Accounting for Non-Majors Final Exam Questions
Course Introduction
Accounting for Non-Majors introduces students to the foundational concepts and practices of accounting, focusing on how financial information is recorded, summarized, and interpreted for effective decision-making. Designed for those without an accounting background, the course covers essential topics such as the accounting cycle, preparation and analysis of basic financial statements, and the use of accounting data in planning, controlling, and evaluating business activities. Practical examples and real-world applications ensure that students gain a clear understanding of how accounting impacts various roles within organizations, equipping them with skills relevant to a broad range of careers.
Recommended Textbook
Survey of Accounting 6th Edition by Carl S. Warren
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1713 Verified Questions
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Chapter 1: The Role of Accounting in Business
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Sample Questions
Q1) During 2012, Smith Corporation had an increase in total assets of $70,000 and an increase in total liabilities of $90,000. Assuming that capital stock increased by $5,000 and no dividends were paid, calculate Smith's net income or net loss for 2012.
A) Net loss of $15,000
B) Net loss of $20,000
C) Net loss of $25,000
D) Net income of $15,000
Answer: C
Q2) Cash investments made by the stockholders of the business are reported on the statement of cash flows in the:
A) financing activities section.
B) investing activities section.
C) operating activities section.
D) supplemental statement.
Answer: A
Q3) A partnership is owned by two or more individuals.
A)True
B)False
Answer: True
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Chapter 2: Basic Accounting Concepts
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Sample Questions
Q1) How can a company earn a large net income and have a small balance in retained earnings?
Answer: The company may pay out most of its earnings in dividends.
Q2) Rush Corporation borrowed $25,000 from the bank. Which of the following accurately shows the effects of the transaction?
A) Increase cash $25,000 and decrease notes payable $25,000
B) Increase cash $25,000 and increase notes payable $25,000
C) Decrease cash $25,000 and decrease notes payable $25,000
D) Decrease cash $25,000 and increase notes payable $25,000
Answer: B
Q3) An increase in Stockholders' Equity from revenues earned will also result in an increase in:
A) liabilities.
B) assets.
C) expenses.
D) cash flow from financing activities.
Answer: B
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Chapter 3: Accrual Accounting Concepts
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Sample Questions
Q1) Accounts receivable arising from trade transactions amounted to $50,000 and $56,000 at the beginning and end of the year, respectively. Net income reported on the income statement for the year was $105,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method are:
A) $105,000.
B) $111,000.
C) $99,000.
D) $156,000.
Answer: C
Q2) Flyer Co. billed a client for flying lessons given in January. The payment was received in February. Under the accrual basis of accounting, when should Flyer Co. record the revenue?
A) January
B) February
C) Some in January and some in February
D) Flyer Co. should not record any revenue
Answer: A
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Chapter 4: Accounting for Merchandising Businesses
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Sample Questions
Q1) Operating expenses are subtracted from fees earned for a service business and from gross profit for a merchandising business.
A)True
B)False
Q2) Which of the following accounts is a contra account to Sales?
A) Accounts Payable
B) Sales Returns and Allowances
C) Accounts Receivable
D) Interest Revenue
Q3) In a perpetual inventory system, merchandise returned to vendors reduces the merchandise inventory account.
A)True
B)False
Q4) ONI, Inc. purchased $60,000 of equipment for cash. How does this transaction impact the statement of cash flows?
A) Decreases the cash flow from operating activities by $60,000
B) Decreases equipment by $60,000
C) Decreases the cash flow from investing activities section by $60,000
D) This transaction would not affect the statement of cash flows.
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Chapter 5: Sarbanes-Oxley, Internal Control, and Cash
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Sample Questions
Q1) In preparing a bank reconciliation, the amount indicated by a debit memorandum for bank service charges is deducted from the cash balance per bank.
A)True
B)False
Q2) Receipts from cash sales of $5,700 were recorded incorrectly by the depositor as $7,500. The $1,800 difference would be included on the bank reconciliation as a(n):
A) addition to the cash balance per books.
B) addition to the cash balance per bank.
C) deduction from the cash balance per bank.
