Accounting II Question
Bank
Course Introduction
Accounting II builds upon the foundational principles learned in introductory accounting by delving deeper into topics such as managerial accounting, cost accounting, and the analysis of financial statements. The course covers advanced concepts including inventory valuation, budgeting, internal controls, partnerships, corporate accounting, and the preparation and interpretation of more complex financial reports. Emphasis is placed on how accounting information supports decision-making processes within organizations, equipping students with the skills necessary to analyze operations, assess performance, and contribute strategically to business management.
Recommended Textbook
Financial Managerial Accounting 16th Edition by Jan Williams
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Page 2
Chapter 1: Accounting: Information for Decision Making
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Sample Questions
Q1) The tailoring of an accounting report to meet the needs of a specific decision maker is more characteristic of financial accounting reports than of management accounting reports.
A)True
B)False
Answer: False
Q2) A strong internal control structure:
A) Contributes to the accuracy and reliability of the accounting records.
B) Will prevent a business from operating at a loss.
C) Assures that a business will remain solvent.
D) Will prevent fraud, theft, and embezzlement.
Answer: A
Q3) The content of management accounting reports needs to be presented in conformity with generally accepted accounting principles.
A)True
B)False
Answer: False
Q4) The information is summarized in a set of statements distributed to the public. Answer: Financial
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Chapter 2: Basic Financial Statements
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Sample Questions
Q1) What information would you find in a statement of cash flows that you would not be able to get from the other two primary financial statements?
A) Cash provided by or used in financing activities.
B) Cash balance at the end of the period.
C) Total liabilities due to creditors at the end of the period.
D) Net income.
Answer: A
Q2) Blue Wholesale Shirt Co. sold shirts to Pink Retail Shoppe. The owner of Pink Retail said she would pay Blue at a later date, which Blue Wholesale agreed to. Blue Wholesale Shirt Co. is considered to be a:
A) borrower.
B) liability.
C) creditor.
D) debtor.
Answer: C
Q3) If a company purchases equipment with cash, its total assets will increase.
A)True
B)False
Answer: False
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Page 4
Chapter 3: The Accounting Cycle: Capturing Economic
Events
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Sample Questions
Q1) On January 3, 2011, total liabilities are:
A) $370,000.
B) $350,000.
C) $300,000.
D) $70,000.
Answer: B
Q2) Sally Smith had expenses of $800 in June which she paid in July. She declared these expenses on her June income statement. By doing this, she is following the accounting principle of:
A) Revenue realization.
B) Adequate disclosure.
C) Matching.
D) Conservatism.
Answer: C
Q3) The credit side of an account is the right side, while the debit side is the left side.
A)True
B)False
Answer: False
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Chapter 4: The Accounting Cycle: Accruals and Deferrals
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Sample Questions
Q1) Tuna Co. purchased a building in 2009 for $650,000 and debited an asset called "Buildings" for the entire amount. The company never depreciated the building although it had a useful life of 15 years. This action will cause:
A) Net income to be understated.
B) Net income to be overstated.
C) Net income will not be affected.
D) Total assets will be understated.
Q2) Before making month-end adjustments, net income of Bobwhite Company was $232,000 for March. Adjusting entries are necessary for the following items: -Depreciation for the month of March: $4,300.
-Interest income accrued to March 31, on deposits in banks: $900.
-Supplies used in March: $300.
-Fees earned in March that had been collected in advance: $3,600. After recording these adjustments, net income for March is:
A) $222,900.
B) $227,700.
C) $231,900.
D) $235,600.
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Page 6
Chapter 5: The Accounting Cycle: Reporting Financial Results
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Sample Questions
Q1) If sales are $270,000, expenses are $220,000 and dividends are $30,000, Income Summary:
A) Will have a credit balance of $50,000.
B) Will have a debit balance of $50,000.
C) Will have a debit balance of $20,000.
D) Will have a credit balance of $20,000.
Q2) Which statement is true regarding the Income Statement?
A) Losses do not appear on income statements.
B) Dividends reduce net income.
C) Dividends declared increase net income.
D) Both losses and gains appear on an income statement.
Q3) Which of the following accounts would never appear in the after-closing trial balance? (More than one answer may be correct)
A) Unearned revenue.
B) Dividends.
C) Accumulated depreciation.
D) Income taxes expense.
Q4) Closing entries do not affect the cash account.
A)True
B)False
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Chapter 6: Merchandising Activities
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Sample Questions
Q1) The balance in the Inventory account at January 31 was:
A) $0.
