Accounting for Decision Making Exam Review
Course Introduction
Accounting for Decision Making introduces students to the fundamental concepts and techniques of accounting that are essential for informed business decision making. The course emphasizes the use of financial and managerial accounting information in planning, controlling, and evaluating organizational operations. Key topics include interpreting financial statements, understanding cost behavior and cost-volume-profit analysis, budgeting, and performance measurement. Through practical case studies and real-world scenarios, students develop analytical skills to assess financial performance and make strategic decisions that drive organizational success.
Recommended Textbook
Using Financial Accounting Information The Alternative to Debits and Credits 10th Edition by Gary
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14 Chapters
2617 Verified Questions
2617 Flashcards
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Page 2
Chapter 1: Accounting As a Form of Communication
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196 Verified Questions
196 Flashcards
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Sample Questions
Q1) Which concept is the reason the dollar is used in the preparation of financial statements?
A)Going concern
B)Legal entity
C)Consistency
D)None of these choices.
Answer: D
Q2) The names of the four financial statements are
Answer: income statement,balance sheet,statement of retained earnings,statement of cash flows
Q3) What is the net income for Ferrara Corporation?
A)$10,000
B)$20,000
C)$30,000
D)Unable to tell from the information provided.
Answer: C
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Chapter 2: Financial Statements and the Annual Report
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Sample Questions
Q1) Which of the following would appear on a multiple-step income statement but not on a single-step income statement?
A)Net income
B)Total expenses
C)Total revenues
D)Income before income taxes
Answer: D
Q2) Read the information about Marvel Shoes.What was the amount of net increase or decrease in the cash balance for Marvel Shoes for the current year?
A)$10,000 increase
B)$30,000 increase
C)$40,000 increase
D)$70,000 increase
Answer: A
Q3) Three common categories of long-term assets are: (1)property,plant,and equipment, (2)investments,and (3)intangibles.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Processing Accounting Information
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180 Flashcards
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Sample Questions
Q1) Given a current ratio of 5 to 1,what is the effect of paying an accounts payable to a supplier?
A)The current ratio would increase.
B)The current ratio would decrease.
C)The current ratio would remain the same.
D)The effect of the current ratio cannot be determined.
Answer: A
Q2) The correct term for the process of transferring amounts from a book of original entry to specific assets,liabilities,revenues,expenses,and stockholders' equity items is
A)double-entry system.
B)recording.
C)credit.
D)posting.
Answer: D
Q3) _______________________ are a distribution of net income for the period,not a reduction of net income as are expenses.
Answer: Dividends
Q4) A purchase of raw materials from a supplier is a(n)____________________ event.
Answer: external
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Chapter 4: Income Measurement and Accrual Accounting
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Sample Questions
Q1) Which one of the following steps in the accounting cycle is completed only at the end of an accounting period?
A)Business transactions are recorded.
B)Adjustments are recorded.
C)Transactions are journalized.
D)Journal entries are posted to the ledger.
Q2) Failure to record accrued interest expense would result in which of the following?
A)Assets being overstated
B)Assets being understated
C)Liabilities being overstated
D)Liabilities being understated
Q3) ____________________ is the name given to revenue,expense,and dividend accounts because they are closed at the end of the period.
Q4) Matching can occur directly (like cost of goods sold),indirectly (like plant assets),or immediately when no future benefits from the cost are expected.
A)True
B)False
Q5) Explain the purpose of a work sheet.
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Chapter 5: Inventories and Cost of Goods Sold
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Sample Questions
Q1) The buyer must include goods purchased FOB shipping point in its Inventory account if the goods are still in transit.
A)True
B)False
Q2) How much will Goldman report as cost of goods purchased in its 2017 income statement?
A)$174,600
B)$183,000
C)$180,400
D)None of these choices
Q3) Which method of inventory costing is not acceptable for financial accounting purposes?
A)Specific Identification
B)FIFO
C)LIFO
D)Replacement Cost
Q4) Moving average is the name given to the use of an average cost method used with a periodic inventory system.
