Accounting Principles
Exam Review
Course Introduction
Accounting Principles introduces students to the fundamental concepts and practices of financial accounting. The course covers the accounting cycle, including the recording, classifying, and summarizing of financial transactions, as well as the preparation and interpretation of basic financial statements such as the balance sheet, income statement, and statement of cash flows. Emphasis is placed on understanding generally accepted accounting principles (GAAP), the role of ethics in accounting, and the importance of accurate financial reporting for decision-making by management, investors, and other stakeholders. The course provides a solid foundation for further study in accounting and finance fields.
Recommended Textbook
Financial Accounting 10th Edition by Walter T. Harrison Available Study Resources on Quizplus
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Chapter 1: The Financial Statements
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177 Verified Questions
177 Flashcards
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Sample Questions
Q1) A company's interest expense for the period is reported on the:
A)balance sheet.
B)income statement.
C)statement of cash flows.
D)statement of retained earnings.
Answer: B
Q2) Which of the following statements is TRUE for a proprietorship?
A)Legally,a proprietorship is separate from the proprietor.
B)For accounting purposes,a proprietorship is separate from the proprietor.
C)For accounting purposes,a proprietorship is not separate from the proprietor.
D)A and B
Answer: B
Q3) A company's main source of cash should be:
A)operating activities.
B)financing activities.
C)investing activities.
D)noncash investing and financing activities.
Answer: A
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3
Chapter 2: Transaction Analysis
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173 Flashcards
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Sample Questions
Q1) Journal entries can have more than two accounts as long as the total debits equal the total credits.
A)True
B)False
Answer: True
Q2) A business purchased office supplies of $10,000 using a note.The business would:
A)debit Supplies for $10,000 and credit Accounts Payable for $10,000.
B)debit Supplies for $10,000 and credit Notes Payable for $10,000.
C)debit Note Receivable for $10,000 and credit Supplies for $10,000.
D)debit Note Receivable for $10,000 and credit Supplies Expense for $10,000. Answer: B
Q3) Which account has a normal debit balance?
A)Salaries payable
B)Common Stock
C)Advertising Expense
D)Service revenue
Answer: C
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4
Chapter 3: Accrual Accounting Income
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190 Verified Questions
190 Flashcards
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Sample Questions
Q1) Adjusting entries:
A)are needed for all balance sheet accounts.
B)must be made on a daily basis to record supplies used during that day.
C)are needed because errors have been made in previous journal entries.
D)are made before the financial statements can be prepared.
Answer: D
Q2) The balance sheet reports:
A)assets,liabilities and stockholders' equity.
B)the changes in retained earnings.
C)assets,liabilities,revenues and expenses.
D)revenues and expenses.
Answer: A
Q3) At December 31,the NBC Company owes an employee for four days of work that will not be paid until January 5th.The weekly rate of pay for a five-day workweek is $1,000.The adjusting entry to record the accrued wages will include a:
A)debit to Salaries Payable for $1,000.
B)debit to Salaries Expense for $1,000.
C)debit to Salaries Payable for $800.
D)debit to Salaries Expense for $800.
Answer: D
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Chapter 4: Internal Control Cash
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166 Flashcards
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Sample Questions
Q1) A company has a beginning cash balance of $3,000.For the year,the company estimates cash disbursements of $85,900.It has a desired ending cash balance of $5,500 and anticipates no new financing.The estimated cash receipts are:
A)$77,400.
B)$79,900.
C)$82,900.
D)$88,400.
Q2) Johnny Company deposited $25,000 in its bank on the same day as,but after the bank prepared Johnny Company's bank statement.The deposit should appear on the bank reconciliation as a(n)________ and is called a(n):
A)addition to the bank balance; outstanding deposit
B)addition to the bank balance; deposit in transit
C)deduction to the bank balance; deposit in transit
D)deduction to the bank balance; outstanding deposit
Q3) Which is NOT an objective of an internal control system?
A)Safeguarding of assets
B)Compliance with company policies
C)Compliance with legal requirements
D)Risk assessment
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Page 6
Chapter 5: Short-Term Investments Receivables
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191 Verified Questions
191 Flashcards
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Sample Questions
Q1) Trading securities are originally recorded at their cost.
A)True
B)False
Q2) Accounts (trade)receivables are amounts to be collected from customers from the sale of goods or services.
A)True
B)False
Q3) Smith Corporation purchases $620,000 of TMI Corporation stock on October 18,2015.Smith Corporation classifies this investment as a trading security.On December 1,Smith Corporation received a cash dividend of $12,000 on the TMI Corporation stock.On December 31,2015,Smith Corporation's investment in TMI Corporation has a fair value of $600,000.
Required: Prepare the necessary journal entries.Explanations are not required.
Q4) With regard to Accounts Receivable,a separate account for each customer is kept in a(n):
A)control account.
B)subsidiary ledger. C)general ledger. D)control ledger.
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Chapter 6: Inventory Cost of Goods Sold
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155 Flashcards
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Sample Questions
Q1) Which is the CORRECT order for items to appear on the income statement?
A)Sales revenue,operating expenses,gross profit,net income
B)Sales revenue,gross profit,net income,operating expenses
C)Sales revenue,gross profit,cost of goods sold,operating expenses
D)Sales revenue,cost of goods sold,gross profit,operating expenses
Q2) Perfect Catering Company's ending inventory was $106,700 at historical cost and $113,500 at current replacement cost.Before consideration of the lower-of-cost-or-market rule,the company's cost of goods sold was $60,000.Following U.S.GAAP,which of the following statements reflect the correct application of the lower-of-cost-or-market rule?