B) $105,000.
C) $115,000.
D) Some other answer.
Q2) If Bounder Dog Supplies, Inc purchased inventory at $2,200 list price and the terms were 3/10 n/30, what would be the value associated with the inventory if payment was made within 10 days?
A) $2,268.
B) $2,334.
C) $2,200.
D) $2,134.
Q3) If costs of goods sold is $560,000 and its gross profit rate is 20%, what is the gross profit?
A) $140,000.
B) $70,000.
C) $120,000.
D) $112,000.
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8
Chapter 7: Financial Assets
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Sample Questions
Q1) Kennedy Company uses the balance sheet approach in estimating uncollectible accounts expense. The company prepares an adjusting entry to recognize this expense at the end of each month. During the month of July, the company wrote-off a $3,500 receivable and made no recoveries of previous write-offs. Following the adjusting entry for July, the credit balance in the Allowance for Doubtful Accounts was $3,000 larger than it was on July 1. What amount of uncollectible account expense was recorded for July?
A) $2,500.
B) $1,000.
C) $1,500.
D) $6,500.
Q2) Deposits-in-transit would not appear on a company's bank reconciliation but would appear on the company's bank statement.
A)True
B)False
Q3) When preparing a bank reconciliation, bank service charges will:
A) Increase the balance per depositor's records.
B) Decrease the balance per depositor's records.
C) Increase the balance per the bank statement.
D) Decrease the balance per the bank statement.
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Chapter 8: Inventories and the Cost of Goods Sold
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Q1) In a periodic inventory system, the cost of goods sold is determined as follows:
A) Year-end inventory, plus purchases during the year, less the inventory at the beginning of the year.
B) Net sales, less the balance in the Gross Profit account.
C) Cost of goods available for sale during the year, less the ending inventory.
D) A physical count is made of all items sold throughout the year, and a cost flow assumption is applied at year-end.
Q2) Assuming the LIFO flow assumption is in use, the perpetual inventory records will indicate an ending inventory of this product of:
A) $9,800.
B) $10,600.
C) $10,800.
D) $8,000.
Q3) In a periodic system, the only account in regard to inventory that is kept up-to-date is the inventory account.
A)True
B)False
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Chapter 9: Plant and Intangible Assets
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Sample Questions
Q1) Ladd Company sold a plant asset that originally had cost $50,000 for $22,000 cash. If Ladd correctly reports a $5,000 gain on this sale, the accumulated depreciation on the asset at the date of sale must have been:
A) $33,000.
B) $28,000.
C) $23,000.
D) Some other amount.
Q2) Clark Imports sold a depreciable plant asset for cash of $35,000. The accumulated depreciation amounted to $70,000, and a loss of $5,000 was recognized on the sale. Under these circumstances, the original cost of the asset must have been:
A) $65,000.
B) $75,000.
C) $100,000.
D) $110,000.
Q3) If an accelerated depreciation method is used for an asset with a useful life of five years, more depreciation expense would be recorded in the third year than in the fifth year.
A)True
B)False
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Page 11
Chapter 10: Liabilities
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Sample Questions
Q1) Estimated liabilities, contingencies, and commitments are usually reported in the long-term liability section of the financial statements.
A)True
B)False
Q2) Amortizing a discount on bonds payable:
A) Increases interest expense.
B) Increases periodic cash payments to bondholders.
C) Decreases interest expense.
D) Decreases periodic cash payments to bondholders.
Q3) The company's annual payroll-related expenses amount to approximately:
A) $1,085,600.
B) $1,181,850.
C) $1,250,700.
D) $900,000.
Q4) What is the total cash (including interest) paid for the building purchased by Able?
A) $800,000.
B) $836,000.
C) $854,000.
D) $816,000.
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Chapter 11: Stockholders Equity: Paid-In Capital
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Sample Questions
Q1) Refer to the information above. How many shares of preferred stock are issued and outstanding?
A) 75,000 shares.
B) 6,000 shares.
C) 60,000 shares.
D) 120,000 shares.
Q2) Refer to the information above. The average issue price per share of the preferred stock was:
A) $150.
B) $165.
C) $180.
D) $195.
Q3) Which statement is true about a stock split?
A) Total shareholders' equity increases.
B) Total shareholders' equity decreases.
C) Total shareholders' equity remains the same.
D) A change in total stockholders' equity depends upon whether it is a 2-for-1 split or a 1-for-2 split.