A)True
B)False
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Chapter 6: Cash and Internal Control
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Sample Questions
Q1) Explain how a company can control small payments that must be made in cash rather than by check.
Q2) Given the following items,what amount should be reported on the balance sheet as Cash and cash equivalents?
\[\begin{array} {| l | r | }
\hline\text { Cashier's check } & \$ 5,000 \\
\hline \text { Certificate of deposit (due in 9 months) } & 12,000 \\
\hline \text { Checking account } & 5,500 \\
\hline \text { Coins and currency on hand } & 1,225 \\
\hline \text { IOU from employee } & 565 \\
\hline \text { Money market account } & 15,000 \\
\hline \text { Postage stamps } & 375 \\
\hline \text { Savings account } & 22,000 \\
\hline \text { Undeposited customer checks } & 1,750 \\
\hline
\end{array}\]
Q3) The IFRS definition of cash equivalents is very similar to that used by __________.
Q4) What rational is used in order to determine if an amount is "cash"?
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Chapter 7: Receivables and Investments
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Sample Questions
Q1) The alternate term for a credit card draft is an invoice.
A)True
B)False
Q2) A company is referred to as a parent if it owns
A)33% of the debt securities of a second company.
B)100% of the debt securities of a second company.
C)15% of the equity securities of a second company.
D)None of these are correct.
Q3) The date that a promissory note is due is the __________.
Q4) On November 2,2017,Quaint General Store concluded that a customer's $400 account receivable was uncollectible and that the account should be written off.What effect will this write-off have on Quaint's 2017 net income and balance sheet totals assuming the allowance method is used to account for bad debts?
A)Decrease in net income;decrease in total assets
B)Increase in net income;no effect on total assets
C)No effect on net income;decrease in total assets
D)No effect on net income;no effect on total assets
Q5) The amount of money received,or the fair value of the products or services received by the maker when a promissory note is issued,is called the __________.
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Chapter 8: Operating Assets: Property, Plant, and Equipment, and Intangibles
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Sample Questions
Q1) __________ is an account that can only exist if one company purchases another business and the cost exceeds the fair market values of the identifiable net assets at the time acquired.
Q2) Foxrun,Inc.purchased a truck at the beginning of 2017 for $32,500.Foxrun decided to depreciate the truck over an eight-year period using the straight-line method,and estimated its residual value to be $4,500.At the beginning of 2018,Foxrun determined that a five-year life should have been used to depreciate the truck.The estimated residual value was not affected by the revision in the asset's life.
A. Determine the amounts to be recorded as depreciation expense for 2017 and 2018
B. What factors may have influenced Foxnun to change the useful life?
Q3) Eagle's Nest sold equipment for $4,000 cash.This resulted in a $1,500 loss.What is the impact of this sale on the working capital?
A)Reduces working capital
B)Increases working capital
C)Has no effect on working capital
D)The increases offset the decrease.
Q4) Distinguish between tangible and intangible operating assets.
Page 10
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Chapter 9: Current Liabilities, Contingencies, and the Time Value of Money
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Sample Questions
Q1) What is the purpose of the current ratio? How does the quick ratio differ from the current ratio?
Q2) For a given contingent liability,a company has the choice of either recording it on the balance sheet or disclosing it in the notes.
A)True B)False
Q3) On November 1,Greenfield Corporation borrowed $55,000 from a bank and signed a 12%,90-day note payable in the amount of $55,000.If you assume 360 days in year,the November 30 adjustment will
A)increase interest expense by $550 and decrease cash by $550.
B)increase discount on notes payable by $1,100 and increase interest payable by $1,100.
C)increase interest expense by $550 and increase interest payable by $550.
D)increase interest expense by $550 and increase notes payable by $550.
Q4) Using the indirect method,an increase in accounts payable would be shown as a(n)__________ in the __________ Activities section of the statement of cash flows.
Q5) When a bank deducts the interest on a note in advance,the note has been
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Chapter 10: Long-Term Liabilities
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Sample Questions
Q1) Connor Martin Corporation's balance sheet showed the following amounts: Current Liabilities,$10,000;Bonds Payable,$3,000;Lease Obligations,$4,000;and Notes Payable,$600.Total stockholders' equity was $12,000.The debt-to-equity ratio is
A)0.83.
