Accounting for Decision Making Practice Exam
Course Introduction
Accounting for Decision Making equips students with the fundamental concepts and tools of accounting essential for informed managerial decision-making. The course explores how financial and managerial accounting information is collected, interpreted, and utilized to support planning, control, and strategic choices within organizations. Emphasis is placed on analyzing and interpreting financial statements, budgeting, cost-volume-profit analysis, and relevant costs for decision-making scenarios. By connecting accounting data to real-world business decisions, this course empowers students to evaluate financial performance, optimize resource allocation, and contribute to effective organizational strategies.
Recommended Textbook
Corporate Financial Accounting 12th Edition by Carl
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15 Chapters
2628 Verified Questions
2628 Flashcards
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Page 2
S. Warren
Chapter 1: Introduction to Accounting and Business
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Sample Questions
Q1) Which of the following is not an asset?
A)investment
B)cash
C)inventory
D)stockholder's equity
Answer: D
Q2) Managerial accountants would be responsible for providing which of the following?
A)Tax reports to government agencies.
B)Profit reports to owners and management.
C)Expansion of a product line report to management.
D)Consumer reports to customers.
Answer: C
Q3) The assets section of the balance sheet normally presents assets in
A)alphabetical order
B)order of largest to smallest dollar amounts
C)in the order that they will be converted into cash or used in operations
D)any order
Answer: C
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3
Chapter 2: Analyzing Transactions
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Sample Questions
Q1) The trial balance is out of balance and the accountant suspects that a transposition or slide error has occurred.What will the accountant do to find the error?
A)Determine the amount of the error and look for that amount on the trial balance.
B)Determine the amount of the error and divide by two,then look for that amount on the trial balance.
C)Determine the amount of the error and refer to the journal entries for that amount.
D)Determine the amount of the error and divide by nine.If the result is evenly divided,then this type of error is likely.
Answer: D
Q2) In which order are the accounts listed in the chart of accounts?
A)assets,expenses,liabilities,stockholders' equity,revenues
B)stockholders' equity,assets,liabilities,revenues,expenses
C)assets,liabilities,stockholders' equity,revenues,expenses
D)assets,liabilities,revenues,expenses,stockholders' equity
Answer: C
Q3) Prepare a journal entry on October 12 for the fees earned on account,$14,600.
Answer: 11ea906a_d1c4_575a_aec7_59d824a6a683_TB2051_00
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Chapter 3: The Adjusting Process
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Sample Questions
Q1) If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account,which of the following describes the effect of the debit portion of the entry?
A)increases the balance of a contra asset account
B)increases the balance of an asset account
C)decreases the balance of a stockholders' equity account
D)increases the balance of an expense account
Answer: D
Q2) Which of the following is not true regarding depreciation?
A)Depreciation allocates the cost of a fixed asset over its estimated life.
B)Depreciation expense reflects the decrease in market value each year.
C)Depreciation is an allocation not a valuation method.
D)Depreciation expense does not measure changes in market value.
Answer: B
Q3) Accumulated Depreciation accounts are liability accounts.
A)True
B)False
Answer: False
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5
Chapter 4: Completing the Accounting Cycle
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192 Flashcards
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Sample Questions
Q1) Unearned Fees appear on the
A)balance sheet in the current assets section
B)balance sheet as a current liability
C)balance sheet in the stockholders' equity section
D)income statement as revenue
Q2) On January 1,2014,the retained earnings account of Crystal Pool Service Company had a balance of $252,000.During the year,the company issued an additional $20,000 of capital stock and paid $52,400 in dividends.For the year ended December 31,2014,Crystal Pool Service Company reported a net income of $73,200.Prepare a retained earnings statement for the year ended December 31,2014.
Q3) Any twelve-month accounting period adopted by a company is known as its fiscal year.
A)True B)False
Q4) Since the adjustments are entered on the work sheet,it is necessary to record them in the journal or post them to the ledger. A)True B)False
Q5) Explain how net income or loss is determined by using the work sheet.
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Chapter 5: Accounting for Merchandising Businesses
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217 Flashcards
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Sample Questions
Q1) Purchases of merchandise are typically credited to the merchandise inventory account under the perpetual inventory system.
