Accounting Principles
Exam Bank
Course Introduction
Accounting Principles introduces students to the foundational concepts and procedures of financial accounting. The course covers essential topics such as the accounting cycle, financial statement preparation, measurement of business transactions, and the principles of recording and reporting assets, liabilities, and equity. Students learn to analyze and interpret financial information, understand generally accepted accounting principles (GAAP), and apply ethical considerations in accounting practices. Through practical exercises and real-world examples, this course equips students with the fundamental skills necessary for success in business and further study in the field of accounting.
Recommended Textbook
Cornerstones of Financial Accounting 1st Canadian Edition by Jay Rich
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12 Chapters
2327 Verified Questions
2327 Flashcards
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Page 2
Chapter 1: Accounting and the Financial Statements
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249 Verified Questions
249 Flashcards
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Sample Questions
Q1) Refer to the figure Beard Marine.What was the balance of retained earnings at January 1,Year 1?
A) $ 21,000
B) $ 26,000
C) $106,000
D) $214,000
Answer: B
Q2) Refer to the figure Bargain Spot Fabrics.What amount should the company report on its balance sheet for total assets?
A) $550,000
B) $775,000
C) $850,000
D) $950,000
Answer: C
Q3) Which of the following items appears on a balance sheet?
A) service revenue
B) unearned revenue
C) dividends
D) cash flow from operations
Answer: B
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Chapter 2: The Accounting Information System
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246 Verified Questions
246 Flashcards
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Sample Questions
Q1) borrowing cash from a bank
A)assets and liabilities increase
B)assets and contributed capital increase
C)assets and retained earnings increase
D)two asset accounts are impacted, but there is no net effect on total assets
E)assets and liabilities decrease
F)assets and retained earnings decrease
G)liabilities increase and retained earnings decrease
H)liabilities decrease and retained earnings increase
Answer: A
Q2) Which of the following accounts is increased by a debit entry?
A) cash
B) loan payable
C) accounts payable
D) revenue
Answer: A
Q3) Borrowing from the bank in order to acquire computer equipment for $1,500 has the effect of increasing both assets and ____________________.
Answer: liabilities
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Page 4
Chapter 3: Accrual Accounting
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208 Verified Questions
208 Flashcards
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Sample Questions
Q1) Closing entries are necessary to assure that the company's net income for an accounting period is accurately determined.
A)True
B)False
Answer: False
Q2) A manufacturing company purchased equipment five years ago on January 1 for $450,000.As of January 1 of the current year,depreciation of $202,500 had been recorded on this asset.Depreciation expense for the current year is $22,500.After the adjustments are recorded and posted at December 31 of the current year,what are the balances for the equipment and for accumulated depreciation?
A) equipment: $225,000; accumulated depreciation: $22,500
B) equipment: $225,000; accumulated depreciation: $225,000
C) equipment: $450,000; accumulated depreciation: $0
D) equipment: $450,000; accumulated depreciation: $225,000
Answer: D
Q3) land
A)temporary account
B)permanent account
Answer: B
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Page 5
Chapter 2: Internal Control and Cash
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205 Flashcards
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Sample
Questions
Q1) While preparing the April 30 bank reconciliation,the accountant identifies the following items: company's balance according to the general ledger,$15,000; outstanding cheques,$2,500; bank service charge,$15; a customer's NSF cheque returned by the bank,$100.What is the company's adjusted cash balance at April 30?
A) $12,385
B) $12,500
C) $14,885
D) $17,385
Q2) When a bank pays interest on a company's chequing account balance,the bank will likely issue a credit memo.
A)True
B)False
Q3) elapsed time between the purchase of goods for resale and the collection of cash from customers
A)cash equivalents
B)cash over and short
C)operating cycle
D)petty cash
Q4) Why is cash management necessary?
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Chapter 5: Revenue and Receivables
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Sample Questions
Q1) If a company estimates its bad debt expense on the basis of a receivables aging,the balance in the allowance for doubtful accounts will not affect the amount of the end-of-period adjusting entry for bad debts.
A)True
B)False
Q2) money due from customers purchasing inventory in the ordinary course of business
A)bad debt expense
B)net sales revenue
C)nontrade receivables
D)percentage of credit sales
E)profitability ratios
F)trade receivables
Q3) The direct write-off method is inconsistent with the matching concept. A)True
B)False
Q4) Refer to Accutemp Heating & Air.Identify the maturity date of the note.
Q5) The ____________________ order is necessary for the buyer to be obligated to accept and pay for the ordered goods.
Q6) Special forms of factoring are called ____________________.
7
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Chapter 6: Cost of Goods Sold and Inventory
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Sample Questions
Q1) Refer to the information provided for Yu Company.For each of the items above,describe the economic effects on the company's accounting equation.
Q2) Oliver & Co.has been in business for 15 years.During that time,the company has consistently used the LIFO inventory costing method.Because of inflation,purchase prices for merchandise have increased consistently over the 15 years.The company has maintained the same inventory quantities over the 15 years.What is the effect of this accounting choice?
A) The company's total net income for the past 15 years is greater than it would have reported using another inventory method.
