Accounting for Non-Majors Pre-Test Questions
Course Introduction
Accounting for Non-Majors introduces students to the foundational concepts and principles of accounting with a focus on practical applications in personal, professional, and business contexts. The course covers essential topics such as financial statements, budgeting, balance sheets, income statements, and the basic interpretation of accounting information for decision-making purposes. Designed specifically for those without previous accounting experience, this course emphasizes understanding and using accounting data rather than preparing detailed reports, equipping students from diverse fields to effectively communicate with financial professionals and make informed financial choices.
Recommended Textbook Survey of Accounting 6th Edition by
Carl S. Warren
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15 Chapters
1713 Verified Questions
1713 Flashcards
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Page 2
Chapter 1: The Role of Accounting in Business
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96 Flashcards
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Sample Questions
Q1) The basic type of stock issued to owners is called common stock.
A)True
B)False
Answer: True
Q2) A business stakeholder has an interest in the economic performance of a business.
A)True
B)False Answer: True
Q3) 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
Q4) Stockholders of a corporation are its internal stakeholders.
A)True
B)False Answer: False
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Chapter 2: Basic Accounting Concepts
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89 Flashcards
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Sample Questions
Q1) Johnson, Inc. purchased land for cash. What effect does this transaction have?
A) Increase in Cash and decrease in Land
B) Decrease in Cash and decrease in Land
C) Increase in Cash and increase in Land
D) Decrease in Cash and increase in Land
Answer: D
Q2) A business receives $10,000 cash for a sale of merchandise and records this receipt of cash as an increase in accounts receivable by mistake. The accounting equation is still in balance.
A)True
B)False
Answer: True
Q3) Johnson, Inc. receives $5,000 cash for fees earned. What is the effect of this transaction?
A) Total assets remain unchanged.
B) Cash flow from Financing Activities will increase.
C) Net income will increase.
D) Retained earnings will remain unchanged.
Answer: C
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Page 4
Chapter 3: Accrual Accounting Concepts
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111 Flashcards
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Sample Questions
Q1) An adjusting entry would adjust an expense account so that the expense is reported when incurred.
A)True
B)False
Answer: True
Q2) The financial statements are affected by which type(s) of adjustments?
A) Deferrals
B) Accruals
C) Both deferrals and accruals
D) Neither deferrals nor accruals
Answer: C
Q3) Receiving cash in advance of performing a service creates a liability for the company.
A)True
B)False
Answer: True
Q4) 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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138 Flashcards
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Sample Questions
Q1) Available discounts taken by the buyer for early payment of an invoice are termed sales discounts by the seller.
A)True
B)False
Q2) 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 discounts
Q3) Generally, the revenue account for a merchandising business is entitled:
A) Sales.
B) Net Sales.
C) Gross Sales.
D) Gross Profit.
Q4) Merchandise inventory shrinkage will decrease Retained Earnings.
A)True
B)False
Q5) The following data for the current year ended December 31, 2013, were extracted from the accounting records of Gilbert Co.:
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Chapter 5: Sarbanes-Oxley, Internal Control, and Cash
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) A special cash fund used to make small payments that occur frequently is called a(n):
A) operating expenses fund.
B) change fund.
C) market fund.
D) petty cash fund.
Q2) In a computerized system, paid vouchers are transferred to a paid voucher file.
A)True
B)False
Q3) All bank memorandums reported on the bank reconciliation require entries in the depositor's accounts.
A)True
B)False
Q4) A voucher is a form where pertinent data about a liability and the particulars of its payment are recorded.
A)True
B)False
Q5) What is the purpose of the Sarbanes-Oxley Act of 2002, and why was it enacted?
Q6) Describe the features of a voucher system and list typical supporting documents for a voucher.
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Chapter 6: Receivables and Inventories
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102 Flashcards
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Sample Questions
Q1) If merchandise inventory is being valued at cost and the price level is steadily rising, the method of costing that will yield the highest net income is:
A) average cost.
B) LIFO.
C) FIFO.
D) All methods will generate the same net income.
Q2) Merchandise inventory is reported on the balance sheet in the section entitled:
A) current assets.
B) fixed assets.
C) current liabilities.
D) stockholders' equity.
Q3) In valuing damaged merchandise for inventory purposes, net realizable value is the estimated selling price less any direct cost of disposal.
A)True
B)False
Q4) Allowance for Doubtful Accounts is a contra equity account.
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 is not a characteristic of accumulated depreciation account?
A) Accumulated depreciation represents cash reserved for asset replacement.
B) Accumulated depreciation account is a contra-asset account.
C) Accumulated depreciation may be disclosed in the notes to the financial statements.
D) Accumulated depreciation is reported on the balance sheet as a deduction from the cost of the asset.
Q2) If the proceeds from a sale of equipment is greater than the book value of the equipment as on the date of sale, a loss is recorded.
A)True
B)False
Q3) Land improvements include:
A) freight.
B) surveying fees.
C) sales tax.
D) outdoor lighting.
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Chapter 8: Liabilities and Stockholders Equity
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131 Flashcards
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Sample Questions
Q1) If paid-in capital in excess of par--preferred stock is $80,000, preferred stock is $500,000, paid-in capital in excess of par--common stock is $50,000, common stock is $1,000,000, and retained earnings is $230,000, the total stockholders' equity is $1,860,000.
A)True
B)False
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) For accounting purposes, stated value is treated the same way as par value.
