Accounting for Non-Business Majors Exam Questions
Course Introduction
This course introduces fundamental accounting principles and practices to students without a business background. It focuses on the basics of financial accounting, including the understanding and preparation of financial statements, recording transactions, and analyzing financial information for personal and organizational decision-making. Emphasis is placed on how accounting impacts everyday life, ethical considerations, and the relevance of financial information in various non-business professions. Through practical examples and hands-on exercises, students gain the skills to interpret and use accounting information in a variety of contexts.
Recommended Textbook
Survey of Accounting 7th Edition by Carl Warren
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15 Chapters
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Page 2
Chapter 1: The Role of Accounting in Business
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Sample Questions
Q1) A partnership is owned by two or more individuals.
A)True
B)False
Answer: True
Q2) Who has the first preference to assets in case a business fails?
A)Stockholders
B)Long-term creditors
C)Customers
D)Employees
Answer: B
Q3) Costs incurred in operating a business are also known as:
A)revenues.
B)expenses.
C)liabilities.
D)dividends.
Answer: B
Q4) Creditors have preference to assets behind stockholders if a business fails.
A)True
B)False
Answer: False
Page 3
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Chapter 2: Basic Accounting Concepts
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Sample Questions
Q1) BNC Company earns revenues and as a result collects cash.Which of the following financial statement elements increased?
A)Cash only
B)Stockholders' equity only
C)Liabilities
D)Cash and stockholders' equity
Answer: D
Q2) A to Z Corporation paid a $10,000 cash dividend.On the Statement of Cash Flows,the transaction would be classified as:
A)Cash Flows from Operating Activities.
B)Cash Flows from Investing Activities.
C)Cash Flows from Financing Activities.
D)Noncash transaction.
Answer: C
Q3) A common-sized income statement is prepared by expressing income statement amounts as a percent of purchases.
A)True
B)False
Answer: False
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Page 4
Chapter 3: Accrual Accounting Concepts
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Sample Questions
Q1) Describe deferrals and accruals.
Answer: Deferrals are created by recording a transaction that delays the recognition of an expense or revenue. An example of a deferral is prepaid insurance.The expense recognition is "deferred" until time has passed. Accruals are created when a revenue/expense has not been recorded at the end of the accounting period.An example of an accrual is interest income earned but not yet recorded.
Q2) Refer to Perill Co.If the month ends on Wednesday,and wages will not be paid until Friday,how much wage expense should be accrued on Wednesday?
A)$650
B)$1,950
C)$3,250
D)$1,300
Answer: B
Q3) Unearned revenue is what type of an account?
A)Asset
B)Revenue
C)Stockholders' equity
D)Liability
Answer: D
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Page 5
Chapter 4: Accounting for Merchandising Businesses
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Sample Questions
Q1) Which of the following businesses is a merchandising business?
A)H&R Block
B)Becker Law Office
C)Little Tykes Daycare
D)Kohl's
Q2) Which of the following are subtracted from sales to arrive at net sales?
A)Sales returns
B)Merchandise inventory
C)Accounts receivable
D)Cost of merchandise sold
Q3) Which of the following is not an administrative expense?
A)Salespersons' salaries
B)Office staff salaries
C)Depreciation of office equipment
D)Office supplies used
Q4) When the terms of sale are FOB shipping point,the buyer should pay the transportation charges.
A)True
B)False
Q5) Based on the following data,determine the cost of merchandise sold for October.
Page 6
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Chapter 5: Sarbanes-Oxley, internal Control, and Cash
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Sample Questions
Q1) A credit memorandum received with a bank statement means the company's bank account has been increased.
A)True
B)False
Q2) Which of the following of internal control deals with hiring,training,evaluation,compensation,and promotion of employees?
A)Monitoring
B)Control environment
C)Risk assessment
D)Control procedures
Q3) Money market funds,commercial paper,and U.S.Treasury Bills are examples of cash equivalents.
A)True
B)False
Q4) A minimum cash balance required by a bank is called:
A)cash in bank.
B)compensating balance.
C)average balance.
D)adjusted balance.
Q5) List the advantages of Electronic Funds Transfers.
Page 7
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Chapter 6: Receivables and Inventories
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Sample Questions
Q1) The maturity value of a 12%,60-day note for $1,000 is $1,020.(Assume 360 days in a year)
A)True
B)False
Q2) The two methods of accounting for uncollectible receivables are the:
A)direct method and the indirect method.
B)allowance method and the direct write-off method.
C)cash method and the accrual method.
D)percent of sales method and the analysis of receivables method.
Q3) Under the direct write-off method,an attempt is made to match Bad Debt Expense to sales revenues in the same accounting period.
A)True
B)False
Q4) Under which method of inventory costing is the cost flow assumed to be in the reverse order in which the expenditures were made?
A)Average cost
B)Last-in,first-out
C)First-in,first-out
D)Specific identification method
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Chapter 7: Fixed Assets and Intangible Assets
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Sample Questions
Q1) Which of the following should be included in the acquisition cost of a piece of equipment?
A)Uninsured theft
B)Mistakes in installation
C)Vandalism
D)Installation costs
Q2) The balance in Accumulated Depreciation account is deducted from the cost of fixed assets on the balance sheet.
A)True
B)False
Q3) Paleota Company purchased a patent from Finise for $234,000.At the time of purchase,the patent had a remaining useful life of 10 years.Determine the patent amortization expense for the first year.
A)$23,400
B)$23,000
C)$14,000
D)$9,800
Q4) For each of the following items indicate whether the transactions listed below increased (+),decreased (-)or had no effect (o)by inserting the appropriate symbol.