B) The company will have paid more income taxes over the past 15 years than it would have if it had used the FIFO method.
C) The company will have to continue to use the LIFO method indefinitely because of federal income tax rules.
D) The ending inventory amount reported on the balance sheet may be significantly lower than its current value.
Q3) Differentiate between the record keeping required for sales and cost of goods sold under a perpetual versus a periodic inventory system.
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Page 8
Chapter 7: Property plant and Equipment Intangibles and Natural Resources
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183 Verified Questions
183 Flashcards
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Sample Questions
Q1) The more efficiently a company uses its fixed assets the lower the fixed asset turnover ratio will be.
A)True
B)False
Q2) If new equipment purchased in Year 1 is reported on the balance sheet at December 31,Year 1 as a long-term asset,there will be no related item on the Year 1 income statement.
A)True
B)False
Q3) Companies are allowed to use different depreciation methods so they can capture declining service potential of an operating asset.
A)True
B)False
Q4) The two items that must be estimated with respect to a plant asset to properly allocate cost to the affected accounting periods are ____________________ and ____________________.
Q5) Distinguish between current assets and operating assets.
Page 9
Q6) An accumulated ________ account is used when writing off natural resources.
Q7) A(n) _________________ is the right to produce or sell a published work.
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Chapter 8: Current Liabilities
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184 Flashcards
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Sample Questions
Q1) How does a landlord record the collection of a tenant's security deposit?
A) as a prepaid expense
B) as a liability
C) as a contingent liability
D) as a contra liability
Q2) Which of the following is an example of a current liability?
A) bonds payable
B) mortgages payable
C) accounts payable
D) notes payable, due in two years
Q3) If a reasonable estimate of the loss cannot be made,then a contingent liability should be recognized in the ____________________.
Q4) A company has property,plant,and equipment of $500,000,current liabilities of $70,000,and long-term liabilities of $300,000.Its current ratio is 3.0.What are its current assets?
A) $210,000
B) $430,000
C) $690,000
D) $900,000
Q5) Why are unearned revenues considered current liabilities?
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Chapter 9: Long-Term Liabilities
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Sample Questions
Q1) A lease is accounted for as an operating lease if the present value of the lease payments is at least 90 percent of the fair value of the leased property.
A)True
B)False
Q2) With the effective interest method of amortization,what does the amortization of a bond discount result in?
A) an increase in shareholders' equity
B) a decrease in liabilities
C) an increase in interest expense
D) a decrease in interest expense
Q3) If bonds were initially issued at a discount,what will happen to the carrying value of the bonds on the issuer's books?
A) decrease as the bonds approach their maturity date
B) increase as the bonds approach their maturity date
C) remain constant throughout the bonds' life
D) fluctuate throughout the bonds' life
Q4) The bond's ____________________ price is typically quoted as a percentage of the face value of the bond.
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Chapter 11: The Statement of Cash Flows
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206 Flashcards
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Sample Questions
Q1) Refer to the figure Company K.How much cash was paid for interest during Year 2?
A) $15,000
B) $25,200
C) $29,000
D) $30,200
Q2) When the direct method is used to determine operating cash flows,how is the purchase of equipment for cash shown on the statement of cash flows?
A) as an operating activity
B) as an investing activity
C) as a financing activity
D) as a noncash investing and financing activity
Q3) Refer to McCullow Investment Group.Ignoring the differences in magnitude,comment on the similarities and differences in the cash flows of the three companies.
Q4) How are cash flows from acquiring and selling products classified?
A) as operating activities
B) as investing activities
C) as financing activities
D) as distribution activities
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Chapter 12: Investments
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Sample Questions
Q1) Business combinations can occur through either an asset or ____________________ acquisition.
Q2) any voting shares not held by the parent in situations where consolidation is required because the investor acquires between 50-100% of the investee's shares
A)equity security
B)debt security
C)passive
D)significant influence
E)control
F)parent
G)subsidiary
H)goodwill
I)business combination
J)minority interest
K)fair value method
L)unrealized gains and losses
M)equity method
N)consolidation worksheet
Q3) ____________________ investments only consist of investments in common shares.
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Chapter 13: Financial Statement Analysis
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Sample Questions
Q1) Refer to Rhodes Bakery.Calculate the following shareholder ratios for Year 3 and Year 2: earnings per share,return on common equity,dividend yield,dividend payout,total payout,and share repurchase payout ratios.Round your answers to two decimal places,then comment on the company's shareholder performance. Additional information is available below:
\[\begin{array} { l r r } & \text { Year 3 } & \text { Year 2 } \\
\text { Net income }& \$ 24,000 & \$ 28,750 \\
\text { Dividends paid }& \$ 1,500 & \$ 875 \\
\text { Average number of shares autstanding } & 22,812 & 17,500 \\
\text { Closing market price per share } & \$ 24.00 & \$ 18.00 \end{array}\]
The company had no preferred shares throughout the period Year 1 through Year 3.At December 31,Year 1,total shareholders' equity was $287,500.
Q2) times interest earned ratio
A)increase
B)decrease
Q3) For what purpose is horizontal analysis used by financial analysts?
Q4) ____________________ analysis compares a single corporation across time.
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