A)True
B)False
Q4) If the market rate of interest is 6% and a corporation's bonds bear interest at 7%, the bonds will sell at a discount.
A)True
B)False
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Chapter 9: Financial Statement Analysis
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Sample Questions
Q1) The comparison of the financial data of a single company for two or more years is called horizontal analysis.
A)True
B)False
Q2) Based on the following data for the current year, compute the number of days' sales in accounts receivable? \(\begin{array}{ll}
\$ 800,000 & \text { Net sales on account during the year } \\
300,000 & \text { Cost of merchandise sold during the yeat } \\
45,000 & \text { Accounts receivable, be ginning of year } \\
35,000 & \text { Accounts receivable, end of year } \\
90,000 & \text { Inventory, be ginning of year } \\
110,000 & \text { Inventory, end of year } \end{array}\)
A) 7.5
B) 18.25
C) 16.0 D) 20.5
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Chapter 10: Accounting Systems for Manufacturing Businesses
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120 Flashcards
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Sample Questions
Q1) 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.
Q2) At the end of the fiscal year, if the balance in Factory Overhead is small, it would normally be:
A) transferred to Work-in-Process.
B) transferred to Cost of Goods Sold.
C) transferred to Finished Goods.
D) allocated between Work-in-Process and Finished Goods.
Q3) Sales commission is an example of factory overhead cost.
A)True
B)False
Q4) Depreciation expense on factory equipment is part 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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140 Flashcards
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Sample Questions
Q1) A low operating leverage is normal for highly automated industries.
A)True
B)False
Q2) The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents:
A) the maximum possible operating loss.
B) the maximum possible operating income.
C) the total fixed costs.
D) the break-even point.
Q3) Variable costs are costs that vary in total in direct proportion to changes in the activity level.
A)True
B)False
Q4) If direct materials cost per unit decreases, the amount of sales necessary to earn a desired amount of profit will decrease.
A)True
B)False
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13
Chapter 12: Differential Analysis and Product Pricing
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Sample Questions
Q1) Raphael Corporation uses the product cost concept of product pricing. Below is cost information for the production and sale of 50,000 units of its sole product. Raphael desires a profit equal to a 12% rate of return on invested assets of $1,000,000. \(\begin{array}{ll}
\$ 80,000.00 & \text { Fixed factory overhead cost } \\
50,000.00 & \text { Fixed selling and administrative costs } \\
5.00 & \text { Variable direct materials cost per urit } \\
8.50 & \text { Variable direct labor cost per unit } \\
2.50 & \text { Variable factory overhead cost per urit } \\
1.00 & \text { Variable selling and admiristrative cost per urit } \end{array}\) Refer to the information provided for Raphael Corporation. The markup percentage for the company's product is:
A) 25%.
B) 12.2%.
C) 29%.
D) 20%.
Q2) A cost that will not be affected by later decisions is termed as sunk cost. A)True
B)False
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Page 14
Chapter 13: Budgeting and Standard Cost Systems
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Sample Questions
Q1) The budget that summarizes future plans for the acquisition of fixed assets is the:
A) direct materials purchases budget.
B) production budget.
C) sales budget.
D) capital expenditures budget.
Q2) Kohlman Company began its operations on March 31 of the current year. Projected manufacturing costs for the first three months of business are $156,800, $195,200, and $217,600, respectively, for April, May, and June. Depreciation, insurance, and property taxes represent $28,800 of the estimated monthly manufacturing costs. Insurance was paid on March 31, and property taxes will be paid in November. Three-fourths of the remainder of the manufacturing costs are expected to be paid in the month in which they are incurred with the balance to be paid in the following month. Refer to the information provided for Kohlman Company. The cash payments for manufacturing in the month of April are:
A) $128,000.
B) $117,600.
C) $156,800.
D) $96,000.
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Page 15
Chapter 14: Performance Evaluation for Decentralized Operations
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Sample Questions
Q1) A decentralized business organization is one in which all major planning and operating decisions are made by top management.
A)True
B)False
Q2) For higher levels of management, responsibility accounting reports:
A) are more detailed than for lower levels of management.
B) are more summarized than for lower levels of management.
C) contain almost the same level of detail as reports for lower levels of management.
D) are rarely provided or reviewed.
Q3) The investment turnover is the ratio of:
A) income from operations to sales.
B) income from operations to invested assets.
C) assets to liabilities.
D) sales to invested assets.
Q4) Identify the formula for the rate of return on investment.
A) Invested Assets/Income From Operations
B) Sales/Invested Assets
C) Income From Operations/Sales
D) Income From Operations/Invested Assets
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Chapter 15: Capital Investment Analysis
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Sample Questions
Q1) Using the following partial table of present value of $1 at compound interest, determine the present value of $20,000 to be received three years hence, with earnings at the rate of 10% a year. \[\begin{array} { |
\hline 12 \% & 10 \% & 6 \% & \text { Year } \\
\hline 0.893 & 0.909 & 0.943 & 1 \\
\hline 0.797 & 0.826 & 0 .890 & 2 \\
\hline 0.712 & 0.751 & 0.840 & 3 \\
\hline 0.636 & 0.683 & 0.792 & 4 \\
\hline & & & \end{array}\]
A) $14,240
B) $16,800
C) $15,020
D) $15,840
Q2) Care must be taken while making capital investment decisions since it involves a long-term commitment of funds and affects operations for several years.
A)True
B)False
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Page 17