Accounting for Non-Business Majors Exam Materials

Course Introduction

This course provides a comprehensive introduction to the fundamental principles and practices of accounting for students who are not majoring in business. Emphasizing practical applications, it covers essential topics such as the accounting cycle, financial statement preparation, basic cost concepts, and the interpretation of financial information. Students will gain an understanding of how accounting data aids in personal financial decision-making, organizational management, and evaluating the fiscal health of various entities. No prior knowledge of accounting is required, making this course accessible and valuable for students from diverse academic backgrounds.

Recommended Textbook

Survey of Accounting 5th Edition by Carl S.

Warren

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15 Chapters

1711 Verified Questions

1711 Flashcards

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Chapter 1: The Role of Accounting in Business

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94 Verified Questions

94 Flashcards

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Sample Questions

Q1) What is the basic accounting equation,and which financial statement is prepared from this equation?

Answer: Assets = Liabilities + Stockholders' Equity

The Balance Sheet

Q2) What is the primary objective of most businesses?

A)To maximize profits

B)To pay dividends to stockholders

C)To provide a benefit to society

D)To manufacture a quality product

Answer: A

Q3) Over 90% of the total dollars of business receipts are received by proprietorships.

A)True

B)False Answer: False

Q4) The popularity of the sole proprietorship is due to the ease and low cost of organizing.

A)True

B)False Answer: True

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Chapter 2: Basic Accounting Concepts

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88 Flashcards

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Sample Questions

Q1) Which of the following is NOT considered to be a liability?

A)Note payable

B)Accounts receivable

C)Unearned revenues

D)Accounts payable

Answer: B

Q2) Which of the following is NOT an element of the financial accounting system?

A)A set of rules for determining the recording of economic events

B)A framework for preparing financial statements

C)A set of rules for the stock exchange

D)Controls to determine whether errors occur during recording

Answer: C

Q3) By keeping a running total of the effects of transactions,the accounting equation provides a framework for summarizing the effects of a series of transactions.

A)True

B)False

Answer: True

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Chapter 3: Accrual Accounting Concepts

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110 Flashcards

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Sample Questions

Q1) For a corporation,stockholders' equity consists of

A)assets plus liabilities.

B)current assets plus long-term assets.

C)intangible assets.

D)capital stock and retained earnings.

Answer: D

Q2) Why is a physical count of supplies necessary at the end of the accounting period?

Answer: The beginning balance in supplies will be updated by purchases.To determine the supplies used,you must determine the supplies on hand for the period (beginning balance plus purchases)and then deduct the ending balance on hand to determine the supplies used (expense)for the period.Supplies used are normally not recorded in the account as used;the physical count is used to determine this. If supplies have been used,then the amount before adjustment will be higher than the physical count.The account must be adjusted for the quantity used.

Q3) Accrued expenses are expenses that have been incurred and paid.

A)True

B)False

Answer: False

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Chapter 4: Accounting for Merchandising Businesses

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Sample Questions

Q1) Merchandise subject to terms 1/10,n/30,FOB shipping point,is sold on account to a customer for $20,000.The seller paid transportation costs of $1,000 and issued a credit memorandum for $5,000 prior to payment.What is the amount of the cash discount allowable?

A)$160

B)$150

C)$140

D)$100

Q2) In credit terms of 1/10,n/30,the "10" represents the A)number of days in the discount period.

B)full amount of the invoice.

C)number of days when the entire amount is due.

D)percent of the cash discount.

Q3) The indirect method of preparing the statement of cash flows reconciles net income with net cash flows from operating activities.

A)True

B)False

Q4) The sales discount account is a contra account to Sales. A)True B)False

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Chapter 5: Sarbanes-Oxley,internal Control,and Cash

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109 Verified Questions

109 Flashcards

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Sample Questions

Q1) Which of the following would be deducted from the balance per books on a bank reconciliation?

A)Service charges

B)Outstanding checks

C)Deposits in transit

D)Notes collected by the bank

Q2) The Sarbanes-Oxley Act of 2002 requires companies and their independent accountants to

A)report on the effectiveness of the company's internal controls.

B)report on any fraud and theft detected in the company.

C)report on the state of the economy and likelihood of fraud.

D)report on the financial activities of the company.

Q3) Which of the following would be added to the balance per books on a bank reconciliation?

A)Service charges

B)Outstanding checks

C)Deposits in transit

D)Notes collected by the bank

Q4) What is a special-purpose cash fund? What is its purpose? Give two examples.

Q5) What is the purpose of the Sarbanes-Oxley Act of 2002,and why was it enacted?

Page 7

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Chapter 6: Receivables and Inventories

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100 Flashcards

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Sample Questions

Q1) If merchandise inventory is being valued at cost and the price level is consistently rising,which method of costing will yield the largest gross profit?

A)Average cost

B)LIFO

C)FIFO

D)All methods will generate the same gross profit.

Q2) The due date of a 60-day note dated July 12 is

A)September 11.

B)September 8.

C)September 9.

D)September 10.

Q3) Other than accounts receivable and notes receivable,name other receivables that might be included on the balance sheet.

Q4) When merchandise sold is assumed to be in the order in which the expenditures were made,the inventory method is called

A)first-in,last-out.

B)last-in,first-out.

C)first-in,first-out.

D)average cost.

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Chapter 7: Fixed Assets and Intangible Assets

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Sample Questions

Q1) The straight-line method is appropriate if usage of the asset varies considerably from year to year.

A)True

B)False

Q2) Fixed assets may be shown at book value on the balance sheet.

A)True

B)False

Q3) Long-lived assets that are intangible in nature,used in the operations of the business,and not held for sale in the ordinary course of business are called fixed assets.