Q4) The average issue price per share of preferred stock: $_____ per share
Q5) The total amount of legal capital: $__________
Page 13
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Chapter 12: Income and Changes in Retained Earnings
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Q1) Which of the following items would be included in comprehensive income but not reported as a component of net income?
A) A lower-of-cost-or-market write-down of inventory.
B) A material loss due to natural disaster.
C) An unrealized gain on the portfolio of available-for-sale marketable securities.
D) A gain on the sale of a segment of the business.
Q2) Earnings per share figures are shown in the income statement:
A) For income before extraordinary items and for income from continuing operations, as well as for net income.
B) For common stock as well as for preferred stock.
C) For all publicly owned, as well as for all privately held, corporations.
D) As an optional disclosure for all corporations, and may be omitted completely or disclosed in a footnote at the option of the issuing corporation.
Q3) What was the average issue price per share of preferred stock?
Q4) Stock dividends
What is the effect of a stock dividend?
Q5) How many shares of common stock are outstanding?
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Page 14
Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) Cash flows and accounting records
In a business with an accrual-based accounting system, is a statement of cash flows based upon account balances shown in the adjusted trial balance? Explain.
Q2) Hamilton Company reported an increase of $370,000 in its accounts receivable during the year 2009. The company's statement of cash flows for 2009 reported $1 million of cash received from customers. What amount of net sales must Hamilton have recorded in 2009?
A) $630,000.
B) $1,370,000.
C) $1,000,000.
D) $370,000
Q3) Alexander Company reported an increase of $185,000 in its accounts receivable during the year. The company's statement of cash flows reported $500,000 of cash received from customers. What amount of net sales must Alexander have recorded?
A) $315,000.
B) $685,000.
C) $500,000.
D) $185,000
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15
Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) All of the following captions or subtotals are typical of a multiple-step income statement, except for:
A) Net sales.
B) Gross profit.
C) Total costs and expenses.
D) Operating income.
Q2) The quick ratio is considered more useful than the current ratio for:
A) Evaluating the profitability of a business that sells inventory very quickly, such as a restaurant.
B) Evaluating the solvency of a business that turns inventory into cash very slowly, such as a shipbuilder.
C) Evaluating long-term credit risk.
D) Evaluating investors' expectations concerning future earnings.
Q3) The lower the current ratio, the more liquid the company appears.
A)True
B)False
Q4) The inventory turnover rate indicates how quickly inventory sells.
A)True
B)False
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Chapter 15: Global Business and Accounting
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Sample Questions
Q1) Under the Foreign Corrupt Practices Act, American business firms are required to:
A) Refuse to transact business in countries that sanction official corruption.
B) Report all bribery attempts to the International Monetary Fund and World Bank.
C) Maintain an adequate system of internal control limiting access to company assets to authorized personnel.
D) Maintain a list of all personnel employed by the company during the last 10 years.
Q2) An international joint venture involves the creation of a new company that is owned by two or more firms from different countries.
A)True
B)False
Q3) Which of the following does not affect the cost associated with producing and selling goods and services in global markets?
A) Tariffs.
B) Duties.
C) Special trade zones.
D) Sales or Use tax rates in the United States.
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Chapter 16: Management Accounting: a Business Partner
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Sample Questions
Q1) The three basic types of manufacturing costs are direct materials, direct labor and manufacturing overhead.
A)True
B)False
Q2) In comparison with a financial statement prepared in conformity with generally accepted accounting principles, a managerial accounting report is more likely to:
A) Be used by decision makers outside of the business organization.
B) Focus upon the operating results of the most recently completed accounting period.
C) View the entire organization as the reporting entity.
D) Be tailored to the specific needs of an individual decision maker.
Q3) Direct materials used, direct labor, and manufacturing overhead are included among the expenses listed in the income statement of a manufacturing company.
A)True B)False
Q4) Product costs are selling expenses that appear on the income statement. A)True B)False
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18
Chapter 17: Job Order Cost Systems and Overhead
Allocations
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Sample Questions
Q1) 118.Using ABC to allocate manufacturing overhead can help managers to:
A) Identify what activities drive overhead costs.
B) Set product prices.
C) Locate inefficiencies in the production process.
D) Do all of the above.
Q2) An activity-based costing system would probably not be appropriate if:
A) A company produces more than one product line.
B) A company produces only one product.
C) A company is highly automated.
D) A company has more than one production facility.
