Accounting for Decision Making Solved
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Course Introduction
Accounting for Decision Making explores the role of accounting information in managerial decision-making processes. The course introduces key concepts such as cost behavior, budgeting, performance evaluation, and financial statement analysis, emphasizing how accounting data can be used to support planning, control, and strategic decisions. Through case studies and practical exercises, students learn to interpret and apply financial information for short- and long-term managerial choices across various business environments. The course is designed to equip students with the analytical skills necessary to make informed, evidence-based decisions that drive organizational success.
Recommended Textbook
Financial Accounting 15th Edition by Carl Warren
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Page 2
Chapter 1: Introduction to Accounting and Business
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Sample Questions
Q1) Land originally purchased for $30,000 is sold for $62,000 in cash.What is the effect of the sale on the accounting equation?
A)assets increase by $62,000; owner's equity increases by $62,000
B)assets increase by $32,000; owner's equity increases by $32,000
C)assets increase by $62,000; liabilities decrease by $30,000; owner's equity increases by $32,000
D)assets increase by $30,000; no change in liabilities; owner's equity increases by $62,000
Answer: B
Q2) The monetary value charged to customers for the performance of services sold is called a (n)
A)asset
B)net income
C)capital
D)revenue
Answer: D
Q3) Determine the total assets at the end of the current year for Scott Industries.
Answer: 11ea8d32_2886_1b09_b445_61d4ae52ab44_TB6239_00
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Chapter 2: Analyzing Transactions
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Sample Questions
Q1) When a transposition error is made on the trial balance,the difference between the debit and credit totals on the trial balance will be
A)zero
B)twice the amount of the transposition
C)one-half the amount of the transposition
D)divisible by 9
Answer: D
Q2) Which of the following entries records the collection of cash from cash customers?
A)Fees Earned, debit; Cash, credit
B)Fees Earned, debit; Accounts Receivable, credit
C)Cash, debit; Fees Earned, credit
D)Accounts Receivable, debit; Fees Earned, credit
Answer: C
Q3) Journalizing is the process of entering amounts in the ledger.
A)True
B)False
Answer: False
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Chapter 3: The Adjusting Process
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Sample Questions
Q1) Prepaid expenses have
A)not yet been recorded as expenses but have been paid
B)been recorded as expenses and paid
C)been incurred and paid
D)not yet been recorded as expenses
Answer: D
Q2) The system of accounting where revenues are recorded when they are earned and expenses are recorded when they are incurred is called the cash basis of accounting.
A)True
B)False
Answer: False
Q3) The matching principle
A)addresses the relationship between the journal and the balance sheet
B)determines whether the normal balance of an account is a debit or credit
C)requires that the dollar amount of debits equal the dollar amount of credits on a trial balance
D)states that the revenues and related expenses should be reported in the same period
Answer: D
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Chapter 4: Completing the Accounting Cycle
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Sample Questions
Q1) The end-of-period spreadsheet
A)is an integral part of the accounting cycle
B)eliminates the need to rewrite the financial statements
C)is a working paper that is required
D)is used to summarize account balances and adjustments for the financial statements
Q2) On the income statement,miscellaneous expenses are usually presented as the last item without regard to the dollar amount.
A)True
B)False
Q3) The difference between a classified balance sheet and one that is not classified is that the classified one has subheadings.
A)True
B)False
Q4) All income statement accounts will be closed at the end of the period.
A)True
B)False
Q5) List and describe the purpose of the four closing entries.
Q6) Describe a classified balance sheet.
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Chapter 5: Accounting Systems
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Sample Questions
Q1) Record purchase on account from vendor
A)Purchases journal
B)Revenue journal
C)Cash receipts journal
D)Cash payments journal
E)Accounts receivable subsidiary ledger
F)Accounts payable subsidiary ledger
G)General journal
Q2) Which of the following journals is called an all-purpose journal?
A)general journal
B)purchases journal
C)revenue journal
D)accounting journal
Q3) Which of the following transactions is recorded in the purchases journal?
A)purchase of store supplies on account
B)return of damaged office equipment
C)purchase of store supplies for cash
D)purchase of office equipment for cash
Q4) Discuss the process of posting from a revenue journal to the subsidiary ledger and to the general ledger.
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Chapter 6: Accounting for Merchandising Businesses
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Sample Questions
Q1) Discount taken by the buyer for early payment of invoice.
