Accounting for Non-Majors
Textbook Exam Questions
Course Introduction
Accounting for Non-Majors is designed to introduce students without an accounting background to the essential concepts and principles of financial and managerial accounting. The course covers the fundamentals of recording, analyzing, and reporting business transactions, interpreting financial statements, and understanding the role of accounting in business decision-making. Emphasizing practical application, students will develop the skills needed to comprehend key accounting information, apply basic budgeting techniques, and assess the financial health of an organization, preparing them to confidently use accounting data in non-accounting roles.
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) Large corporations such as ExxonMobil and Walmart are organized as limited liability corporations.
A)True
B)False
Answer: False
Q2) A note payable requires payment of the amount borrowed plus A)interest.
B)cash.
C)accounts payable.
D)investments.
Answer: A
Q3) The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time,such as a month or year,is called a(n)
A)prior period statement.
B)statement of retained earnings.
C)income statement.
D)balance sheet.
Answer: C
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Chapter 2: Basic Accounting Concepts
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Sample Questions
Q1) For EFG Co. ,the transaction "Payment to creditors" would
A)increase total assets.
B)decrease total assets.
C)have no effect on total assets.
D)decrease stockholders' equity.
Answer: B
Q2) Receiving cash for fees earned affects which financial statement elements?
A)Assets only
B)Stockholders' equity only
C)Assets and stockholders' equity
D)Assets and liabilities
Answer: C
Q3) BNC Company earns revenues and as a result collects cash.Which of the following financial statement elements are increased?
A)Cash only
B)Stockholders' equity only
C)Liabilities
D)Cash and stockholders' equity
Answer: D
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Page 4
Chapter 3: Accrual Accounting Concepts
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Sample Questions
Q1) 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 Jedi record the revenue?
A)January
B)February
C)Some in January and some in February
D)Jedi should not record any revenue
Answer: A
Q2) Which of the following is an example of an accrued expense?
A)Salary owed but not yet paid
B)Fees received but not yet earned
C)Supplies on hand
D)A two-year premium paid on a fire insurance policy
Answer: A
Q3) The fixed asset section of a balance sheet may also be labeled as property,plant,and equipment.
A)True
B)False
Answer: True
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Chapter 4: Accounting for Merchandising Businesses
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Sample Questions
Q1) NBC Company had $32,000 in net sales,$15,000 in cost of merchandise sold,$18,000 in operating expenses,and $2,000 in other income.What is NBC Company's gross profit?
A)$17,000
B)$3,000
C)$1,000
D)($1,000)
Q2) When the terms of sale are FOB shipping point,the buyer should pay the transportation charges.
A)True
B)False
Q3) Discounts taken by the buyer for early payment of an invoice are called purchases discounts by the buyer.
A)True
B)False
Q4) If payment is due by the end of the month in which the sale is made,the invoice terms are expressed as n/eom.
A)True
B)False
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6
Chapter 5: Sarbanes-Oxley,internal Control,and Cash
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Sample Questions
Q1) A check drawn by a depositor for $810 in payment of a liability was recorded by the depositor as $180.This item would be included on the bank reconciliation as a(n)
A)addition to the balance per the depositor's records.
B)addition to the balance per the bank statement.
C)deduction from the balance per the bank statement.
D)deduction from the balance per the depositor's records.
Q2) Which of the following should NOT be considered cash by an accountant?
A)Money orders
B)Bank checking accounts
C)Postage stamps
D)Travelers' checks
Q3) On the bank's accounting records,customers' accounts are normally shown as A)revenue.
B)a liability.
C)an asset.
D)expenses.
Q4) List the principal advantage of Electronic Funds Transfers.
Q5) What is a special-purpose cash fund? What is its purpose? Give two examples.
Q6) Discuss what would be included under personnel policies.
Page 7
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Chapter 6: Receivables and Inventories
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Sample Questions
Q1) At the end of a period before the accounts are adjusted,Allowance for Doubtful Accounts has a balance of $250,and net sales on account for the period total $500,000.If uncollectible accounts expense is estimated at 1% of net sales on account,the current provision to be made for uncollectible accounts expense is $4,997.50.
A)True
B)False
Q2) The party promising to pay a note at maturity is the payee.
A)True
B)False
Q3) A 90-day,10% note for $10,000 dated April 1 is received from a customer on account.The face value of the note is
A)$10,000.
B)$11,000.
C)$1,000.
D)$9,000.
Q4) Other than accounts receivable and notes receivable,name other receivables that might be included on the balance sheet.
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Chapter 7: Fixed Assets and Intangible Assets
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Sample Questions
Q1) A pressurized spray painter was purchased on April 1 of the fiscal year for $3,900.It has a useful life of 4 years and a residual value of $300.Determine depreciation expense for the first two years,assuming a fiscal year end of December 31 and using (a)the straight-line method and (b)the double-declining-balance method.
Q2) Amortization refers to the systematic transfer of fixed assets to expense accounts.
A)True
B)False
Q3) The Accumulated Depreciation account is deducted from the cost of fixed assets on the balance sheet.
A)True
B)False
Q4) A company purchased a photocopy machine for $16,000.It has a useful life of 4 years and a residual value of $1,000.Compute depreciation for the second year under each of the following methods: (a)straight-line and (b)double-declining-balance.
Q5) An intangible asset is one that has a physical existence.
A)True
B)False
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Page 9
Chapter 8: Liabilities and Stockholders Equity
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Sample Questions
Q1) Most employers are levied a tax on payrolls for A)sales tax.
