Accounting for Decision Making Test Bank
Course Introduction
Accounting for Decision Making is designed to equip students with the essential accounting knowledge and analytical skills necessary to support effective business decision making. The course explores the role of accounting information in internal planning, control, and performance evaluation, focusing on the interpretation and application of financial and managerial accounting data. Through real-world case studies, students learn how to assess costs, analyze financial statements, develop budgets, and use accounting tools to inform strategic and operational choices within organizations. This course emphasizes the importance of ethical considerations and critical thinking in using accounting information for sound managerial decisions.
Recommended Textbook
Financial Accounting Fundamentals 6th Edition by
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16 Chapters
4128 Verified Questions
4128 Flashcards
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Page 2
John J Wild
Chapter 1: Accounting in Business
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331 Verified Questions
331 Flashcards
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Sample Questions
Q1) Every business transaction leaves the accounting equation in balance.
A)True
B)False Answer: True
Q2) Identifying the proper ethical path is usually easy.
A)True
B)False Answer: False
Q3) The statement of cash flows reports all of the following except:
A) Cash flows from operating activities.
B) Cash flows from investing activities.
C) Cash flows from financing activities.
D) The net increase or decrease in assets for the period reported.
E) The net increase or decrease in cash for the period reported.
Answer: D
Q4) The three common forms of business ownership include sole proprietorship,partnership,and corporation.
A)True
B)False Answer: True
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Chapter 2: Analyzing for Business Transactions
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292 Verified Questions
292 Flashcards
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Sample Questions
Q1) In a seller's accounting records,________ are promises of payment waiting to be received from customers.
Answer: Accounts receivable
Q2) ________ is the process of transferring journal entry information from the journal to the ledger.
Answer: Posting
Q3) A record containing all the separate accounts for a company as well as all of their balances is called the________
Answer: ledger
Q4) Credits always increase account balances.
A)True
B)False
Answer: False
Q5) The four categories of equity accounts are ________,________,________,and ________.
Answer: Common Stock; Dividends; revenues; expenses
Q6) Dividends paid to stockholders are a business expense.
A)True
B)False
Answer: False
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Chapter 3: Adjusting Accounts for Financial Statements
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445 Verified Questions
445 Flashcards
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Sample Questions
Q1) The accounting system that uses the adjusting process to recognize revenues when earned and expenses when incurred.
A)Accrued revenues
B)Expense recognition (matching) principle
C)Cash basis accounting
D)Depreciation
E)Accrual basis accounting
F)Interim financial statements
G)Straight-line depreciation
H)Time period assumption
I)Fiscal year
Answer: E
Q2) It is acceptable to record cash received in advance of providing products or services to revenue accounts if an adjusting entry is made at the end of the period to bring the liability account balance to the correct unearned amount.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Accounting for Merchandising Operations
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Sample Questions
Q1) Quick assets include cash and cash equivalents,inventory,and current receivables.
A)True
B)False
Q2) Expenses to promote sales by displaying and advertising merchandise,make sales,and deliver goods to customers are known as:
A) General and administrative expenses.
B) Cost of goods sold.
C) Selling expenses.
D) Purchasing expenses.
E) Non-operating activities.
Q3) ________ can benefit a seller by decreasing the delay in receiving cash and reducing future collection efforts.
Q4) A company had sales of $350,000 and cost of goods sold of $200,000.Its gross profit equals $150,000.
A)True B)False
Q5) Describe the difference between the periodic and perpetual inventory accounting systems.
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Chapter 5: Inventories and Cost of Sales
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Sample Questions
Q1) The consistency concept allows a company to use different accounting methods from period to period in order to maximize profits.
A)True
B)False
Q2) Goods in transit are included in a purchaser's inventory:
A) At any time during transit.
B) When the purchaser is responsible for paying freight charges.
C) When the supplier is responsible for freight charges.
D) If the goods are shipped FOB destination.
E) After the half-way point between the buyer and seller.
Q3) What advantages does a perpetual inventory system have over periodic inventory system?
Q4) Identify the items that are included in merchandise inventory.(In your answer address the special situations of goods in transit,consigned goods,and damaged goods.)
Q5) One application of internal control when taking a physical count of inventory is the use of pre-numbered inventory tickets.
A)True
B)False
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Chapter 6: Cash, fraud, and Internal Controls
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Sample Questions
Q1) Collusion is a form of fraud where individuals collaborate to thwart separation of duties.
A)True
B)False
Q2) The payee is the person who signs a check,authorizing its payment.