A)Freight
B)Delivery Expense
C)Merchandise Inventory
D)Sales discount
E)Purchases Returns and Allowances
F)Debit memo
G)Purchase discount
H)Trade discount
Q2) Gross profit is equal to
A)sales plus cost of merchandise sold
B)sales plus selling expenses
C)sales less selling expenses
D)sales less cost of merchandise sold
Q3) Using a perpetual inventory system,the entry to record the return of merchandise purchased on account includes a
A)debit to Cost of Merchandise Sold
B)credit to Accounts Payable
C)credit to Merchandise Inventory
D)credit to Sales
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Chapter 7: Inventories
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Sample Questions
Q1) If ending inventory for the year is understated,net income for the year is overstated.
A)True
B)False
Q2) Produces the highest gross profit when costs are decreasing
A)FIFO
B)LIFO
C)Weighted average
Q3) During periods of increasing costs,the use of the FIFO method of costing inventory will result in a greater amount of net income than would result from the use of the LIFO cost method.
A)True
B)False
Q4) The lower-of-cost-or-market method of determining the value of ending inventory can be applied on an item-by-item basis,by major classification of inventory,or by the total inventory.
A)True
B)False
Q5) List three different security measures taken to safeguard inventory.
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Chapter 8: Internal Control and Cash
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Sample Questions
Q1) A business that requires all cash payments be made by check cannot use a petty cash system.
A)True B)False
Q2) A voucher system is an example of an internal control procedure over cash payments.
A)True B)False
Q3) A check outstanding for two consecutive months will appear only on the first month's bank reconciliation.
A)True
B)False
Q4) In establishing a petty cash fund,a check is written for the amount of the fund and is recorded as a debit to Accounts Payable and a credit to Petty Cash.
A)True B)False
Q5) The bank reconciles its statement to the company's records.
A)True B)False
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Chapter 9: Receivables
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Sample Questions
Q1) At the end of the current year,Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $2,500,000.An analysis of receivables estimates uncollectible receivables as $25,000.Determine the net realizable value of accounts receivable after adjustment. (Hint: Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance for Doubtful Accounts.)
A)$550,000
B)$544,500
C)$525,000
D)$575,000
Q2) At the end of a period (before adjustment),Allowance for Doubtful Accounts has a credit balance of $250.The credit sales for the period total $500,000.If the company estimates uncollectible accounts expense at 1% of credit sales,the amount of bad debt expense to be recorded in an adjusting entry is $4,750.
A)True
B)False
Q3) List at least three indicators that a receivable may be uncollectible.
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11
Chapter 10: Long-Term Assets: Fixed and Intangible
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Sample Questions
Q1) When exchanging equipment,if the trade-in allowance is greater than the book value a loss results.
A)True
B)False
Q2) The proper journal entry to purchase a computer costing $975 on account to be utilized within the business would be
A)Office Supplies 975Accounts Payable 975
B)Office Equipment 975Accounts Payable 975
C)Office Supplies 975Accounts Receivable 975
D)Office Equipment 975Accounts Receivable 975
Q3) Long-lived assets held for sale are classified as fixed assets.
A)True
B)False
Q4) When a company discards machinery that is fully depreciated,this transaction would be recorded as a
A)debit to Accumulated Depreciation and credit to Machinery
B)debit to Machinery and a credit to Accumulated Depreciation
C)debit to Cash and a credit to Accumulated Depreciation
D)debit to Depreciation Expense and a credit Accumulated Depreciation
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Chapter 11: Current Liabilities and Payroll
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Sample Questions
Q1) Which of the following forms is typically given to employees at the end of the calendar year so that employees can file their individual income tax forms?
A)Employee's Withholding Allowance Certificate (Form W-4)
B)Wage and Tax Statement (Form W-2)
C)Employer's Quarterly Federal Tax Return (Form 941)
D)401k plans
Q2) The journal entry a company uses to record partially funded pension rights for its salaried employees at the end of the year is
A)debit Salaries Expense; credit Cash
B)debit Pension Expense; credit Unfunded Pension Liability
C)debit Pension Expense; credit Unfunded Pension Liability and Cash
D)debit Pension Expense; credit Cash
Q3) The proceeds from discounting a $20,000,60-day note payable at 6% is $20,200.
A)True
B)False
Q4) Federal income taxes withheld increase the employer's payroll tax expense.
A)True
B)False
Q5) Kelly Howard has the following transactions.Prepare the journal entries.
