Accounting I Solved Exam Questions
Course Introduction
Accounting I is an introductory course that provides students with a foundational understanding of accounting principles and practices. The course covers essential topics such as the accounting cycle, double-entry system, preparation of financial statements, and the analysis of financial transactions. Students will learn how to record, classify, and summarize basic business transactions and gain familiarity with key concepts such as assets, liabilities, equity, revenues, and expenses. By the end of the course, students will have the skills necessary to manage simple accounting records and interpret basic financial information, preparing them for more advanced study in accounting and finance.
Recommended Textbook
Corporate Financial Accounting 12th Edition by Carl
S. Warren
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2628 Verified Questions
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Chapter 1: Introduction to Accounting and Business
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Sample Questions
Q1) The basic difference between manufacturing and merchandising companies is the completion level of the products they purchase for resale to customers.
A)True
B)False
Answer: True
Q2) Given the following: Beginning retained earnings $ 58,000
Ending retained earnings $ 30,000
Dividends declared and paid $ 25,000
Calculate net income or net loss.
Answer: \(\begin{array}{lr}
\text { Ending retained earnings } & \$ 30,000 \\
\text { Beginning retained earnings } & 58,000 \\
\text { Decre ass in retained earnings } & \$ 28,000 \\
\text { Less dividends } & 25,000 \\
\text { Net loss } & \$ 3,000
\end{array}\)
Q3) Paying an account payable increases liabilities and decreases assets.
A)True
B)False
Answer: False
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Chapter 2: Analyzing Transactions
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Sample Questions
Q1) Discuss and describe how errors in accounts can be found. Answer: 1)through audit procedures
2)by looking at the trial balance
3)by chance
Q2) Which of the following entries records the cash sale of capital stock to stockholders?
A)debit Capital Stock;credit Cash
B)debit Cash;credit Capital Stock
C)debit Cash;credit Revenue
D)debit Revenue;credit Cash
Answer: B
Q3) The normal balance of a capital stock account is a debit.
A)True
B)False
Answer: False
Q4) The erroneous arrangement of digits,such as writing $45 as $54,is called a slide. A)True
B)False
Answer: False
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Page 4
Chapter 3: The Adjusting Process
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Sample Questions
Q1) The systematic allocation of land's cost to expense is called depreciation.
A)True
B)False
Answer: False
Q2) The account type and normal balance of Prepaid Expense is
A)revenue,credit
B)expense,debit
C)liability,credit
D)asset,debit
Answer: D
Q3) Adjustments for accruals are needed to record a revenue that has been earned or an expense that has been incurred but not recorded.
A)True
B)False Answer: True
Q4) The updating of accounts is called the adjusting process.
A)True
B)False Answer: True
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Chapter 4: Completing the Accounting Cycle
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Sample Questions
Q1) Office Equipment is an example of a current asset account.
A)True
B)False
Q2) In the accounting cycle,the last step is
A)preparing the financial statements
B)journalizing and posting the adjusting entries
C)preparing a post-closing trial balance
D)journalizing and posting the closing entries
Q3) Liabilities that will be due within one year or less and that are to be paid out of current assets are called current liabilities.
A)True
B)False
Q4) The amount of the net income for a period appears on both the income statement and the balance sheet for that period.
A)True
B)False
Q5) The most important output of the accounting cycle is the financial statements. A)True
B)False
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Chapter 5: Accounting for Merchandising Businesses
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Sample Questions
Q1) Purchased goods in transit,shipped FOB destination,should be excluded from ending inventory of the buyer.
A)True
B)False
Q2) Office salaries,depreciation of office equipment,and office supplies are examples of what type of expense?
A)selling expense
B)miscellaneous expense
C)administrative expense
D)other expense
Q3) If the perpetual inventory system is used,an account entitled Cost of Merchandise Sold is included in the general ledger.
A)True
B)False
Q4) Conquest Company uses a perpetual inventory system.Conquest purchased $1,500 of merchandise on account and payment was made within the discount period.The credit terms were 2/10,n/30.Journalize Conquest's purchase and payment.
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Chapter 6: Inventories
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Sample Questions
Q1) During times of rising prices,which of the following is not an accurate statement?