Q3) What is the work in process at November 30? $___________
Q4) What is the cost of goods sold during November? $___________
Q5) The amount of direct materials cost charged to completed jobs during March was:
A) $20,000.
B) $50,000.
C) $30,000.
D) Some other amount.
Q6) Job order costing cannot be used for a service company.
A)True
B)False Page 19
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Page 20
Chapter 18: Process Costing
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Q1) Per-unit costs:
A) Are relevant only when a company is engaged in manufacturing activities.
B) Are determined in job order costing systems but cannot be computed when a process costing system is in use.
C) Are relevant in manufacturing, merchandising, and service industries, regardless of the type of cost accounting system in use.
D) Are determined by relating manufacturing costs to the number of units sold.
Q2) Equivalent units are usually computed for:
A) Only direct materials.
B) Only direct labor.
C) Only factory overhead.
D) Direct materials, direct labor, and factory overhead costs.
Q3) What are the equivalent units for direct labor and overhead?
A) 140,000.
B) 80,000.
C) 160,000.
D) 130,000.
Q4) The total cost of the 10,000 cases transferred to finished goods in May was $__________.
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Chapter 19: Costing and the Value Chain
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Sample Questions
Q1) A just-in-time manufacturing system is also known as a supply push system.
A)True
B)False
Q2) Which of the following activities performed by a manufacturer of roller blades is not a value-added activity?
A) Inspection of direct materials upon receipt from suppliers.
B) Storage of direct materials until needed for production.
C) Transfer of direct materials to appropriate points on the assembly line.
D) Estimated lost sales due to poor quality.
Q3) Target costing is directed toward:
A) Increasing the activity costs associated with existing products.
B) Identifying the amount by which the costs of existing products must be reduced to achieve a target profit margin.
C) The creation and design of products that will provide adequate profits.
D) The improvement of existing production processes by eliminating non-value adding activities.
Q4) Non-value-added activities are those that add to a product's desirability.
A)True
B)False
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Chapter 20: Cost-Volume-Profit Analysis
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Q1) Using the high-low method, compute the fixed element of Universal's monthly repair cost:
A) $150.
B) $250.
C) $6,300.
D) $6,450.
Q2) How many units must be sold each month to earn a monthly operating income of $25,000?
A) 833.
B) 2,300.
C) 3,500.
D) Some other amount.
Q3) At the current selling price of $170 per unit, what dollar volume of sales per month is necessary for Grand Gimmicks to generate monthly operating income of $12,000?
A) $24,162.
B) $51,063.
C) $58,838.
D) $77,617.
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23
Chapter 21: Incremental Analysis
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Q1) The split-off point is the point at which joint products can be separated into two or more products.
A)True
B)False
Q2) Products which emerge from a shared manufacturing process are referred to as:
A) Complementary products.
B) Joint products.
C) Contributory products.
D) Codependent products.
Q3) Sunk costs have already been incurred and cannot be changed by future actions.
A)True
B)False
Q4) What is the incremental cost of producing each additional motor?
A) $29.
B) $69.
C) $95.
D) Some other amount.
Q5) Sunk costs are relevant to decisions about replacing plant assets. A)True
B)False
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Chapter 22: Responsibility Accounting and Transfer Pricing
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Q1) The contribution margin ratio is:
A) 40%.
B) 50%.
C) 55%.
D) 25%.
Q2) The Sports Arena location of Burgerheaven reports monthly sales of $140,000, variable costs of $63,000, and traceable fixed costs of $54,000. The contribution margin ratio of this business unit is:
A) 70%.
B) 45%.
C) 55%.
D) 30%.
Q3) The measurement most often used to evaluate a business unit organized as an investment center consists of:
A) Contribution margin stated as a percentage of average total assets.
B) Responsibility margin stated as a percentage of net sales.
C) Contribution margin stated as a percentage of net sales.
D) Responsibility margin stated as a percentage of average total assets.
Q4) Return on assets: _____________%
Q5) Responsibility margin: $_____________
25
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Chapter 23: Operational Budgeting
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Q1) Which of the following is a major component of a master budget?
A) A production throughput schedule.
B) A machinery maintenance schedule.
C) A manufacturing cost budget.
D) An employee training budget.
Q2) What are Ross's budgeted collections for July?
A) $800,000.
B) $939,000.
C) $1,083,000.
D) $915,000.
Q3) A cash budget is affected directly by each of the following except:
A) A capital expenditures budget.
B) A sales forecast.