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Chapter 12: Accounting for Partnerships and Limited Liability Companies
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Sample Questions
Q1) Revenue per employee may be used to measure partnership (LLC)efficiency.
A)True
B)False
Q2) Immediately prior to the admission of Abbott,the Smith-Jones Partnership assets had been adjusted to current market prices and the capital balances of Smith and Jones were $40,000 and $60,000,respectively.If the parties agree that the business is worth $120,000,what is the amount of bonus that should be recognized in the accounts at the admission of Abbott?
A)$60,000
B)$80,000
C)$40,000
D)$20,000
Q3) When a limited liability company is formed,
A)the partnership activities are limited
B)all partners have limited liability
C)some of the partners have limited liability
D)none of the partners has limited liability
Q4) What is a partnership? List three advantages and three disadvantages of the partnership form of business organization.
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Chapter 13: Corporations: Organization, stock Transactions, and Dividends
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Sample Questions
Q1) A class of stock having first rights to dividends of a corporation
A)Authorized shares
B)Issued shares
C)Outstanding shares
D)Par value
E)Common stock
F)Preferred stock
G)Paid-In Capital in Excess of Par
H)Transfer agent
Q2) The par value of common stock must always be equal to its market value on the date the stock is issued.
A)True
B)False
Q3) Cash dividends become a liability to a corporation on the date of record.
A)True
B)False
Q4) If the dividend amount of preferred stock,$50 par value,is quoted as 8%,then the dividends per share would be $4.
A)True
B)False
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Chapter 14: Long-Term Liabilities: Bonds and Notes
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Sample Questions
Q1) Hayden Corporation issues 1,000,10-year,8%,$2,000 bonds dated January 1 at 92.The journal entry to record the issuance will show a
A)credit to Discount on Bonds Payable for $160,000
B)debit to Cash for $2,000,000
C)credit to Bonds Payable for $2,000,000
D)credit to Cash for $1,840,000
Q2) Bonds payable should be reported on the balance sheet at face value plus or minus any unamortized premium or discount.
A)True
B)False
Q3) When the market rate of interest on bonds is higher than the contract rate,the bonds will sell at
A)a premium
B)their face value
C)their maturity value
D)a discount
Q4) The prices of bonds are quoted as a percentage of the bonds' market value.
A)True
B)False
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Chapter 15: Investments and Fair Value Accounting
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Sample Questions
Q1) The company whose stock is purchased by another entity
A)Debt securities
B)Equity securities
C)Investor
D)Investee
E)Cost method
F)Trading securities
G)Available-for-sale securities
H)Held-to-maturity securities
I)Equity method
J)Business combination
Q2) Accounting for the sale of stock is the same for both the cost and the equity methods of accounting for investments.
A)True
B)False
Q3) Temporary investments such as in trading securities are
A)recorded at cost but reported at fair market value
B)recorded at cost and reported at cost
C)recorded at cost but reported at lower of cost or fair market value
D)recorded at fair market value and reported at fair market value
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Chapter 16: Statement of Cash Flows
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Sample Questions
Q1) Net income for the year was $29,500.Accounts receivable increased $2,500,and accounts payable increased $5,400.There were no other changes in noncash current assets and liabilities.Under the indirect method,the cash flow from operations is $32,400.
A)True
B)False
Q2) A major disadvantage of the indirect method of reporting cash flows from operating activities is that the difference between the net amount of cash flows from operating activities and net income is emphasized.
A)True
B)False
Q3) Net income for the year was $45,500.Accounts receivable increased by $5,500,and accounts payable increased by $11,200.Under the indirect method,the cash flow from operations is
A)$51,200
B)$45,500
C)$62,200
D)$28,800
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Chapter 17: Financial Statement Analysis
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Sample Questions
Q1) The current ratio is
A)used to evaluate a company's liquidity and short-term debt-paying ability
B)a solvency measure that indicates the margin of safety for bondholders
C)calculated by dividing current liabilities by current assets
D)calculated by subtracting current liabilities from current assets
Q2) The dividend yield is equal to the dividends per share divided by the par value per share of common stock.
A)True
B)False
Q3) Which of the following is not a characteristic evaluated in ratio analysis?
A)liquidity
B)profitability
C)solvency
D)marketability
Q4) What is a major advantage of using percentages rather than dollar changes in doing horizontal and vertical analyses?
Q5) Solvency analysis focuses on the ability of a business to pay its long-term liabilities.
A)True
B)False
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