A)Average costing will yield results that are between those of FIFO and LIFO.
B)LIFO will result in a higher cost of goods sold than FIFO.
C)FIFO will result in a higher net income than LIFO.
D)LIFO will result in higher income taxes than FIFO.
Q2) If the perpetual inventory system is used,the account entitled Merchandise Inventory is debited for purchases of merchandise.
A)True
B)False
Q3) While taking a physical inventory,a company counts their inventory as less than the actual amount on hand.How will this error affect the income statement?
Q4) Use of the retail inventory method requires taking a physical count of inventory. A)True B)False
Q5) The lower of cost or market is a method of inventory valuation. A)True B)False
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Chapter 7: Sarbanes-Oxley, internal Control, and Cash
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Sample Questions
Q1) The Sarbanes-Oxley Act requires that financial statements of all public companies report on management's conclusions about the effectiveness of the company's internal control procedures.
A)True
B)False
Q2) The debit balance in Cash Short and Over at the end of an accounting period is reported as
A)an expense on the income statement
B)income on the income statement
C)an asset on the balance sheet
D)a liability on the balance sheet
Q3) On August 3rd,Sonar Sales decides to establish a $275.00 Petty Cash Account to relieve the burden on Accounting.
Q4) Money orders are considered cash.
A)True
B)False
Q5) The petty cash fund eliminates the need for a bank checking account.
A)True
B)False
Q6) List the principal advantage of Electronic Funds Transfers.
Page 9
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Chapter 8: Receivables
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Sample Questions
Q1) At the end of the current year,Accounts Receivable has a balance of $675,000;Allowance for Doubtful Accounts has a debit balance of $5,400;and net sales for the year total $3,000,000.An analysis of receivables indicates the uncollectible receivables are estimated to be $45,000.
Determine (a)the amount of the adjusting entry for bad debt expense; (b)the adjusted balances of Accounts Receivable,Allowance of Doubtful Accounts;and Bad Debt Expense;and (c)the net realizable value of accounts receivable.
Q2) The maturity value of a note receivable is always the same as its face value. A)True B)False
Q3) At the end of the current year,Accounts Receivable has a balance of $550,000;Allowance for Doubtful Accounts has a credit balance of $5,500;and net sales for the year total $2,500,000.An analysis of receivables estimates uncollectible receivables as $25,000.
Determine (a)the amount of the adjusting entry for bad debt expense; (b)the adjusted balances of Accounts Receivable,Allowance of Doubtful Accounts;and Bad Debt Expense;and (c)the net realizable value of accounts receivable.
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Chapter 9: Fixed Assets and Intangible Assets
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Sample Questions
Q1) The normal balance of the accumulated depreciation account is debit.
A)True
B)False
Q2) Expected useful life is
A)calculated when the asset is sold.
B)estimated at the time that the asset is placed in service.
C)determined each year that the depreciation calculation is made.
D)none of the answers are correct.
Q3) When exchanging equipment,if the trade-in allowance is greater than the book value a loss results.
A)True
B)False
Q4) Xtra Company purchased goodwill from Argus for $96,000.Argus had developed the goodwill over 12 years.How much would Xtra amortize the goodwill for its first year?
A)$7,000
B)$ 8,000
C)Goodwill is not amortized.
D)Not enough information.
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11
Chapter 10: Current Liabilities and Payroll
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Sample Questions
Q1) The journal entry a company uses to record fully funded pension rights for its salaried employees at the end of the year is
A)debit Salary Expense;credit Cash
B)debit Pension Expense;credit Unfunded Pension Liability
C)debit Pension Expense;credit Unfunded Pension Liability and Cash
D)debit Pension Expense;credit Cash
Q2) The payroll register of Seaside Architecture Company indicates $870 of Social Security and $217 of Medicare tax withheld on total salaries of $14,500 for the period.Assume earnings subject to state and federal unemployment compensation taxes are $5,250.at the federal rate of 0.8% and state rate of 5.4%.Provide the journal entry to record the payroll tax expense for the period.
Q3) Quick assets include
A)cash;cash equivalents,receivables,prepaid expenses,and inventory
B)cash;cash equivalents,receivables,and prepaid expenses
C)cash;cash equivalents,receivables,and inventory
D)cash;cash equivalents,and receivables
Q4) The proceeds from discounting a $20,000,60-day,note payable at 6% is $20,200.
