Accounting I Final Exam
Course Introduction
Accounting I is an introductory course that provides students with a foundational understanding of the principles and practices of financial accounting. The course covers essential topics such as the accounting cycle, double-entry bookkeeping, preparation of financial statements, and the recording and reporting of business transactions. Students will learn how to analyze and interpret financial information to support effective decision-making within organizations. Emphasis is placed on understanding the role of accounting in business operations, as well as the ethical considerations involved in financial reporting. This course is suitable for students seeking to pursue further studies in accounting, finance, or related fields.
Recommended Textbook
Financial Accounting 10th Edition by Walter T. Harrison
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Chapter 1: The Financial Statements
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Sample Questions
Q1) The major types of transactions that affect retained earnings are:
A)paid-in capital and common stock.
B)assets and liabilities.
C)revenues,expenses,and dividends.
D)revenues and liabilities.
Answer: C
Q2) The principle stating that assets acquired by the business should be recorded at their actual cost on the date of purchase is the:
A)historical cost principle.
B)objectivity principle.
C)reliability principle.
D)stable dollar principle.
Answer: A
Q3) Which financial statement answers the following question: What is the company's financial position?
A)statement of cash flows
B)income statement
C)statement of retained earnings
D)balance sheet
Answer: D
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Chapter 2: Transaction Analysis
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Sample Questions
Q1) Accounts are listed in random order in a trial balance.
A)True
B)False Answer: False
Q2) An accounts receivable usually specifies an interest rate. A)True
B)False Answer: False
Q3) If a posting error has occurred whereby a debit is posted as a credit,then the out-of-balance amount on the trial balance will be evenly divisible by: A)11.
B)9.
C)2.
D)5. Answer: C
Q4) A trial balance is one of a company's major financial statements.
A)True
B)False Answer: False
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Chapter 3: Accrual Accounting Income
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Sample Questions
Q1) Under cash-basis accounting,income statements and balance sheets are misstated.
A)True
B)False
Answer: True
Q2) When preparing the financial statements of a company:
A)liabilities are not classified on the balance sheet.
B)current assets are the most liquid assets.
C)the balance sheet must be prepared using the account format.
D)the income statement can be prepared using the multi-step or report format.
Answer: B
Q3) On October 1,McReady Company paid six months' insurance in advance totaling $9,000.An adjusted trial balance prepared on December 31 would include a balance in the Prepaid Insurance account of:
A)$0.
B)$3,000.
C)$4,500.
D)$9,000.
Answer: C
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Chapter 4: Internal Control Cash
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Sample Questions
Q1) What are some examples of the misappropriation of assets?
A)An employee overstates an expense reimbursement request after a company trip.
B)An employee steals some money from the petty cash fund.
C)Kickback scheme between a purchasing agent and vendor
D)all of the above
Q2) The type of fraud committed by company managers who make false and misleading entries in the books in order to improve a company's financial statements is called:
A)misappropriation of assets.
B)fraudulent financial reporting.
C)embezzlement.
D)collusion.
Q3) E-commerce pitfalls include all of the following EXCEPT:
A)stolen credit card numbers.
B)phishing expedition.
C)encryption.
D)trojan horses.
Q4) The person to whom a check is paid is referred to as the maker.
A)True
B)False
Page 6
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Chapter 5: Short-Term Investments Receivables
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Sample Questions
Q1) Accounts (trade)receivables are amounts to be collected from customers from the sale of goods or services.
A)True B)False
Q2) If the quick ratio is 2.0,and the current liabilities are $110,000,what is the amount of quick assets?
A)$110,000
B)$200,000
C)$220,000
D)none of the above
Q3) The percent-of-sales method of computing uncollectible accounts for Accounts Receivable is used for:
A)interim statements because it is more accurate than the aging method.
B)annual statements because it is more accurate than the aging method.
C)interim statements because it is easier than the aging method.
D)annual statements because it is easier than the aging method.
Q4) Uncollectible-account expense is included in Cost of Goods Sold on the income statement.
A)True B)False
Page 7
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Chapter 6: Inventory Cost of Goods Sold
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Sample
Questions
Q1) Which inventory costing method provides the most realistic measure of net income?
A)FIFO
B)LIFO
C)average cost
D)specific identification
Q2) Roadway Company purchases inventory from Fedway Company with the shipping terms FOB destination.This means that:
A)Roadway Company owns the goods while they are in transit.
B)Legal title passes to Roadway Company when the goods leave Fedway's shipping dock.
C)Fedway Company will pay the freight on this transaction.
D)Roadway Company will include the goods in their inventory as soon as they leave Fedway's shipping dock.
Q3) A company will include goods out on consignment in their ending inventory.
A)True
B)False
Q4) The gross profit percentage is net sales divided by gross profit.
A)True
B)False
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Chapter 7: Plant Assets,natural Resources, Intangibles
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Q1) The exclusive right to produce and sell an invention like the smart phone requires a: A)copyright.
B)license.
C)trademark.
D)patent.
