Accounting for Non-Majors Practice Questions
Course Introduction
Accounting for Non-Majors introduces fundamental principles and practices of accounting to students with little or no prior background in the subject. The course focuses on the essential concepts of financial and managerial accounting, emphasizing the interpretation and use of accounting information for decision-making in a variety of organizational contexts. Topics include the accounting cycle, preparation and analysis of financial statements, budgeting, cost behavior, and internal controls. By the end of the course, students will gain a foundational understanding of accounting that will support them in their personal financial planning, business endeavors, or further study in related fields.
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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Sample Questions
Q1) When a business borrows money,it incurs a(n)
A)tax.
B)liability.
C)receivable.
D)addtional equity.
Answer: B
Q2) The basic type of stock issued to owners is called common stock.
A)True
B)False
Answer: True
Q3) Which of the following is TRUE in regards to a limited liability company?
A)It is organized as a corporation.
B)It can elect to be taxed as a partnership.
C)It provides tax and liability advantages to the owners.
D)All are correct.
Answer: D
Q4) What is the basic accounting equation,and which financial statement is prepared from this equation?
Answer: Assets = Liabilities + Stockholders' Equity
The Balance Sheet
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Chapter 2: Basic Accounting Concepts
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Sample Questions
Q1) For EFG Co. ,the transaction "Purchase of store equipment with a note payable" would A)increase total assets.
B)decrease total assets.
C)have no effect on total assets.
D)decrease total liabilities.
Answer: A
Q2) For EFG Co. ,the transaction "Payment of quarterly taxes" would
A)increase total assets.
B)decrease total assets.
C)have no effect on total assets.
D)increase stockholders' equity.
Answer: B
Q3) Refer to Exhibit 2-1.What is net income,assuming no stock was issued and no dividends were paid?
A)$215,000
B)$175,000
C)$135,000
D)$40,000
Answer: C
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Page 4
Chapter 3: Accrual Accounting Concepts
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110 Flashcards
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Sample Questions
Q1) Which of the following should be shown on a statement of cash flows under the financing activity section?
A)The purchase of a long-term investment in the common stock of another company
B)The payment of cash to retire a long-term note
C)The proceeds from the sale of a building
D)The issuance of a long-term note to acquire land
Answer: B
Q2) Which of the following is an example of an intangible asset?
A)Goodwill
B)Patents
C)Copyrights
D)All of these
Answer: D
Q3) The revenue recognition concept states that revenue should be recorded in the same period as the cash is received.
A)True
B)False
Answer: False
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Chapter 4: Accounting for Merchandising Businesses
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142 Flashcards
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Sample Questions
Q1) The indirect method of preparing the statement of cash flows reconciles net income with net cash flows from operating activities.
A)True
B)False
Q2) When someone purchases merchandise and incurs the cost of transportation,these costs of purchasing inventory are added to the cost of the inventory.
A)True
B)False
Q3) Which expenses are subtracted from gross profit to arrive at income from operations?
A)All expenses
B)Cost of merchandise sold
C)Operating expenses
D)Sales expenses
Q4) Sales Discounts is used in accounting for transactions with customers.
A)True
B)False
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Chapter 5: Sarbanes-Oxley,internal Control,and Cash
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Sample Questions
Q1) A check for $456 was erroneously charged by the bank as $654.In order for the bank reconciliation to balance,you must deduct $198 from the bank statement balance.
A)True
B)False
Q2) The objectives of internal control are to
A)control the internal organization of the accounting department personnel and equipment.
B)provide reasonable assurance that assets are safeguarded,information is processed accurately,and laws and regulations are complied with.
C)prevent fraud and promote the social interest of the company.
D)provide control over "internal-use only" reports and employee internal conduct.
Q3) The data needed to adjust the depositor's accounts based on the bank reconciliation are shown as adjustments to the depositor's records.
A)True
B)False
Q4) What is the purpose of the Sarbanes-Oxley Act of 2002,and why was it enacted?
Q5) What is a special-purpose cash fund? What is its purpose? Give two examples.
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Page 7
Chapter 6: Receivables and Inventories
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Sample Questions
Q1) During inflationary periods,the use of the LIFO method of costing inventory will result in a lesser amount of net income than would result from the use of the average method.
A)True
B)False
Q2) If the cost of an item of inventory is $60 and the current replacement cost is $65,the amount included in inventory according to the lower of cost or market is
A)$5.
B)$60.
C)$65.
D)$125.
Q3) Both accounts receivable and notes receivable represent claims that are expected to be collected in cash.
A)True
B)False
Q4) When companies sell their receivables to other companies,the transaction is called factoring.
A)True
B)False
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Chapter 7: Fixed Assets and Intangible Assets
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Sample Questions
Q1) Which of the following expenditures would NOT be included in the cost of an asset?
A)Freight costs
B)Vandalism
C)Sales tax
D)Surveying fees
Q2) Physical depreciation occurs when a fixed asset is no longer able to provide services at the level for which it was intended.
A)True
B)False
Q3) An estimate of the amount that an asset can be sold for at the end of its useful life is called book value.
A)True
B)False
Q4) The Accumulated Depreciation account is deducted from the cost of fixed assets on the balance sheet.