D) deduction from the cash balance per books.
Q3) The framework that has become widely accepted as the standard by which companies design, analyze, and evaluate internal controls is the:
A) Internal Control - Integrated Framework by the Committee of Sponsoring Organizations.
B) Internal Control - Integrated Framework by the Congress of Special Offerings.
C) Internal Control Localized Structure by the Committee of Sponsoring Organizations.
D) Internal Control Localized Structure by the Congress of Special Offerings.
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Page 7
Chapter 6: Receivables and Inventories
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Sample Questions
Q1) Other than accounts receivable and notes receivable, name other receivables that might be included on the balance sheet.
Q2) Allowance for Doubtful Accounts has an unadjusted balance of $1,100 at the end of the year, and an analysis of customers' accounts indicates doubtful accounts of $12,900. Which of the following records the proper provision for doubtful accounts?
A) Increase Uncollectible Accounts Expense, $14,000; increase Allowance for Doubtful Accounts, $14,000
B) Decrease Allowance for Doubtful Accounts, $14,000; decrease Uncollectible Accounts Expense, $14,000
C) Decrease Allowance for Doubtful Accounts, $11,800; decrease Uncollectible Accounts Expense, $11,800
D) Increase Uncollectible Accounts Expense, $11,800; increase Allowance for Doubtful Accounts, $11,800
Q3) Merchandise inventory is reported on the balance sheet in the section entitled:
A) current assets.
B) fixed assets.
C) current liabilities.
D) stockholders' equity.
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Chapter 7: Fixed Assets and Intangible Assets
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Sample Questions
Q1) Determine the cost of the land, based on the following data. \(\begin{array}{ll}
\$ 180,000 & \text { Land purchase price } \\
15,000 & \text { Broke1's commission } \\
5,000 & \text { Payment for the demolition and removal of existing building } \\ 1,000 & \text { Cashreceived from the sale of materials salvaged from the demolished building } \end{array}\)
Q2) A patent was purchased for $670,000 with a legal life of 20 years. Management estimates that the patent has an 12-year economic life. The entry to record amortization would include:
A) an increase in amortization expense for $33,500.
B) an increase in research and development expense for $670,000.
C) a decrease in patent for $55,833.
D) an increase in accumulated amortization for $670,000.
Q3) Intangible assets do not exist physically.
A)True
B)False
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Chapter 8: Liabilities and Stockholders Equity
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Sample Questions
Q1) If the market rate of interest is 9% and a corporation's bonds bear interest at 7%, the bonds will sell at a premium.
A)True
B)False
Q2) Which of the following is not necessary for a corporation to pay cash dividends?
A) Sufficient cash
B) Formal action of the board of directors
C) Prior declaration of stock dividends
D) Sufficient retained earnings
Q3) For accounting purposes, stated value is treated the same way as par value.
A)True
B)False
Q4) The issuance of common stock affects both paid-in capital and retained earnings.
A)True
B)False
Q5) On which of the following dates, a company incurs liability for a dividend?
A) The date of record
B) The date of payment
C) The date of liquidation
D) The date of declaration
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Chapter 9: Financial Statement Analysis
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Sample Questions
Q1) Thomson Company reported the following on its income statement: \(\begin{aligned}
\$ 420,000 & \text { Income before income taxes } \\ 120,000 & \text { Income tax expense } \\
\$ 300,000 & \text { Net income } \end{aligned}\)
An analysis of the income statement revealed that interest expense was $40,000. Thomson Company's number of times interest charges are earned was:
A) 8 times.
B) 7.5 times.
C) 9.5 times.
D) 11.5 times.
Q2) The rate earned on total assets is one of the measures of profitability.
A)True
B)False
Q3) If a company has issued only one class of stock, the earnings per share is determined by dividing net income by the number of shares outstanding.