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Chapter 8: Liabilities and Stockholders Equity
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Sample Questions
Q1) The charter of a corporation provides for the issuance of 100,000 shares of common stock.Assume that 60,000 shares were originally issued and 5,000 were subsequently reacquired.What is the number of shares outstanding?
A)5,000
B)100,000
C)60,000
D)55,000
Q2) If 20,000 shares are authorized,14,000 shares are issued,and 500 shares are held as treasury stock,a cash dividend of $1 per share would amount to $13,500.
A)True
B)False
Q3) A bond is simply a form of an interest-bearing note.
A)True
B)False
Q4) Liabilities due beyond one year are classified as .
A)current liabilities
B)long-term liabilities
C)contingent liabilities
D)fixed liabilities
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Chapter 9: Financial Statement Analysis
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Sample Questions
Q1) The current ratio is computed by dividing current assets by .
A)fixed assets
B)inventories
C)current liabilities
D)accounts receivable
Q2) A company with $60,000 in current assets and $40,000 in current liabilities pays a $1,000 current liability.As a result of this transaction,the current ratio and working capital will:
A)both decrease.
B)both increase.
C)increase and remain the same,respectively.
D)remain the same and decrease,respectively.
Q3) If a firm has an quick ratio of 1,the subsequent payment of an account payable will cause the ratio to increase.
A)True
B)False
Q4) The relationship of 120 to 100 can be expressed as 1.2,1.2:1,or 120%.
A)True
B)False
Q5) The following items are reported on a company's balance sheet:
Page 11
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Chapter 10: Accounting Systems for Manufacturing Businesses
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Sample Questions
Q1) Job order cost systems can be used to compare unit costs of similar jobs to determine if costs are staying within expected ranges.
A)True
B)False
Q2) Which of the following statements is true of lead time?
A)Total lead time can be divided into acceptable and non-acceptable lead time.
B)Lead time is a measure of time that elapses between the sale of a product and delivery to the customer.
C)Reducing nonvalue-added lead time reduces costs and improves the speed of production.
D)Reducing nonacceptable lead time improves the speed of production,but will not affect product cost.
Q3) Compute factory overhead cost from the following costs:
A)$23,000
B)$43,000
C)$70,000
D)$113,000
Q4) KCT Printing Company uses a job order cost system.
Q5) Use the correct number to designate each item below:
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Chapter 11: Cost Behavior and Cost-Volume-Profit Analysis
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Sample
Questions
Q1) 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.
Q2) If sales are $820,000,variable costs are 68% of sales,and operating income is $260,000,what is the contribution margin ratio?
A)53%
B)38%
C)47%
D)32%
Q3) The contribution margin ratio is:
A)the same as the variable cost ratio.
B)the same as profit.
C)the portion of equity contributed by the stockholders.
D)the same as the profit-volume ratio.
Q4) A company has a margin of safety of 25%,a contribution margin ratio of 30%,and sales of $1,000,000.
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Chapter 12: Differential Analysis and Product Pricing
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Sample Questions
Q1) Differential revenue is the amount of increase or decrease in revenue expected from a particular course of action as compared to an alternative.
A)True
B)False
Q2) The product cost concept includes all manufacturing costs in the cost amount to which the markup is added to determine product price.
A)True B)False
Q3) Based on the above data,what is the differential revenue from the acceptance of the offer?
A)$45,000
B)$40,000
C)$50,000
D)$60,000
Q4) Brickman's Pharmacy sells a variety of products.The business is divided into four segments or departments for reporting purposes.The departments and their operating results are shown below:
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14
Chapter 13: Budgeting and Standard Cost Systems
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Sample Questions
Q1) Refer to the information provided for Frogue Company.The total factory overhead cost variance is:
A)$3,900 favorable.
B)$10,400 favorable.
C)$10,400 unfavorable.
D)$9,900 unfavorable.
Q2) The following data relate to direct labor costs for the current period:
A)$1,875.00 unfavorable
B)$2,212.50 unfavorable
C)$1,875.00 favorable
D)$2,212.50 favorable
Q3) Production and sales estimates for June are as follows:
A)10,000.
B)12,000.
C)13,000.
D)12,500.
Q4) Nonmanufacturing activities are usually controlled using a static budget rather than a standard costing system.
A)True
B)False
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Chapter 14: Performance Evaluation for Decentralized Operations
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Sample Questions
Q1) Which of the following is not a approach used for setting transfer prices?
A)Market price approach
B)Revenue price approach
C)Negotiated price approach
D)Cost price approach
Q2) The excess of divisional income from operations over a minimum acceptable divisional income from operations is termed:
A)profit margin.
B)residual income.
C)rate of return on investment.
D)gross profit.
Q3) The best measure of managerial efficiency in the use of investments in assets is:
A)rate of return on stockholders' equity.
B)rate of return on investment.
C)income from operations.
D)inventory turnover.
Q4) PDT Co.has two divisions,East and West.Invested assets and condensed income statement data for each division for the past year ended December 31 are as follows:
Page 16
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Chapter 15: Capital Investment Analysis
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Sample Questions
Q1) In net present value analysis for a proposed capital investment,the expected future net cash flows are reduced to their present values.
A)True
B)False
Q2) Using the following partial table of present value of $1 at compound interest,determine the present value of $20,000 to be received four years hence with earnings at the rate of 12% a year:
A)$13,660
B)$15,840
C)$12,720
D)$10,400
Q3) Methods that ignore present value in capital investment analysis include the cash payback method.
A)True
B)False
Q4) The net present value has been computed for Proposals A and B.Relevant data are as follows:
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