Accounting I Exam Practice Tests
Course Introduction
Accounting I introduces students to the fundamental principles and procedures of financial accounting. The course covers the accounting cycle, including the recording, classification, and summarization of business transactions. Students learn how to prepare and interpret basic financial statements such as the balance sheet, income statement, and statement of owner's equity. Topics also include the role of accounting in business decision-making, the application of generally accepted accounting principles (GAAP), and the ethical considerations in accounting practices. By the end of the course, students will possess a strong foundation in accounting concepts and techniques essential for further study and real-world business applications.
Recommended Textbook Financial Accounting 4th Canadian Edition by Robert; Libby
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1686 Verified Questions
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Chapter 1: Financial Statements and Business Decisions
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Sample Questions
Q1) Which financial statement for a business would you look at to determine the company's performance during an accounting period?
A)statement of financial position.
B)statement of cash flows.
C)income statement.
D)statement of changes in equity.
Answer: C
Q2) One feature of the statement of cash flows is to show the change in cash for the period.
A)True
B)False
Answer: True
Q3) The AcSB is currently the body responsible for establishing accounting standards. A)True
B)False
Answer: True
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Chapter 2: Investing and Financing Decisions and the Accounting System
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Sample Questions
Q1) If the correct accounts have been identified and the appropriate direction of the effect on each account has been determined,then the equation should remain in balance most of the time.
A)True
B)False
Answer: False
Q2) Share capital results when a company buys a new delivery truck.
A)True
B)False
Answer: False
Q3) The payment of a liability in cash will decrease shareholders'' equity.
A)True
B)False
Answer: False
Q4) Transactions have a dual economic effect on the fundamental accounting model.
A)True
B)False
Answer: True
Page 4
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Chapter 3: Operating Decisions and the Accounting System
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110 Flashcards
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Sample Questions
Q1) A company receives a $25,000 cash deposit from a customer on March 15 but will not deliver the goods until April 20.Which of the following statements is false?
A)Cash will be reported on the statement of cash flows for the month of March.
B)Revenue will be recorded and reported on the income statement for April.
C)A liability will be reported on the statement of financial position at the end of March.
D)Revenue will be recorded and reported on the income statement for March.
Answer: D
Q2) A company reports sales revenue of $120 million this year and $110 million last year.Their total assets in the current year are $80 million and last year's total assets were $75 million.What is the current year's asset turnover ratio?
A)1.46
B)1.50
C)1.55
D)1.61
Answer: C
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Chapter 4: Adjustments,financial Statements,and the Quality of Earnings
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Sample Questions
Q1) The primary purpose of the statement of cash flows is to report which of the following?
A)profit earned and dividends paid during the period.
B)all inflows and outflows of cash during the period.
C)assets owned and claims against those assets at the end of the period.
D)liability changes made by the financial department of the company during the period.
Q2) Profit under accrual timing is subject to more distortion than cash flow from operations because of large accruals and deferrals that can impact reported profit.
A)True
B)False
Q3) The statement of cash flows does which of the following?
A)explains what caused profit during the accounting period.
B)identifies all assets held at the end of the accounting period by type and amount.
C)explains that the trial balance is in balance.
D)explains all of the sources and uses of cash during the accounting period.
Q4) Is the adjusted trial balance a financial statement? Explain why or why not.
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Chapter 5: Communicating and Interpreting Accounting Information
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Sample Questions
Q1) Depreciation expense does not cause a cash outflow for the current period; therefore,it should never be shown on the statement of cash flows.
A)True
B)False
Q2) Which of the following transactions is not a direct source of cash?
A)Disposal of inventory for cash.
B)Borrowing cash.
C)Sale and issuance of shares for cash.
D)Sale of services on credit.
Q3) The income statement,statement of financial position and statement of cash flows all are prepared on the accrual basis.
A)True
B)False
Q4) The 20B income statement for Ryan Corporation showed the following: What was the cash flow from operating activities?
A)$66,000.
B)$70,000.
C)$82,000.
D)$86,000.
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Chapter 6: Reporting and Interpreting Sales Revenue, receivables, and Cash
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135 Flashcards
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Sample Questions
Q1) Which of the following statements is true?
A)Accumulated depreciation is a contra account in the income statement.
B)The current ratio is current assets divided by current liabilities.
C)Retained earnings is the accumulated profit plus the accumulated dividends paid.
D)Book value of a building is the cost less the current year's depreciation.
Q2) A complete set of financial statements for most businesses includes only the following: income statement,statement of financial position,and statement of cash flows.
A)True
B)False
Q3) Libbyway,Inc.,paid cash dividends of $20,000 during 20A.In its statement of cash flows,the dividends would be shown as a cash flow used in which of the following?
A)Operating activities.
B)Financing activities.
C)Investing activities.
D)Distributing activities.
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Chapter 7: Reporting and Interpreting Cost of Goods Sold and Inventory
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Sample Questions
Q1) Albert Company agreed to build a bowling complex for Pins R Us for a price of $2,000,000.The project is expected to take three years to complete.Albert estimated that the total cost of the project would be $1,600,000.During the first year,construction costs amount to $600,000.If Albert uses the percentage of completion method,how much revenue will be recognized for the first year?