C) A manufacturing cost budget.
D) A budgeted income statement.
Q4) Compute the amounts that should be included for each of the following in a flexible budget prepared at an 11,000-unit level of production:
a. Direct materials: $_____________
b. Direct labor: $_____________
c. Fixed manufacturing overhead: $_____________
26
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Chapter 24: Standard Cost Systems
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Q1) The use of inexpensive, low quality, materials often results in:
A) A favorable materials quantity variance.
B) A favorable labor rate variance.
C) An unfavorable materials quantity variance.
D) An unfavorable materials price variance.
Q2) Standard cost system overhead variances
Rogers Manufacturing produces a component part used throughout the computer industry. Variable overhead is allocated to production at a rate of $5 per unit. The company's monthly fixed overhead costs average $30,000. Normal output levels average 40,000 units per month. During April, Rogers produced 50,000 units and incurred actual overhead costs of $280,000.
(a) Total overhead applied to production in April amounted to $__________.
(b) Total overhead budgeted in April for the level of output achieved amounted to $__________.
(c) April's overhead spending variance was $___________ (favorable/unfavorable).
(d) April's overhead volume variance was $___________ (favorable/unfavorable).
(e) For which of Rogers' two overhead variances is the production manager held responsible?
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Chapter 25: Rewarding Business Performance
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Q1) What is the capital turnover for Brookes, Inc.?
A) 38%.
B) 54%.
C) 70%.
D) 86%.
Q2) The balanced scorecard approach attempts to measure whether an organization is meeting its strategic goals.
A)True
B)False
Q3) Bonuses may be used to reward employees who meet performance goals.
A)True
B)False
Q4) Capital turnover can be improved by reducing invested capital while keeping sales constant.
A)True
B)False
Q5) Identify the criticisms of using ROI (Return on investment) as the only performance measure.
Q6) State the four performance lenses in a balanced scorecard and briefly describe each of them.
Page 28
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Chapter 26: Capital Budgeting
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Q1) The payback period for this proposed investment is:
A) 4.5 years.
B) Twelve years.
C) Six years.
D) Two years.
Q2) If all revenue generated by an investment is immediately received in cash, and all of the investment's expenses (other than depreciation) are immediately paid in cash, annual net cash flow of the investment may be determined by:
A) Subtracting the investment's annual depreciation expense from the annual net income earned by the investment.
B) Adding the investment's annual depreciation expense to the annual net income earned by the investment.
C) Subtracting the investment's annual expenses from the annual revenue it generates.
D) Adding the investment's annual depreciation expense to the annual revenue generated by the investment.
Q3) Capital budgeting estimates often involve a considerable degree of uncertainty.
A)True
B)False
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Chapter 28: Forms of Business Organization
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Q1) When a corporation declares a dividend:
A) Assets decrease, liabilities increase.
B) Retained earnings increase, liabilities increase.
C) Liabilities increase, retained earnings decrease.
D) Retained earnings decrease, assets increase.
Q2) In a limited liability partnership, a partner has unlimited liability for his own actions and limited liability for the actions of his partners.
A)True
B)False
Q3) The Board of Directors of a corporation:
A) Are not responsible for hiring other professional managers.
B) Do not decide whether profits will be distributed to stockholders.
C) Make major policy decisions.
D) Are members of a government agency.
Q4) The assets of a partnership belong jointly to all the partners while the assets of a sole proprietorship belong to the proprietorship.
A)True
B)False
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Chapter 27: The Time Value of Money: Future Amounts and
Present Values Answer Key
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Source URL: https://quizplus.com/quiz/78576
Sample Questions
Q1) The difference between the present value and the future value of a sum of money depends upon:
A) The rate of interest.
B) The length of time.
C) The rate of interest and the length of time.
D) Neither the rate of interest nor the length of time.
Q2) Judy Bright has just won the lottery. She can elect to receive her winnings in equal payments of $200,000 a year for the next ten years on December 31 or to receive $2,000,000 immediately. If the current interest rate is 6%, which choice will provide the highest amount:
A) Receiving $2,000,000 immediately.
B) Taking equal payments for 10 years.
C) It does not matter since either choice provides the same amount.
D) Refusing to accept the winnings since it is not enough.
Q3) The market price of a bond is equal to its present value.
A)True
B)False
Q4) (a) How long will it take Barbara to accumulate $30,000 to buy a car if she invests $15,000 at 5%? (b) How long will it take if she invests the same amount at 4% semi-annually?
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