A)True

B)False

Q4) A fully depreciated asset must be

A)removed from the books.

B)kept on the books until sold or discarded.

C)disclosed only in the notes to the financial statements.

D)recognized on the income statement as a loss.

Q5) Expenditures made to extend an asset's life are deemed revenue expenditures. A)True

B)False

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Chapter 8: Liabilities and Stockholders Equity

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Sample Questions

Q1) If $1,000,000 of 8% bonds are issued at 102,the amount of cash received from the sale is

A)$1,060,000.

B)$1,020,000.

C)$1,000,000.

D)$1,030,000.

Q2) Significant changes in stockholders' equity are reported in the A)statement of stockholders' equity.

B)income statement.

C)retained earnings statement.

D)statement of cash flows.

Q3) The reduction in the par or stated value of common stock,accompanied by the issuance of a proportionate number of additional shares,is called a stock split.

A)True

B)False

Q4) The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business.

A)True

B)False

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Chapter 9: Financial Statement Analysis

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Sample Questions

Q1) Using vertical analysis of the income statement,a company's net income as a percentage of net sales is 10%;therefore,the operating expenses as a percentage of sales must be 90%.

A)True

B)False

Q2) The ratio of the market price per share of common stock on a specific date to the annual earnings per share is referred to as the price-earnings ratio.

A)True

B)False

Q3) The percentage analysis of increases and decreases in individual items in comparative financial statements is called

A)vertical analysis.

B)solvency analysis.

C)profitability analysis.

D)horizontal analysis.

Q4) The relationship of 120 to 100 can be expressed as 1.2,1.2:1,or 120%.

A)True

B)False

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Chapter 10: Accounting Systems for Manufacturing Businesses

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116 Verified Questions

116 Flashcards

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Sample Questions

Q1) Which of the following products probably would be manufactured using a job order costing system?

A)Number 2 pencils

B)Computer monitors

C)Wedding invitations

D)Paper

Q2) Activity-based costing is a method of accumulating and allocating costs by department.

A)True

B)False

Q3) Which types of inventories does a manufacturing business report on its balance sheet?

A)Finished goods inventory and work in process inventory

B)Direct materials inventory and work in process inventory

C)Direct materials inventory,work in process inventory,and finished goods inventory

D)Direct materials inventory and finished goods inventory

Q4) Sales commissions is an example of factory overhead cost.

A)True

B)False

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Chapter 11: Cost Behavior and Cost-Volume-Profit Analysis

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139 Flashcards

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Sample Questions

Q1) If a business had sales of $4,000,000,fixed costs of $1,200,000,a margin of safety of 25%,and a contribution margin ratio of 40%,what was the break-even point?

A)$3,000,000

B)$2,800,000

C)$4,800,000

D)$2,000,000

Q2) When a business sells more than one product at varying selling prices,the business's break-even point can be determined as long as the number of products does not exceed

A)two.

B)three.

C)fifteen.

D)There is no limit.

Q3) Monthly rent on a factory building that does NOT vary with the number of units produced is an example of a fixed cost.

A)True

B)False

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Chapter 12: Differential Analysis and Product Pricing

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102 Flashcards

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Sample Questions

Q1) In addition to the differential costs in an equipment replacement decision,the remaining useful life of the old equipment and the estimated life of the new equipment are important considerations.

A)True

B)False

Q2) In deciding whether to accept business at a special price,the short- run price should be set high enough to cover all costs and expenses,plus provide a reasonable amount for profit.

A)True

B)False

Q3) When deciding to make or buy a part needed for the manufacturing process,management needs to consider whether the plant has excess production capacity available to make the part or if current production will need to be interrupted to manufacture the part.

A)True

B)False

Q4) The highest contribution margin per scarce resource is the most profitable.

A)True

B)False

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Chapter 13: Budgeting and Standard Cost Systems

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170 Flashcards

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Sample Questions

Q1) If the standard to produce a given amount of product is 2,000 units of direct materials at $12 and the actual was 1,600 units at $13,the direct materials quantity variance was $4,800 favorable.

A)True

B)False

Q2) The direct materials cost variance is

A)$6,500 unfavorable.

B)$9,000 unfavorable.

C)$9,000 favorable.

D)$6,500 favorable.

Q3) The cash collections from accounts receivable in October are

A)$270,000.

B)$272,500.

C)$210,000.

D)$218,000.

Q4) The first budget to be prepared is usually the sales budget.

A)True B)False

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Chapter 14: Performance Evaluation for Decentralized Operations

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137 Verified Questions

137 Flashcards

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Sample Questions

Q1) The rates at which services are charged to each division are called service department charge rates.

A)True

B)False

Q2) The objective of transfer pricing is to encourage each division manager to transfer goods and services between divisions if overall company income can be increased by doing so.

A)True

B)False

Q3) The rate of return on investment may be computed by dividing investment turnover by the profit margin.

A)True B)False

Q4) The profit center income statement should include ONLY controllable revenues and expenses.

A)True B)False

Page 16

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Chapter 15: Capital Investment Analysis

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103 Flashcards

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Sample Questions

Q1) Which of the following is a present value method of analyzing capital investment proposals?

A)Average rate of return

B)Cash payback method

C)Accounting rate of return

D)Net present value

Q2) When evaluating a proposal by use of the net present value method,if there is a deficiency of the present value of future cash inflows over the amount to be invested,the proposal should be accepted.

A)True

B)False

Q3) Which method of evaluating capital investment proposals uses the concept of present value to compute a rate of return?

A)Average rate of return

B)Internal rate of return

C)Cash payback period

D)Accounting rate of return

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