A)True
B)False
Q3) The journal entry to record the reimbursement of the fund on September 30 includes a:
A) Debit to Office Supplies for $73.
B) Credit to Merchandise Inventory for $137.
C) Credit to Cash for $250.
D) Debit Petty Cash for $232.
E) Credit to Cash for $18.
Q4) On a bank reconciliation,an unrecorded debit memorandum for printing checks is:
A) Noted as a memorandum only.
B) Added to the book balance of cash.
C) Deducted from the book balance of cash.
D) Added to the bank balance of cash.
E) Deducted from the bank balance of cash.
Page 8
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Chapter 7: Accounting for Receivables
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Sample Questions
Q1) A method of accounting for bad debts that records the loss from an uncollectible account receivable immediately upon determining it is uncollectible.
A)Factoring accounts receivable
B)Allowance method
C)Accounts receivable turnover
D)Principal of a note
E)Materiality constraint
F)Installment accounts receivable
G)Pledging accounts receivable
H)Direct write-off method
I)Dishonoring a note
J)Full disclosure principle
Q2) What are some of the considerations management should make when assessing the accounts receivable turnover ratio?
Q3) The percent of sales method of estimating bad debts focuses more on the realizable value of accounts receivable than on expense recognition.
A)True
B)False
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9
Chapter 8: Accounting for Long-Term Assets
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Sample Questions
Q1) On January 2,2010,a company purchased a delivery truck for $45,000 cash.The truck had an estimated useful life of seven years and an estimated salvage value of $3,000.The straight-line method of depreciation was used.Prepare the journal entries to record depreciation expense and the disposition of the truck on September 1,2014,under each of the following assumptions:
a.The truck and $45,000 cash were given in exchange for a new delivery truck that had a cash price of $60,000.This transaction has commercial substance.
b.The truck and $40,000 cash were exchanged for a new delivery truck that had a cash price of $60,000.This transaction has commercial substance.
Q2) A company purchased a tract of land for its natural resources at a cost of $1,500,000.It expects to mine 2,000,000 tons of ore from this land.The salvage value of the land is expected to be $250,000.The depletion expense per ton of ore is:
A) $0.75.
B) $0.625.
C) $0.875.
D) $6.00.
E) $8.00.
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Chapter 9: Accounting for Current Liabilities
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Sample Questions
Q1) A liability is incurred when income is earned because income tax expense is created by earning income.
A)True
B)False
Q2) Accounts payable
A)Long-term liability
B)Not a liability
C)Current liability
Q3) The difference between the amount borrowed and the amount repaid is referred to as ________.
Q4) A company's has fixed interest expense of $52,000,income taxes expense of $121,000,and net income of $281,000.The company's times interest earned ratio equals:
A) 8.73.
B) 5.40.
C) 7.73.
D) 2.33.
E) 0.11.
Q5) Employer payroll taxes are an added employee ________ beyond the wages and salaries earned by the employees.
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Chapter 10: Accounting for Long-Term Liabilities
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Sample Questions
Q1) On January 1,Parson Freight Company issues 7%,10-year bonds with a par value of $2,000,000.The bonds pay interest semiannually.The market rate of interest is 8% and the bond selling price was $1,864,097.The bond issuance should be recorded as:
A) Debit Cash $2,000,000; credit Bonds Payable $2,000,000.
B) Debit Cash $1,864,097; credit Bonds Payable $1,864,097.
C) Debit Cash $2,000,000; credit Bonds Payable $1,864,097; credit Discount on Bonds Payable $135,903.
D) Debit Cash $1,864,097; debit Discount on Bonds Payable $135,903; credit Bonds Payable $2,000,000.
E) Debit Cash $1,864,097; debit Interest Expense $135,903; credit Bonds Payable $2,000,000.
Q2) The factor for the present value of an annuity at 8% for 10 years is 6.7101.This implies that an annuity of ten $15,000 payments at 8% yields a present value of $2,235. A)True B)False
Q3) What are methods that a company may use to retire its bonds?
Q4) The ________ ratio is used to assess the risk of a company's financing structure. To view all questions and flashcards with answers, click on the resource link above.
12
Chapter 11: Corporate Reporting and Analysis
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Sample Questions
Q1) Dividend yield is computed by dividing earnings per share by the market value per share.
A)True
B)False
Q2) The Paid-in Capital,Treasury Stock account can have a zero or credit balance.