A)True B)False
Q2) Under the perpetual inventory system,a company purchases merchandise on terms 2/10,n/30.If payment is made within 10 days of the purchase,the entry to record the payment will include a credit to Cash and a credit to Purchase Discounts.
A)True
B)False
Q3) When goods are shipped FOB destination and the seller pays the freight charges,the buyer
A)journalizes a reduction for the cost of the merchandise.
B)journalizes a reimbursement to the seller.
C)does not take a discount.
D)makes no journal entry for the freight.
Q4) Freight in is the amount paid by the company to deliver merchandise sold to a customer.
A)True
B)False
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Chapter 6: Inventories
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Sample Questions
Q1) The three inventory costing methods will normally each yield different amounts of net income.
A)True
B)False
Q2) When merchandise inventory is shown on the balance sheet,both the method of determining the cost of the inventory and the method of valuing the inventory should be shown.
A)True
B)False
Q3) The lower-of-cost-or-market method of determining the value of ending inventory can be applied on an item by item,by major classification of inventory,or by the total inventory.
A)True
B)False
Q4) The two most widely used methods for determining the cost of inventory are
A)FIFO and LIFO
B)FIFO and average
C)LIFO and average
D)gross profit and average
Q5) List three different security measures taken by stores to safeguard inventory.
Page 8
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Chapter 7: Sarbanes-Oxley, internal Control, and Cash
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175 Flashcards
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Sample Questions
Q1) On August 3rd,Sonar Sales decides to establish a $275.00 Petty Cash Account to relieve the burden on Accounting.
Q2) During a bank reconciliation process,
A)Outstanding checks and deposits in transit are added to the bank statement balance.
B)Outstanding checks are subtracted and deposits in transit are added to the bank statement balance.
C)Outstanding checks and deposits in transit are subtracted from the bank statement balance.
D)Outstanding checks are added and deposits in transit are subtracted from the bank statement balance.
Q3) List and define each of the five elements of internal control.
Q4) The sum of the money on hand and petty cash receipts in a petty cash fund will always be equal to the balance in the Petty Cash account.
A)True
B)False
Q5) Distinguish preventive controls from detective controls and give examples of each as they relate to cash.
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Chapter 8: Receivables
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Sample Questions
Q1) Dalton Company uses the allowance method to account for uncollectible receivables.Dalton has determined that the Irish Company account is uncollectible.To write-off this account,Dalton should debit
A)Bad Debt Expense and credit Accounts Receivable
B)Bad Debt Expense and credit Allowance for Doubtful Accounts
C)Allowance for Doubtful Accounts and credit Accounts Receivable
D)Accounts receivable and credit Allowance for Doubtful Accounts
Q2) The number of days' sales in receivables
A)is an estimate of the length of time the receivables have been outstanding
B)measures the number of times the receivables turn over each year
C)is Net Credit Sales divided by Average Receivables
D)is not meaningful and therefore is not used
Q3) The accounts receivables turnover ratio is computed by dividing total gross sales by the average net receivables during the year.
A)True
B)False
Q4) Other than accounts receivable and notes receivable,name other receivables that might be included in the general ledger.
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Page 10
Chapter 9: Fixed Assets and Intangible Assets
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Sample Questions
Q1) The method of determining depreciation that yields successive reductions in the periodic depreciation charge over the estimated life of the asset is
A)units-of-production
B)declining-balance
C)straight-line
D)time-valuation
Q2) A capital expenditure results in a debit to
A)an expense account
B)a capital account
C)a liability account
D)an asset account
Q3) As a company records depreciation expense for a period of time a corresponding cash inflow from investing activities is reported on the statement of cash flows.
A)True
B)False
Q4) The double-declining-balance method is an accelerated depreciation method.
A)True
B)False
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11
Chapter 10: Current Liabilities and Payroll
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Sample Questions
Q1) Which of the following are included in the employer's payroll taxes?
A)SUTA taxes
B)FUTA taxes
C)FICA taxes
D)all of the above
Q2) Assuming a 360-day year,when a $40,000,90-day,9% interest-bearing note payable matures,total payment will amount to:
A)$40,900
B)$43,600
C)$900
D)$3,600
Q3) Amounts withheld from each employee for Social Security and Medicare varies by state.