A)$0.
B)$150,000.
C)$600,000.
D)$750,000.
Q2) Information gained from an aging analysis of trade receivables provides management with insights regarding future cash flows,losses due to uncollectible accounts,and the general effectiveness of the credit and collection activities of the entity.
A)True
B)False
Q3) Calculate the average collection period for 2012 and 2011: a.2012 __________ b.2011 __________
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Chapter 8: Reporting and Interpreting Property, plant, and Equipment; Intangibles; and Natural Resources
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Sample Questions
Q1) Purchases discounts should be recorded as an addition to the cost of purchases in the calculation of cost of goods sold.
A)True
B)False
Q2) Purchases,returns and allowances should be added to the cost of purchases on the income statement,assuming the periodic inventory system is used.
A)True
B)False
Q3) Ownership of goods passes from the seller to the buyer after the buyer has paid for the goods.
A)True
B)False
Q4) A company that has decreased its inventory between years will cause a decrease in cash flow from operations.
A)True
B)False
Q5) A cost flow assumption need not match the physical flow of inventory.
A)True
B)False
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Chapter 9: Reporting and Interpreting Liabilities
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Sample Questions
Q1) When assets are disposed of through sale or abandonment,we recognize gains or losses when the asset's net carrying amount is not equal to the cash received.
A)True
B)False
Q2) One example of a capital expenditure is ordinary maintenance cost such as an oil change for a company truck.
A)True
B)False
Q3) Since the Capital Cost Allowance is used by most corporations for tax reporting,the majority of corporations no longer use accelerated methods for financial reporting since there is no tax advantage to be gained by using those methods.
A)True
B)False
Q4) The estimate of residual value made at the beginning of the useful life has no relationship to the book value at the end of the asset's useful life.
A)True
B)False
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Chapter 10: Reporting and Interpreting Bond Securities
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Sample Questions
Q1) In 2011,P Co reported a current ratio of 1.47 and in 2012,0.55.In examining their statement of financial position for 2012,they disclosed current assets of $4,362 million and current liabilities of $7,914 million.In 2011,they had no short-term borrowings but they disclosed $3,921 million in short-term borrowings for 2012.What would P Co's current ratio have been in 2012 if they had not borrowed those funds?
A)0.37
B)0.98
C)1.09
D)It cannot be computed without knowing the amount of current liabilities in 2011 so we can compute the average current liabilities in the denominator.
Q2) Goodman Company borrowed $100,000 cash on September 1,20B,and signed a one-year,12%,interest-bearing note payable.What would be the required adjusting entry at the end of the accounting period,December 31,20B?
A)Choice A
B)Choice B
C)Choice C
D)Choice D
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Chapter 11: Reporting and Interpreting Stockholders Equity
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Sample Questions
Q1) On July 1,20B,WildWorld Inc.sold (issued)300,$1,000,ten-year,7% bonds at 101.The bonds were dated July 1,20B,and semi-annual interest will be paid each December 31 and June 30.WildWorld uses straight-line amortization.What is the bond liability that would be reported on the statement of financial positionat December 31,20B?
A)$300,000
B)$302,700
C)$302,850
D)$303,000
Q2) The financial leverage ratio is a measure of a company's profitability. A)True B)False
Q3) A long-term note may be secured by a document called a A)premium. B)debenture. C)bond.
D)mortgage.
Q4) An unsecured bond usually is called an indenture. A)True B)False
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Chapter 12: Statement of Cash Flows
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Sample Questions
Q1) The most common reason a company would declare a share split is to reduce the market price of its share to increase the trading activity.
A)True
B)False
Q2) Dividends in arrears on cumulative preferred shares
A)never have to be paid,even if common dividends are paid.
B)must be paid before common shareholders can receive a dividend.
C)should be recorded as a current liability until they are paid.
D)enable the preferred shareholders to share equally in corporate profit with the common shareholders.
Q3) Both inflows (e.g.,issuance of share capital)and outflows (e.g.,repurchase of shares)are reported in the Financing Activities section of the statement of cash flows.
A)True
B)False
Q4) Legal capital is the permanent amount of capital,defined by law,that must remain invested in the corporation.
A)True
B)False
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Chapter 13: Analyzing Financial Statements
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Sample Questions
Q1) Calculate C Co's gross profit ratio for 2012 and 2011 respectively.
A)30.3% and 29.6%
B)69.7% and 70.4%
C)20.1% and 26.4%
D)40.6% and 45.7%
Q2) Long-term creditors are usually most interested in evaluating
A)liquidity.
B)marketability.
C)profitability.
D)solvency.
Q3) Which of the following describes book value per common share?
A)It is not widely used in assessing the future dividend potential of the corporation.
B)It is a good measure of management performance.
C)It is usually greater than the market value per share.
D)It is a measure of liquidity.
Q4) The current ratio is one indicator of the liquidity of a company.
A)True
B)False
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