A)True
B)False
Q3) Given the following information about a corporation's current year activities,compute the retained earnings for the current year.
\[\begin{array} { | l | r | }
\hline \text { Retained earnings, December 31 (prior year) } & \$ 280,000 \\
\hline \text { Cost of goods sold } & \$ 90,000 \\
\hline \text { Other operating expenses } & \$ 54,000 \\
\hline \text { Cash dividends } & \$ 31,800 \\
\hline \text { Correction of understatement of net income in prior } & \\
\hline \text { period (inventory error) } & \$ 23,000 \\
\hline \text { Stock dividends } & \$ 20,000 \\
\hline \text { Net income } & \$ 36,000 \\
\hline \end{array}\]
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Chapter 12: Reporting Cash Flows
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Sample Questions
Q1) The statement of cash flows explains how transactions and events impact the end-of-period cash balance to produce the end-of-period net income.
A)True
B)False
Q2) A machine with a cost of $130,000,accumulated depreciation of $85,000,and current year depreciation expense of $17,000 is sold for $40,000 cash.The amount that should be reported as a source of cash under cash flows from investing activities is:
A) $45,000.
B) $5,000.
C) $17,000.
D) $28,000.
E) $40,000.
Q3) Cash sales of merchandise. A)O B)N C)I
Q4) What are the five usual steps involved in the preparation of the statement of cash flows?
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Chapter 13: Analysis of Financial Statements
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Sample Questions
Q1) Explain the purpose of financial statement analysis for both external and internal users.
Q2) Which of the following items is typically not included as a separate item after normal revenues and expenses?
A) Write down of inventories.
B) Condemnation of property by the city government.
C) Loss of use of property due to a new and unexpected environmental regulation.
D) Loss due to an unusual and infrequent calamity.
E) Expropriation of property by a foreign government.
Q3) The background on a company,its industry,and its economic setting is usually included in which of the following sections of a financial statement analysis report?
A) Executive summary.
B) Analysis overview.
C) Evidential conclusions.
D) Factor analysis.
E) Inferences.
Q4) Describe ratio analysis including its purpose,application,and interpretation.
Q5) Identify and explain the four building blocks of financial statement analysis.
Q6) Identify and describe three common tools of financial statement analysis.
Page 15
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Chapter 14: Time Value of Money
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Sample Questions
Q1) The number of periods in a present value calculation may only be expressed in years.
A)True
B)False
Q2) Interest may be defined as:
A) Time.
B) A borrower's payment to the owner of an asset for its use.
C) The future value of a present amount.
D) Always a liability.
E) Always an asset.
Q3) In a present value or future value table,the length of one time period may be interpreted as one year,one month,or any other length of time.
A)True
B)False
Q4) Explain the concept of the future value of a single amount.
Q5) A company is setting aside $21,354 today,and wishes to have $30,000 at the end of three years for a down payment on a piece of property.What interest rate must the company earn?
Q6) Explain the concept of the future value of an annuity.
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Chapter 15: Investments
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Sample Questions
Q1) All of the following statements regarding equity securities are true except:
A) Equity securities should be recorded at cost when acquired.
B) Equity securities are valued at fair value if classified as trading securities.
C) Equity securities are valued at fair value if classified as significant influence securities.
D) Equity securities are valued at fair value if classified as available-for-sale securities.
E) Equity securities classified as available-for-sale record the dividend revenue when received.
Q2) A company has an investment in 9% bonds with a par value of $100,000 that pay interest on October 1 and April 1.The amount of interest accrued on December 31 (the company's year-end)would be:
A) $750.
B) $1,500.
C) $2,250.
D) $4,500.
E) $9,000.
Q3) Return on total assets is computed by dividing ________ by ________.
Q4) Explain how to record the sale of trading securities.
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Chapter 16: Partnership Accounting
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Sample Questions
Q1) Fellows and Marshall are partners in an accounting firm and share net income and loss equally.Fellows' beginning partnership capital balance for the current year is $185,000,and Marshall's beginning partnership capital balance for the current year is $260,000.The partnership had net income of $350,000 for the year.Fellows withdrew $80,000 during the year and Marshall withdrew $70,000.What is Marshall's return on equity?
A) 67.3%
B) 60.3%
C) 78.7%
D) 54.3%
E) 56.0%
Q2) At least one partner having a debit balance in his/her capital account at the point of the final distribution of cash is known as a ________.
Q3) The Redtail Partnership agrees to dissolve.The cash balance after selling all assets and paying all liabilities is $56,000.The final capital account balances are: Paulson,$33,000; Gray,$27,000; and Chang, ($4,000).Chang agrees to pay $4,000 cash from personal funds to settle his deficiency.Prepare the journal entries to record the transactions required to dissolve this partnership.
Q4) Partner net income divided by average partner equity equals ________.
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