A)True
B)False
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Chapter 11: Corporations: Organization, stock Transactions, and Dividends
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Sample Questions
Q1) The price at which a stock can be sold depends upon a number of factors.Which statement below is not one of those factors?
A)the financial condition,earnings record,and dividend record of the corporation
B)investor expectations of the corporation's earning power
C)how high the par value is
D)general business and economic conditions and prospects
Q2) At December 31st,the Jeter Company had the following ending balances;
Retained Earnings - $100,000
Preferred Stock ($100 par,7% cumulative,10,000 authorized,5,000 issued and outstanding)- 500,000
Treasury stock - $35,000
Additional paid in capital - common stock - 400,000
Additional paid in capital - preferred stock - 50,000
Common stock ($5.00 par value,100,000 shares authorized,60,000 issued)- 300,000
Prepare the stockholders equity section of the balance sheet in good form with all of the required disclosures..
Q3) Paid-in capital may originate from real estate donated to the corporation.
A)True
B)False
Page 13
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Chapter 12: Long-Term Liabilities: Bonds and Notes
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Sample Questions
Q1) The face value of bonds is quoted as a percentage of the bonds' market value.
A)True
B)False
Q2) When the effective-interest method is used,the amortization of the bond premium
A)increases interest expense each period
B)decreases interest expense each period
C)increases interest expense in some periods and decreases interest expense in other periods
D)has no effect on the interest expense in any period
Q3) On the first day of the fiscal year,a company issues a $500,000,8%,10 year bond that pays semi-annual interest of $20,000 ($500,000 ´ 8% ´ 1/2),receiving cash of $520,000.Journalize the entry to record the first interest payment and amortization of premium using the straight-line method.
Q4) The present value of $30,000 to be received in two years,at 12% compounded annually,is (rounded to nearest dollar)
A)$23,916
B)$37,632
C)$23,700
D)$30,000
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Chapter 13: Investments and Fair Value Accounting
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Sample Questions
Q1) It is possible for one company to influence the operating policies of another company unless it owns more than 50% interest in that company.
A)True
B)False
Q2) The company whose more than 50% stock is owned by the another company is called the
A)controlling company.
B)investee company.
C)subsidiary company.
D)sibling company.
Q3) What are the total proceeds from the February 1,2015 sale?
A)$52,400
B)$51,500
C)$50,000
D)$52,000
Q4) Growth firms generally pay regular dividends to stockholders.
A)True
B)False
Q5) (1)Discuss factors contributing to the trend to fair value accounting. (2)What are some of the disadvantages associated with using fair value?
Page 15
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Chapter 14: Statement of Cash Flows
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Sample Questions
Q1) A company had net income of $252,000.Depreciation expense is $26,000.During the year,Accounts Receivable and Inventory increased by $15,000 and $40,000,respectively.Prepaid Expenses and Accounts Payable decreased by $2,000 and $4,000,respectively.There was also a loss on the sale of equipment of $3,000.How much cash was provided by operating activities?
A)$217,000.
B)$224,000.
C)$284,000.
D)$305,000.
Q2) Purchasing equipment by issuing a six-month note should be shown on the statement of cash flows under the investing activities section.
A)True
B)False
Q3) Cash flow per share is
A)required to be reported on the balance sheet
B)required to be reported on the income statement
C)required to be reported on the statement of cash flows
D)not required to be reported on any statement
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Chapter 15: Financial Statement Analysis
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Sample Questions
Q1) When you are interpreting financial ratios,it is useful to compare a company's ratios to some form of standard.
A)True
B)False
Q2) The tendency of the rate earned on stockholders' equity to vary disproportionately from the rate earned on total assets is sometimes referred to as
A)leverage
B)solvency
C)yield
D)quick assets
Q3) Solvency analysis focuses on the ability of a business to pay its current and noncurrent liabilities.
A)True
B)False
Q4) An extraordinary loss of $300,000 that results in income tax savings of $90,000 should be reported as an extraordinary loss (net of tax)of $210,000 on the income statement.
A)True
B)False
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