end of 2013 and correctly stated at the end of 2014
Q4) The comparability principle in accounting means that a company must perform strictly proper accounting only for items and transactions that are significant to the financial statements of a business.
A)True
B)False
Q5) State some methods retailers might use to increase the gross margin on sales.
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Chapter 7: Property, Plant, and Equipment, and Intangible Assets
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129 Verified Questions
129 Flashcards
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Sample Questions
Q1) Which of the following is not an intangible asset?
A) Copyright
B) Patent
C) Leasehold improvement
D) Trademark
Q2) A change in useful life estimate is very common in Canada.
A)True
B)False
Q3) To measure depreciation, all of the following must be known except:
A) the asset's useful life in terms of years, hours, or units
B) the estimated residual value of the asset
C) the cost of the asset
D) the current market value of the asset
Q4) Land improvements are subject to depreciation.
A)True
B)False
Q5) If an organization selects the revaluation model, it should revise its depreciation amount with each new carrying amount.
A)True
B)False
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Chapter 8: Long-Term Investments and the Time Value of Money
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97 Verified Questions
97 Flashcards
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Sample Questions
Q1) The journal entry to record the receipt of a cash dividend will include a credit to Retained Earnings.
A)True
B)False
Q2) On January 1, 2014, TXU Europe Corporation purchased 40% of the outstanding stock of Alberta Power Pool Corporation for $800,000. Net income reported by Alberta Power Pool Corporation for 2014 and 2015 was, respectively, $100,000 and $125,000. Dividends paid by Alberta Power Pool Corporation during 2014 and 2015 were, respectively, $60,000 and $75,000. The long-term investment will appear on TXU Europe Corporation's December 31, 2015, balance sheet at:
A) $746,000
B) $864,000
C) $836,000
D) $890,000
Q3) How does an investor account for a long-term investment in bonds?
Q4) Long-term bond investments are reported on the balance sheet at their:
A) historical cost
B) amortized cost
C) current market value
D) lower of cost or market
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Chapter 9: Liabilities
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96 Flashcards
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Sample Questions
Q1) The account Sales Tax Payable represents a company's liability to the government for sales taxes collected.
A)True
B)False
Q2) A bond issued at a discount typically has a market price that decreases toward maturity value.
A)True B)False
Q3) The effective-interest method of amortization keeps interest expense at the same dollar amount of the bond's carrying value for every interest payment over the bond's life.
A)True
B)False
Q4) Earnings per share is the amount of a company's net income per share of its common shares.
A)True B)False
Q5) A bond issued at a price above its maturity or par value is sold at a premium. A)True
B)False
11
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Chapter 10: Shareholders Equity
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110 Flashcards
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Sample Questions
Q1) The issuance of common shares requires a:
A) credit to Retained Earnings
B) debit to Retained Earnings
C) credit to Common Shares
D) debit to Common Shares
Q2) Explain the fundamental difference between retained earnings and share capital.
Q3) One reason a company will repurchase its own shares is to help avoid a takeover of the company by an outside party.
A)True
B)False
Q4) Which of the following shows the relationship between net income and average common shareholders' equity?
A) current ratio
B) acid-test ratio
C) return on equity
D) return on assets
Q5) Stock dividends result in a reduction in the balance of the contributed capital account.
A)True
B)False
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Equity
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71 Flashcards
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Sample Questions
Q1) A change in accounting estimate must be accounted for is accounted for retrospectively.
A)True
B)False
Q2) The statement of retained earnings reports the changes in all categories of equity during the period.
A)True
B)False
Q3) A company that switches from straight-line amortization to double-declining-balance amortization during an accounting period must report this change on the financial statements as:
A) an extraordinary item
B) income from continuing operations
C) a prior-period adjustment
D) a cumulative effect of a change in accounting principle
Q4) Under IFRS, when income tax payable exceeds income tax expense:
A) Accumulated Income Tax is debited
B) Prepaid Income Tax is credited
C) Deferred Tax Liability is credited
D) Deferred Tax Asset is debited Page 13
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Page 14
Chapter 12: The Statement of Cash Flows
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Sample Questions
Q1) If the cash collections from customers amounted to $634,800 and the Accounts Receivable account decreased $19,400 during the same period, sales for the period were:
A) $615,400
B) $634,800
C) $654,200
D) indeterminable from the information given
Q2) Which of the following would not appear on a statement of cash flows prepared using the direct method?
A) cash receipt from repayment of a loan
B) cash purchase of inventory
C) depreciation expense
D) cash payments for operating expenses
Q3) The most important section of a statement of cash flows is the:
A) operating activities
B) investing activities
C) financing activities
D) all of the sections are equally important
Q4) Why is the statement of cash flows of interest to investors, creditors, and management?
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Chapter 13: Financial Statement Analysis
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116 Flashcards
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Sample Questions
Q1) Which of the following would be most likely to reveal that cost of goods sold increased by $75,000 from 2013 to 2014?
A) horizontal analysis
B) trend analysis
C) vertical analysis
D) ratio analysis
Q2) The analysis of trend percentages is a form of vertical analysis.
A)True
B)False
Q3) The dividend yield evaluates:
A) a company's stock as an investment
B) a company's ability to pay non-current debt
C) a company's ability to convert receivables into cash
D) a company's ability to finance assets
Q4) A common size statement reports each item as a percentage of the previous years figure.
A)True
B)False
Q5) Name some common financial ratios used by investors to compare different companies.
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