Accounting for Non-Majors Exam Bank
Course Introduction
Accounting for Non-Majors is designed to provide students from diverse academic backgrounds with a foundational understanding of accounting principles and practices relevant to personal and professional contexts. The course covers essential topics such as the accounting cycle, preparation and interpretation of financial statements, basic budgeting, and the role of accounting in decision-making. Emphasizing practical skills over technical detail, the course enables students to analyze financial information, understand key accounting terminology, and appreciate the significance of accounting in organizational operations, equipping them to make informed economic choices in various business environments.
Recommended Textbook
Financial Accounting 15th Edition by Jan Williams
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Page 2
Chapter 1: Accounting: Information for Decision Making
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Sample Questions
Q1) The principal function of CPAs is to:
A) Audit income tax returns to determine if taxpayers have underpaid their income taxes.
B) Conduct audits to determine whether the employees of a business are performing their jobs honestly and efficiently.
C) Advise individual investors on stock market investments.
D) Perform audits to determine the fairness and reliability of a company's financial statements.
Answer: D
Q2) Suppose a number of your friends have organized a company to develop and sell a new software product. They have asked you to loan them $8,000 to help get the company started, and have promised to repay your $8,000 plus 10% interest in one year. Of the following, which amount may be described as the return on your investment?
A) $8,000.
B) $800.
C) $8,800.
D) $7,200.
Answer: B
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3
Chapter 2: Basic Financial Statements
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Sample Questions
Q1) Accounting equation
(A.) During the current year, the assets of Duffy Stationery increased by $650,000 and the liabilities decreased by $340,000. What was the change in owners' equity during the year?
(B.) The owners' equity of Graham Interiors appears on the balance sheet as $720,000 and is equal to one-fourth of total assets. Compute the amount of total liabilities.
(C.) At the end of the year, the owners' equity in Scott Mfg. amounted to $845,000. During 2009, the assets of the business increased by $515,000 and the liabilities increased by $205,000. The owners' equity at the beginning of 2009 was how much?
Answer: (A.) $990,000 increase
(B.) $2,160,000
(C.) $535,000
Q2) If Retained Earnings at December 31, 2010, is $140,000, total assets amount to:
A) $98,000.
B) $377,000.
C) $475,000.
D) $188,000.
Answer: C
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Page 4
Chapter 3: The Accounting Cycle: Capturing Economic Events
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Sample Questions
Q1) In a trial balance prepared on June 4, the sum of the credit column is:
A) $130,000.
B) $132,600.
C) $127,000
D) Some other amount.
Answer: B
Q2) In a trial balance prepared at January 3, 2011, the total of the debit column is:
A) $760,000.
B) $1,570,000.
C) $740,000.
D) $370,000.
Answer: A
Q3) Which of the following accounts normally does not have a debit balance?
A) Dividends.
B) Wage Expense.
C) Building.
D) Capital Stock.
Answer: D
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Chapter 4: The Accounting Cycle: Accruals and Deferrals
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Sample Questions
Q1) Interest that has accrued during the accounting period on a note payable requires an adjusting entry consisting of:
A) A debit to Interest Expense and a credit to Cash.
B) A debit to Notes Payable and a credit to Interest Payable.
C) A debit to an asset and a credit to a liability.
D) A debit to Interest Expense and a credit to Interest Payable.
Q2) Adjusting entries are needed:
A) Whenever revenue is not received in cash.
B) Whenever expenses are not paid in cash.
C) Only to correct errors in the initial recording of business transactions.
D) Whenever transactions affect the revenue or expenses of more than one accounting period.
Q3) Which of the following accounting principles is concerned with offsetting revenue with the expenses incurred in producing that revenue?
A) Realization principle.
B) Materiality.
C) Matching.
D) Depreciation.
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6
Chapter 5: The Accounting Cycle: Reporting Financial
Results
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Sample Questions
Q1) The concept of adequate disclosure requires a company to inform financial statement users of each of the following, except:
A) The accounting methods in use.
B) The due dates of major liabilities.
C) Destruction of a large portion of the company's inventory on January 20, three weeks after the balance sheet date, but prior to issuance of the financial statements.
D) Income projections for the next five years based upon anticipated market share of a new product; the new product was introduced a few days before the balance sheet date.