B)medical insurance premiums.
C)federal unemployment compensation tax.
D)union dues.
Q2) For the year that just ended,a company reports net income of $1,500,000.There are 500,000 shares authorized,300,000 shares issued,and 250,000 shares of common stock outstanding.What is the earnings per share?
A)$5.00
B)$2.50
C)$6.00
D)$3.00
Q3) If prior to the last weekly payroll period of the calendar year,the cumulative earnings for an employee are $75,200,earnings subject to social security tax are $106,800,and the tax rate is 7.5%,the employer's social security tax on the $800 gross earnings paid on the last day of the year is $60.
A)True
B)False
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Chapter 9: Financial Statement Analysis
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Sample Questions
Q1) Statements in which all items are expressed in relative terms are called common-size statements.
A)True
B)False
Q2) If the accounts receivable turnover for the current year has decreased when compared with the ratio for the preceding year,there has been an acceleration in the collection of receivables.
A)True
B)False
Q3) Which of the following is NOT an analysis used in assessing solvency?
A)Inventory analysis
B)Number of times interest charges are earned
C)Asset turnover
D)Accounts receivable analysis
Q4) Which of the following is a measure of the liquid position of a corporation?
A)Earnings per share
B)Inventory turnover
C)Current ratio
D)Number of times interest charges earned
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Chapter 10: Accounting Systems for Manufacturing
Businesses
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Sample Questions
Q1) Activity-based costing is a method of accumulating and allocating costs by department.
A)True
B)False
Q2) Calculate direct materials cost used in production for Crawford,Inc.
A)$231,000
B)$240,000
C)$250,000
D)$249,000
Q3) Heedy Winery accumulates the costs incurred in the labeling process in an activity cost pool.Costs for the labeling process are estimated to be $320,000 for the coming year,and the winery expects to generate 640,000 labels.Production for its top-selling wine is estimated at 160,000 bottles.How much overhead from the labeling process will be allocated to this particular variety of wine?
A)$40,000
B)$80,000
C)$160,000
D)$320,000
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Chapter 11: Cost Behavior and Cost-Volume-Profit Analysis
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Sample Questions
Q1) If the volume of sales is $6,000,000 and sales at the break-even point amount to $4,800,000,the margin of safety is 25%.
A)True
B)False
Q2) Cost-volume-profit analysis can be presented in both equation form and graphic form.
A)True
B)False
Q3) If the unit selling price is $40,the volume of sales is $3,000,000,sales at the break-even point amount to $2,500,000,and the maximum possible sales are $3,300,000,the margin of safety is 12,500 units.
A)True
B)False
Q4) Total variable costs change as the level of activity changes.
A)True B)False
Q5) The fixed cost per unit varies with changes in the level of activity.
A)True
B)False
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Chapter 12: Differential Analysis and Product Pricing
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Sample Questions
Q1) When deciding to make or buy a part needed for the manufacturing process,management needs to consider whether the plant has excess production capacity available to make the part or if current production will need to be interrupted to manufacture the part.
A)True
B)False
Q2) In addition to the differential costs in an equipment replacement decision,the remaining useful life of the old equipment and the estimated life of the new equipment are important considerations.
A)True
B)False
Q3) Hill Co.can further process Product O to produce Product P.Product O is currently selling for $60 per pound and costs $42 per pound to produce.Product P would sell for $82 per pound and would require an additional cost of $13 per pound to produce. The differential cost of producing Product P is $13 per pound.
A)True
B)False
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Chapter 13: Budgeting and Standard Cost Systems
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Sample Questions
Q1) A budget procedure that provides for the maintenance at all times of a twelve-month projection into the future is called continuous budgeting.
A)True
B)False
Q2) Budgets are normally used by both profit-making businesses and nonprofit organizations.
A)True
B)False
Q3) What is the direct labor time variance?
A)$17,400 favorable
B)$17,400 unfavorable
C)$18,000 favorable
D)$18,000 unfavorable
Q4) If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12,the direct materials price variance was $800 favorable.
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 would be MOST effective in a small owner/manager-operated business?
A)Profit centers
B)Centralization
C)Investment centers
D)Cost centers
Q2) Assume that Division X has generated sales revenue of $3,025,000 and achieved income from operations of $242,000 using $1,800,000 of invested assets.If management desires a minimum rate of return of 12%,the residual income is
A)$26,000.
B)$29,040.
C)$147,000.
D)$186,960.
Q3) If divisional income from operations is $75,000,invested assets are $637,500,and the minimum rate of return on invested assets is 6%,the residual income is $36,750.
A)True
B)False
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Chapter 15: Capital Investment Analysis
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Sample Questions
Q1) Internal rate of return is often called the payback rate of return.
A)True
B)False
Q2) If a proposed expenditure of $80,000 for a fixed asset with a 4-year life has an annual expected net cash flow and net income of $32,000 and $12,000,respectively,the cash payback period is 2.5 years.
A)True
B)False
Q3) A qualitative characteristic that may impact upon capital investment analysis is manufacturing productivity.
A)True
B)False
Q4) For years one through five,a proposed expenditure of $250,000 for a fixed asset with a 5-year life has expected net income of $40,000,$35,000,$25,000,$25,000,and $25,000,respectively,and net cash flows of $90,000,$85,000,$75,000,$75,000,and $75,000,respectively.The cash payback period is 2.5 years.
A)True
B)False
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