A)True
B)False
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Chapter 8: Liabilities and Stockholders Equity
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Sample Questions
Q1) During the first year of operations,employees earned vacation pay of $50,000.The vacations will be taken during the second year.The vacation pay expense should be recorded in the first year of operations.
A)True
B)False
Q2) How is treasury stock shown on the balance sheet?
A)As an asset
B)As a decrease in stockholders' equity
C)As an increase in stockholders' equity
D)Treasury stock is not shown on the balance sheet.
Q3) Which of the following is usually NOT a prerequisite to paying a cash dividend?
A)Formal action by the board of directors
B)Market value in excess of par value per share
C)Sufficient cash
D)Sufficient retained earnings
Q4) One of the prerequisites required to pay a cash dividend is formal action by the board of directors.
A)True
B)False
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Chapter 9: Financial Statement Analysis
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Sample Questions
Q1) Ratios and various other analytical measures are NOT a substitute for sound judgment,nor do they provide definitive guides for action.
A)True
B)False
Q2) 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
Q3) The ratio of the sum of cash,receivables,and marketable securities to current liabilities is called the
A)price-earnings ratio.
B)earnings ratio.
C)quick ratio.
D)current ratio.
Q4) For most profitable companies,the rate earned on total assets will be less than A)the rate earned on stockholders' equity.
B)the rate earned on total liabilities and stockholders' equity.
C)the rate earned on sales.
D)cannot be determined without more information.
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Chapter 10: Accounting Systems for Manufacturing Businesses
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Sample Questions
Q1) A difference in quantity of materials used on two comparable jobs may be caused by
A)inadequately trained employees.
B)poor quality materials.
C)employee carelessness.
D)all of these.
Q2) Just-in-time manufacturing uses which of the following techniques?
A)Provides specialized training so that employees only do one task and work individually to improve efficiencies in the department
B)Organizes the plant in such a way as to reduce product movement from station to station
C)Encourages management to make all operating decisions regarding the manufacturing process rather than the line employees in order to streamline the process
D)All of these
Q3) Indirect labor would be included in factory overhead.
A)True
B)False
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Chapter 11: Cost Behavior and Cost-Volume-Profit Analysis
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139 Verified Questions
139 Flashcards
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Sample Questions
Q1) 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%
Q2) Which of the following conditions would cause the break-even point to decrease?
A)Total fixed costs increase
B)Unit selling price decreases
C)Unit variable cost decreases
D)Unit variable cost increases
Q3) Cost behavior refers to the manner in which a cost changes as the related activity changes.
A)True
B)False
Q4) If fixed costs are $300,000 and variable costs are 70% of break-even sales,profit is zero when sales revenue is $1,000,000.
A)True B)False
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Chapter 12: Differential Analysis and Product Pricing
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Sample Questions
Q1) What is a bottleneck?
A)A narrow area in the plant layout often causing the production process to slow due to the inability of production workers to move the product from station to station
B)A manufacturing strategy used to control the production process by minimizing or eliminating excess inventory
C)The point in the manufacturing process where demand for the product exceeds the ability to produce the product
D)All of these describe a bottleneck in the production process.
Q2) When evaluating whether to lease or sell equipment,the book value of the equipment is a sunk cost and not a differential cost.
A)True
B)False
Q3) If the total unit cost of manufacturing Product Y is currently $40 and the total unit cost after modifying the style is estimated to be $48,the differential cost for this situation is $8.
A)True
B)False
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Chapter 13: Budgeting and Standard Cost Systems
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Sample Questions
Q1) The variance from standard for factory overhead resulting from incurring a total amount of factory overhead cost that is greater or less than the amount budgeted for the level of operations achieved is termed controllable variance.
A)True
B)False
Q2) The master budget of a small manufacturer would normally include all component budgets that impact the financial statements.
A)True
B)False
Q3) Currently attainable standards do NOT allow for reasonable production difficulties.
A)True
B)False
Q4) The budget process involves doing all the following EXCEPT
A)establishing specific goals.
B)executing plans to achieve the goals.
C)periodically comparing actual results with the goals.
D)dismissing all managers who fail to achieve operational goals specified in the budget.
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Chapter 14: Performance Evaluation for Decentralized Operations
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Sample Questions
Q1) The primary disadvantage of decentralized operations is that decisions made by one manager may affect other managers in such a way that the profitability of the entire company may suffer.
A)True
B)False
Q2) Which of the following expressions is termed the investment turnover factor as used in determining the rate of return on investment?
A)Invested Assets/Sales
B)Income From Operations/Invested Assets
C)Income From Operations/Sales
D)Sales/Invested Assets
Q3) By use of the rate of return on investment as a divisional performance measure,divisional managers will always be motivated to invest in proposals that will increase the overall rate of return for the company.
A)True
B)False
Q4) The ratio of sales to invested assets is termed investment turnover.
A)True
B)False
16
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Chapter 15: Capital Investment Analysis
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Sample Questions
Q1) A qualitative characteristic that may impact upon capital investment analysis is manufacturing productivity.
A)True
B)False
Q2) The excess of the cash flowing in from revenues over the cash flowing out for expenses is termed net cash flow.
A)True
B)False
Q3) If the average rate of return on an asset exceeds the minimum acceptable rate of return for investments,the asset should be purchased.
A)True
B)False
Q4) The expected period of time that will elapse between the date of a capital investment and the complete recovery in cash of the amount invested is called the discount period.
A)True
B)False
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