B)1.47.
C)1.42.
D)0.63.
Q2) Carrying value is computed annually when a bond is issued for other than its face value.For a bond issued at a premium,how will this component change as the bond approaches maturity?
A)Decrease
B)Increase
C)Remain constant
D)Not enough information given to decide
Q3) For a capital lease,the lessee must record both an asset and a liability.The amount of the asset is subsequently reduced by the process of __________.
Q4) __________ is either the bond's face value minus any unamortized discount or plus any unamortized premium.
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Page 12
Chapter 11: Stockholders Equity
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Sample Questions
Q1) Zelienople Co.reported the following information at December 31,2017: The number of shares of common stock issued is \(\begin{array}{lr}
\text { Preferred stock, } \$ 10 \text { par, } 5,000 \text { shares authorized, cumulative } & \$ 50,000 \\
\text { Common stock, } \$ 1 \text { par, } 500,000 \text { shares authorized } & 200,000 \\
\text { Additional paid-in capital common } & 25,000 \\
\text { Retained earnings } & \underline{ 75,000 }\\
\text { Total contributed capital and retained earnings } & \$ 350,000 \\
\text { Less: Treasury stock (400 shares at cost) } & \underline{ 5,000 }\\
\text { Total stockholders' equity } & \underline{ \$ 345,000} \end{array}\)
A)5,000.
B)200,000.
C)500,000.
D)550,000.
Q2) Shares sold or distributed to stockholder are __________.
Q3) Why is stockholders' equity viewed as a residual amount?
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Chapter 12: The Statement of Cash Flows
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Sample Questions
Q1) The following items were reported on the balance sheets and income statement for Carlton Co.: \(\begin{array}{lr}
\text { Accounts receivable, December } 31,2017 & \$ 185,000 \\
\text { Accounts receivable, December } 31,2018 & 178,000 \\
\text { Sales-2018 } & 850,000 \end{array}\)What amount would be reported in the Operating Activities section of the statement of cash flows for collections from customers under the direct method assuming that all sales are on credit?
A)$850,000
B)$857,000
C)$843,000
D)Cannot be determined without further information
Q2) Under the __________,a company reports its major classes of gross cash receipts and cash payments in the Operating Activities section of the statement of cash flows.
Q3) The financial statement that summarizes the operating,investing,and financing activities of a business over a period of time is the __________.
Q4) __________ is a noncash expense related to plant assets.
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Page 14
Chapter 13: Financial Statement Analysis
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Sample Questions
Q1) Why is liquidity important for businesses?
Q2) Assume the current ratio for Allegheny Supply Co.is 2 to 1.If the company purchased supplies on credit,the effect of this transaction is to
A)increase the current ratio.
B)decrease the current ratio.
C)have no effect on the current ratio.
D)decrease cash.
Q3) The FASB requires a separate note in the financial statements to show the effects of inflation so that investors are able to compare statements more accurately.
A)True
B)False
Q4) The concept of leverage refers to the practice of using borrowed funds and amounts received from preferred stockholders in an attempt to earn an overall return that is higher than the cost of these funds.
A)True
B)False
Q5) What two difficulties may be that are encountered when two companies are compared?
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Chapter 14: International Financial Reporting Standards
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Sample Questions
Q1) Which of the following inventory costing methods is prohibited under IFRS?
A)FIFO
B)Weighted average
C)LIFO
D)Perpetual
Q2) The benefits of a single set of accounting standards used around the world would include all of the following except
A)they would eventually save companies considerable money in accounting fees.
B)they would prevent competitors from acquiring each other.
C)they would allow easier comparisons by analysts and investors.
D)they would facilitate access to foreign capital markets.
Q3) Discuss at least four reasons that accounting standards currently differ between countries.
Q4) Significant differences exist in terms on financial statements around the world.For example,another name for what we know as Contingent Liabilities in the United States is
A)Share Capital.
B)Capital Reserves.
C)Provisions for Other Risks.
D)Deferred Income.
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