Q2) Dividends will have what effect upon retained earnings?
A) Increase.
B) Decrease.
C) No effect.
D) Depends upon if there is income or loss.
Q3) The net income percentage can be measured by dividing net income by total revenue.
A)True
B)False
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Chapter 6: Merchandising Activities
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Sample Questions
Q1) The two basic approaches to accounting for inventory and the cost of goods sold are the perpetual inventory system and the periodic inventory system. (More than one of the following statements may be correct.)
A) Most large merchandising companies and manufacturing businesses use periodic inventory systems.
B) As a practical matter, a grocery store or a large department store could not maintain a perpetual inventory system without the use of point-of-sale terminals.
C) In a periodic inventory system the cost of goods sold cannot be determined until a complete physical inventory is taken.
D) In a perpetual inventory system, the Cost of Goods Sold account is debited promptly for the cost of merchandise sold.
Q2) The amount of costs transferred from the Inventory account to the Cost of Goods Sold account during January was:
A) $0.
B) $35,000.
C) $55,000.
D) Some other answer.
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8
Chapter 7: Financial Assets
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Sample Questions
Q1) Marketable securities
(a.) Explain how investments in available-for-sale marketable securities are valued in the investor's balance sheet. the objectivity principle?
(c.) What does Unrealized Holding Gain (or Loss) on Investments represent? How is this item reported in the financial statements?
Q2) Upon completion of the bank reconciliation, a journal entry will be required to update the depositor's accounting records. This entry will include a:
A) Credit to Cash for $700.
B) Debit to Cash for $700.
C) Debit to Cash for $7.
D) Debit to Bank Service Charge Expense for $7.
Q3) Financial assets include all of the following except:
A) Cash.
B) Marketable securities.
C) Inventories.
D) Accounts receivable.
Q4) What is the adjusted cash balance in the September 30 bank reconciliation?
Q5) What is the amount of the deposit in transit?
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Chapter 8: Inventories and the Cost of Goods Sold
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Sample Questions
Q1) Assuming that Anderson uses the LIFO flow assumption, it should record this inventory shrinkage by:
A) Debiting Cost of Goods Sold $7,000.
B) Crediting Cost of Goods Sold $7,500.
C) Debiting Cost of Goods Sold $7,500.
D) Crediting Cost of Goods Sold $7,000.
Q2) Inventory:
A) Consists of all goods owned and held for sale to customers.
B) Is a non-financial asset.
C) Both consists of all goods owned and held for sale to customers and is a non-financial asset.
D) Both consists of all goods owned and held for sale to customers and is a financial asset.
Q3) Assume that the replacement cost of this monitor at year-end is $210 per unit. Using LIFO flow assumption and the lower-of-cost-or-market rule, the ending inventory amounts to:
A) $46,000.
B) $42,000.
C) $37,000.
D) $83,000.
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Chapter 9: Plant and Intangible Assets
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Sample Questions
Q1) The term accumulated depreciation, as used in accounting, is best defined as:
A) The portion of a plant asset recognized as expense since the asset was acquired.
B) Funds (or cash) set aside to replace the asset being depreciated.
C) Earnings retained in the business that will be used to purchase another asset when the present asset is depreciated.
D) An expense of doing business.
Q2) The tax basis of a depreciable asset generally is higher than the book value of that asset for financial reporting purposes.
A)True
B)False
Q3) An asset which costs $14,400 and has accumulated depreciation of $8,000 is sold for $5,600. What amount of gain or loss will be recognized when the asset is sold?
A) A gain of $800.
B) A loss of $800.
C) A loss of $2,400.
D) A gain of $2,400.
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Chapter 10: Liabilities
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Sample Questions
Q1) The combination of liabilities and owners' equity used in financing the assets of a business is called the company's capital structure.
A)True
B)False
Q2) Elm Corporation plans to invest $300 million to earn about 15% before income taxes. The company is considering whether it should raise the $300 million by issuing 10% bonds payable or capital stock. If the company issues the bonds, it will probably report:
A) Lower net income and lower income taxes expense than if it issues capital stock.
B) Higher net income and higher income taxes expense than if it issues capital stock.
C) Lower net income and higher income taxes expense than if it issues capital stock.
D) Higher net income and lower income taxes expense than if it issues capital stock.