Q2) A distinctive identification of a product or a service is a: A)patent.
B)trademark.
C)copyright.
D)license.
Q3) Costs that maintain a plant asset in its present condition should be ________.Costs that restore a plant asset to working order or its prior condition should be ________.
A)capitalized; capitalized
B)capitalized; expensed
C)expensed; capitalized
D)expensed; expensed
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Chapter 8: Long-Term Investments: The Time Value of Money
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Sample Questions
Q1) An investor receives a cash dividend from a long-term available-for-sale investment.Which journal entry is required?
A)a debit to Cash and a credit to Dividend Revenue
B)a debit to Cash and a credit to Interest Revenue
C)a debit to Cash and credit to Investment in Available-for-Sale Securities
D)a debit to Cash and credit to Interest Receivable
Q2) If an investor owns less than 20% of the common stock of another company as a long-term investment:
A)the equity method of accounting should be used for the investment.
B)the investor has a controlling interest in the investee.
C)the investor usually has little or no influence on the investee.
D)the investor has significant influence on the investee.
Q3) Milton Company owns 30% interest in the stock of Darcy Corporation.During the year,Darcy pays $20,000 in dividends to Milton,and reports $100,000 in net income.Milton Company will report Equity-Method Investment Revenue of:
A)$6,000.
B)$24,000.
C)$30,000.
D)$36,000.
Page 10
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Chapter 9: Liabilities
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Sample Questions
Q1) On January 1,2014,Tarantino Corporation issued $4,000,000,9%,5-year bonds at 96.The bonds pay semiannual interest on January 1 and July 1.Tarantino uses the straight-line method of amortization and has a calendar year end.
Required:
Prepare all the journal entries that Tarantino Corporation would make related to this bond issue through January 1,2015.Omit explanations.
Q2) If,as part of the accounting for a lease,the lessee debits an asset and credits a liability,then the lease must be a(n):
A)purchased lease.
B)operating lease.
C)cancelable lease.
D)capital lease.
Q3) If $500,000,6% bonds are issued on January 1 and pay interest semiannually,the amount of interest paid on July 1 will be $15,000.
A)True B)False
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Chapter 10: Stockholders Equity
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Sample Questions
Q1) What statement about corporations is FALSE?
A)An advantage of a corporation is ease of transfer of ownership.
B)An advantage of a corporation is a greater ability to raise capital than other forms of organization.
C)An advantage of a corporation is limited life.
D)An advantage of a corporation is stockholders have limited liability for a corporation's debts and acts.
Q2) Stockholders have limited liability for a corporation's debts.
A)True
B)False
Q3) When treasury stock is purchased,accountants record treasury stock at:
A)the stock's par value.
B)the stock's original selling price.
C)the stock's current market value.
D)the difference between the original selling price and the par value.
Q4) The Retained Earnings account contains cash for paying dividends to the stockholders.
A)True
B)False
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Statement, the Statement of Comprehensive Income
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Sample Questions
Q1) The income statement and the statement of cash flows often paint the same picture of the company.
A)True
B)False
Q2) Income tax expense is used to calculate income from operations.
A)True
B)False
Q3) Financial statement fraud involving expense recognition involves:
A)understating the amount of expenses.
B)failure to record and disclose some expenses.
C)delaying the proper recognition of expenses.
D)all of the above.
Q4) The operating expense section of an income statement would NOT include:
A)salaries expense.
B)utilities expense.
C)supplies expense.
D)interest expense.
Q5) Operating income includes income from discontinued operations.
A)True
B)False Page 13
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Chapter 12: The Statement of Cash Flows
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Sample Questions
Q1) Examples of financing activities on a statement of cash flows do NOT include:
A)issuing stock.
B)borrowing money.
C)buying treasury stock.
D)declaring stock dividends.
Q2) A statement of cash flows reports the cash inflows and cash outflows for a company at a point in time.
A)True
B)False
Q3) The three types of activities reported on the statement of cash flows are presented in the following order:
A)operating,investing,and financing.
B)financing,operating,and investing.
C)investing,operating,and financing.
D)financing,investing,and operating.
Q4) The statement of cash flows is an optional statement.
A)True
B)False
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Chapter 13: Financial Statement Analysis
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Sample Questions
Q1) In the statement of cash flows,more purchases of long-term assets than sales of long-term assets are considered a sign of a healthy company.
A)True
B)False
Q2) Expressing cash and cash equivalents as a percentage of total assets is an example of:
A)horizontal analysis.
B)economic value added.
C)ratio analysis.
D)vertical analysis.
Q3) How is the trend percentage for sales in 2015 computed? The base year is 2000.
A)Year 2015 sales ÷ Year 2000 sales
B)(Year 2015 sales - Year 2000 sales)÷ Year 2000 sales
C)(Year 2015 sales - Year 2000 sales)÷ Year 2015 sales
D)(Year 2015 sales ÷ Year 2000 sales)× 100
Q4) Horizontal analysis highlights changes in financial statement line items from year to year.
A)True B)False
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