A)True
B)False
Q4) In order to be a recorded contingent liability,the liability must be possible and easily estimated.
A)True
B)False
Q5) List five internal controls that relate directly to payroll.
Page 12
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Chapter 11: Corporations: Organization, stock Transactions, and Dividends
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Sample Questions
Q1) Which of the following statements concerning taxation is accurate?
A)Corporations pay federal income taxes but not state income taxes.
B)Corporations pay federal and state income taxes.
C)Only the owners must pay taxes on corporate income.
D)Corporations pay income taxes but their owners do not.
Q2) The par value per share of common stock represents
A)the minimum selling price of the stock established by the articles of incorporation.
B)the minimum amount the stockholder will receive when the corporation is liquidated
C)an arbitrary amount established in the articles of incorporation
D)the amount of dividends per share to be received each year
Q3) Preferred stockholders must receive their current year dividends before the common stockholders can receive any dividends.
A)True
B)False
Q4) The par value of stock is an arbitrary per share amount defined in many states as legal capital.
A)True
B)False
Page 13
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Chapter 12: Long-Term Liabilities: Bonds and Notes
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Sample Questions
Q1) The interest portion of an installment note payment is computed by multiplying the interest rate by the carrying amount of the note at the end of the period.
A)True
B)False
Q2) The present value of an annuity is the sum of the present values of each cash flow.
A)True
B)False
Q3) If a company borrows money from a bank as an installment note,the interest portion of each annual payment will:
A)equal the interest rate on the note times the carrying amount of the note at the beginning of the period.
B)remain constant over the term of the note.
C)equal the interest rate on the note times the face amount.
D)increase over the term of the note.
Q4) (a) Prepare the journal entry to issue $100,000 bonds which sold for $94,000. (b) Prepare the journal entry to issue $100,000 bonds which sold for $104,000
Q5) (a) Prepare the journal entry to issue $500,000 bonds which sold for $490,000
(b) Prepare the journal entry to issue $500.000 bonds which sold for $515,000
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Chapter 13: Investments and Fair Value Accounting
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Sample Questions
Q1) A company that has 25,000 shares of $5.00 par value common stock issued and outstanding paid a dividend of $0.40 per share.The market value of the stock is $16 per share.The company's dividend yield is:
A)2.5%
B)400%
C)16%
D)40%
Q2) In general,consolidated financial statements should be prepared
A)when a corporation owns more than 20% and less than 40% of the common stock of another company
B)when a corporation owns more than 50% of the common stock of another company
C)only when a corporation owns 100% of the common stock of another company
D)whenever the market value of the stock investment is significantly lower than its cost
Q3) Any difference between the fair market values of the securities and their cost is a realized gain or loss.
A)True
B)False
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15
Chapter 14: Statement of Cash Flows
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Sample Questions
Q1) To determine cash payments for operating expenses for the cash flow statement using the direct method,a decrease in accrued expenses is added to operating expenses other than depreciation.
A)True
B)False
Q2) Cash dividends of $50,000 were declared during the year.Cash dividends payable were $10,000 and $5,000 at the beginning and end of the year,respectively.The amount of cash for the payment of dividends during the year is
A)$55,000
B)$50,000
C)$65,000
D)$60,000
Q3) In calculating cash flows from operating activities using the indirect method,a gain on the sale of equipment is
A)added to net income.
B)deducted from net income.
C)ignored because it does not affect cash.
D)reported supplementally as a non-cash investing and financing activity
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16
Chapter 15: Financial Statement Analysis
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Sample Questions
Q1) All of the following are typically included in the Management's Discussion and Analysis in annual reports except:
A)explanations of any significant changes between the current and prior years' financial statements.
B)management's assessment of liquidity.
C)journal entries.
D)off-balance-sheet arrangements
Q2) A company can use comparisons of its financial data to the data of other companies and industry values to evaluate its position.
A)True
B)False
Q3) Which of the following measures a company's ability to pay its current liabilities?
A)earnings per share
B)inventory turnover
C)current ratio
D)number of times interest charges earned
Q4) Define solvency and profitability.How are they alike?
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