Q3) Over the 30-year life of the mortgage, the total amount Fisher will pay for interest charges is $________
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12
Chapter 11: Stockholders Equity: Paid-In Capital
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Sample Questions
Q1) Which of the following is not an addition to total paid-in-capital?
A) Retained earnings.
B) Treasury stock.
C) Neither retained earnings nor treasury stock.
D) Both retained earnings and treasury stock.
Q2) A corporation continues in existence even if a stockholder dies or withdraws from the organization.
A)True
B)False
Q3) The balance in Retained Earnings at the beginning of the year was $650,000, and there were no dividends in arrears. Net income for 2010 was $475,000. What was the amount of dividend declared on each share of common stock during 2010? $_____ per share
Q4) Common stock is considered the legal capital of the corporation.
A)True
B)False
Q5) A stockholders' subsidiary ledger will have entries made for each stockholder showing the number of shares held.
A)True
B)False
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Chapter 12: Income and Changes in Retained Earnings
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Sample Questions
Q1) A stock split changes the par value of a stock, whereas a stock dividend does not.
A)True
B)False
Q2) Comprehensive income can be displayed to users of financial statements in which of the following way(s):
A) As a second income statement.
B) As a single income statement that includes both the components of net income and the components of other comprehensive income.
C) As an element in the changes in stockholders' equity displayed as a column in the statement of stockholders' equity.
D) Either as a second income statement, as a single income statement that includes both the components of net income and the components of other comprehensive income, or as an element in the changes in stockholders' equity displayed as a column in the statement of stockholders' equity.
Q3) MRB Company purchased 1,000 shares of its own outstanding $12 par value common stock for $16 per share and then sold 400 shares six months later for $19 a share. Prepare the journal entries for the purchase of the stock and for the sale.
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Page 14
Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) When preparing a statement of cash flows, money held in cash equivalents is considered the same as cash.
A)True
B)False
Q2) Whether one uses the direct or the indirect method of presentation of the statement of cash flows, the totals from each of the three sections (activities) will be the same regardless of the method used.
A)True
B)False
Q3) Alexander Company reported an increase of $185,000 in its accounts receivable during the year. The company's statement of cash flows reported $500,000 of cash received from customers. What amount of net sales must Alexander have recorded?
A) $315,000.
B) $685,000.
C) $500,000.
D) $185,000
Q4) Collections of interest revenue are classified as operating activities.
A)True
B)False
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Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) Noble's operating income was:
A) $1,610.
B) $675.
C) $935.
D) $115.
Q2) The changes in financial statement items from a base year to following years are called:
A) Money changes.
B) Trend percentages.
C) Component percentages.
D) Ratios.
Q3) The trend in ratios is usually more useful than looking at a single year's ratio.
A)True
B)False
Q4) The current ratio may be less than, equal to, or greater than the quick ratio. A)True
B)False
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Chapter 15: Global Business and Accounting
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Sample Questions
Q1) To convert a dollar amount into a foreign currency divide the dollar amount by the exchange rate.
A)True
B)False
Q2) Payments made by American companies to motivate foreign officials to undertake actions more rapidly than they might otherwise are prohibited by the Foreign Corrupt Practices Act.
A)True
B)False
Q3) Of the following globalization strategies, which would be least demanding in terms of the quantity and variety of accounting information required?
A) Exporting.
B) International licensing.
C) Joint ventures.
D) Establishing a wholly owned foreign subsidiary.
Q4) Explain the major provisions of the Foreign Corrupt Practices Act as amended in 1986.
Q5) Differentiate between Adoption and Convergence as related to International Financial Reporting Standards.
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Chapter 16: The Time Value of Money
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Q1) Compounding interest assumes the interest on an investment is reinvested.
A)True
B)False
Q2) Explain how compound interest applies to the time value of money.
Q3) Future value is the amount that must be invested today at a specific interest rate to receive a particular amount at some future date.
A)True
B)False
Q4) The present value of a cash amount:
A) Is always less than the future value.
B) Is always more than the future value.
C) Is the same as the future value.
D) Is the same as the actual cash value.
Q5) The market price of a bond is equal to its present value.
A)True
B)False
Q6) Discounting a future amount of a cash receipt will determine the present value of that receipt.
A)True
B)False
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