A)True
B)False
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Chapter 10: Accounting Systems for Manufacturing Businesses
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Sample Questions
Q1) Indicate whether each of the following costs of a cabinet manufacturer would be classified as direct materials cost, direct labor cost, factory overhead cost, or period cost.
a. Plant manager's salary
b. Office administrative assistant's salary
c. Depreciation on factory equipment
d. Rent on office building
e. Varieties of wood
f. Varnish for coating cabinets
g. Utilities cost on the factory
h. Cabinet assembly worker's salary
i. Advertising costs
j. Screws and glue used in assembly process
Q2) Activity-based costing is a method of accumulating and allocating costs by department.
A)True
B)False
Q3) Indirect labor is included in factory overhead.
A)True
B)False
Page 12
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Chapter 11: Cost Behavior and Cost-Volume-Profit Analysis
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Sample Questions
Q1) If variable costs per unit decreased because of a decrease in utility rates, the break-even point would:
A) decrease.
B) increase.
C) remain the same.
D) increase or decrease, depending upon the percentage increase in utility rates.
Q2) If variable costs per unit increased because of an increase in hourly wage rates, the break-even point would:
A) decrease.
B) increase.
C) remain the same.
D) increase or decrease, depending upon the percentage increase in wage rates.
Q3) If sales total $5,000,000, fixed costs total $400,000, and variable costs are 2,750,000, the contribution margin ratio is 45%.
A)True
B)False
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Chapter 12: Differential Analysis and Product Pricing
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Sample Questions
Q1) Max, Inc. can sell a large piece of machinery for $90,000. The machinery originally cost $240,000 and has accumulated depreciation of $130,000. Max will have to pay a 5% sales commission on the sale. Rather than sell, Max is considering leasing the machine. It can be leased for 4 years for $24,000 per year. Max has estimated future operating expenses to be $3,000 per year, and Max will be responsible for those expenses. Which of the following options most accurately describes the analysis and decision for Max?
A) Lease - because differential revenues are $6,000 if Max leases rather than sells
B) Lease - because Max will lose $20,000 if it sells the equipment for less than its $110,000 book value
C) Sell - because differential income of selling rather than leasing is $6,000
D) Sell - because differential income is $1,500 if Max sells rather than leases
Q2) In deciding whether to accept business at a special price when the company is operating below full capacity, the special price should be set high enough to cover both the fixed and variable costs.
A)True
B)False
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Chapter 13: Budgeting and Standard Cost Systems
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Sample Questions
Q1) For February, sales revenue is $250,000; sales commissions are 6% of sales; the sales manager's salary is $50,000; advertising expenses are $15,000; shipping expenses total 1% of sales; and miscellaneous selling expenses are $1,000 plus 1/2 of 1% of sales. Total selling expenses for the month of February are:
A) $65,000.
B) $69,750.
C) $82,250.
D) $84,750.
Q2) The most effective means of presenting standard factory overhead cost variance data is through a selling overhead cost budget.
A)True
B)False
Q3) The master budget of a small manufacturer would normally include all necessary component budgets except the capital expenditures budget.
A)True
B)False
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Chapter 14: Performance Evaluation for Decentralized Operations
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Sample Questions
Q1) Responsibility accounting reports for a profit center typically show:
A) revenues, expenses, and profit controlled by the manager of the center.
B) only the controllable revenues.
C) revenues, expenses, profit, and investment in assets controlled by the manager of the center.
D) all the investment in assets controlled by the manager of the center.
Q2) 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.
Q3) In an investment center, the manager has responsibility and authority for making decisions that affect:
A) only costs.
B) both costs and revenues.
C) only assets.
D) costs, revenues, and assets.
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Chapter 15: Capital Investment Analysis
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Sample Questions
Q1) When evaluating a proposal by use of the cash payback method, if net cash flows exceed the capital investment within the time deemed acceptable by management, the proposal should be accepted.
A)True
B)False
Q2) The amount of the average investment for a proposed investment of $70,000 in a fixed asset, with a useful life of four years, recognition is given to the effect of straight-line depreciation on the investment, no residual value, and an expected total net income of $21,600 for the 4 years, is:
A) $10,800.
B) $21,600.
C) $35,000.
D) $30,000.
Q3) The excess of cash flowing in from revenues over the cash flowing out for expenses is termed net cash flow.
A)True B)False
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