A)The Ending Inventory balance will be $106,700,and Cost of Goods Sold will be $60,000.
B)The Ending Inventory balance will be $113,500,and Cost of Goods Sold will be $60,000.
C)The Ending Inventory balance will be $106,700,and Cost of Goods Sold will be $66,800.
D)The Ending Inventory balance will be $113,500,and Cost of Goods Sold will be $53,200.
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Chapter 7: Plant Assets,natural Resources, Intangibles
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Sample Questions
Q1) Income before depreciation and taxes amounts to $200,000.Using straight-line depreciation,the current year's depreciation expense will be $30,000.Using double-declining-balance depreciation,the current year's depreciation expense will be $50,000.Assuming a tax rate of 30%,what is the net cash saved in income taxes by using double-declining-balance depreciation over straight-line depreciation?
A)$6,000
B)$9,000
C)$12,000
D)$15,000
Q2) Book value of a plant asset equals the cost of the asset less the current year's depreciation expense.
A)True
B)False
Q3) If a company buys a building and the surrounding land for cash,total assets increase.
A)True
B)False
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Chapter 8: Long-Term Investments: The Time Value of Money
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Sample Questions
Q1) Long-term available-for-sale investments in stock are reported on the balance sheet at cost.
A)True
B)False
Q2) Long-term available-for-sale securities can be:
A)bonds held to maturity.
B)bonds not held to maturity,but held for more than one year.
C)stocks other than trading securities and equity-method securities.
D)B and C.
Q3) The cash paid to purchase available-for-sale investments is reported on the statement of cash flows as a(n):
A)increase in financing activities.
B)decrease in financing activities.
C)increase in investing activities.
D)decrease in investing activities.
Q4) Unrealized gains on investments in available-for-sale securities result from sales of the securities.
A)True
B)False
10
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Chapter 9: Liabilities
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Sample Questions
Q1) Miller Corporation has $2,000,000 of bonds outstanding.The unamortized premium is $57,000.If the company retired the bonds at 101,what would be the gain or loss on the retirement? Ignore any interest due.
A)$20,000 gain
B)$20,000 loss
C)$37,000 gain
D)$57,000 gain
Q2) The retirement of callable bonds at an amount below face value would appear on a statement of cash flows as an:
A)outflow in the financing activities section.
B)inflow in the financing activities section.
C)outflow in the operating activities section.
D)inflow in the operating activities section.
Q3) Under the effective-interest method,the amount of bond discount amortized each interest period is equal to the:
A)amount of interest expense less the cash paid for interest.
B)amount of interest expense plus the cash paid for interest.
C)face value of the bond times the stated interest rate.
D)face value of the bond times the market interest rate at the date of issue.
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Page 11
Chapter 10: Stockholders Equity
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Sample Questions
Q1) Mr.Jorgensen,a shareholder in the Best Corporation,owns 1,000 shares of their common stock.Mr.Jorgensen receives a 5% stock dividend.After the stock dividend,Mr.Jorgensen will have a:
A)total of 50 shares of Best Corporation's common stock.
B)total of 950 shares of Best Corporation's common stock.
C)total of 1,000 shares of Best Corporation's common stock.
D)total of 1,050 shares of Best Corporation's common stock.
Q2) Apple Inc.issued 1 million shares of no-par common stock for $10 million.What journal entry is prepared?
A)debit Cash $10 million and credit Paid-in Capital in Excess of Par $10 million
B)debit Cash $10 million and credit Retained Earnings $10 million
C)debit Cash $10 million and credit Paid-in Capital in Excess of Stated Value $10 million
D)debit Cash $10 million and credit Common Stock $10 million
Q3) How does the payment of a previously declared dividend affect the accounting equation?
A)increase assets and decrease stockolders' equity
B)decrease assets and decrease stockholders' equity
C)increase assets and decrease liabilities
D)decrease assets and decrease liabilities
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Page 12
Chapter
11:
Quality, the Income Statement, the Statement of Comprehensive Income
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Sample Questions
Q1) A company reports basic earnings per share of $5.00 per share.The company has convertible preferred stock that can be converted into common stock.What will fully diluted earnings per share equal?
A)$5.00 per share
B)more than $5.00 per share
C)less than $5.00 per share
D)There is not enough information.
Q2) Income tax expense appears on the:
A)tax return.
B)statement of stockholders' equity.
C)income statement.
D)balance sheet.
Q3) Eastwich Corporation has pretax accounting income of $575,000 and taxable income of $560,000.The company's income tax rate is 30%.The journal entry to record the income tax includes a:
A)debit to Deferred Tax Asset $4,500.
B)credit Income Tax Payable $172,500.
C)credit to Deferred Tax Liability $4,500.
D)debit Income Tax Expense $168,000.
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Chapter 12: The Statement of Cash Flows
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136 Flashcards
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Sample Questions
Q1) 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.
Q2) A company is adjusting net income to determine Net Cash Provided by Operating Activities for the statement of cash flows.The indirect method is used.Which statement is FALSE?
A)An increase in a noncash current asset is subtracted from net income.
B)A decrease in a noncash current asset is added to net income.
C)A decrease in a current liability is added to net income.
D)An increase in a current liability is added to net income.
Q3) On a statement of cash flows prepared with the indirect method,investing activities do NOT include:
A)sale of investments that are not cash equivalents.
B)receipt of interest on investments.
C)collection of note receivable.
D)lending money to an employee.
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Page 14
Chapter 13: Financial Statement Analysis
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Sample Questions
Q1) The percentage change in a financial statement line item over two years is computed by dividing the dollar amount of the line item in the most recent year by the prior year dollar amount of the line item.
A)True
B)False
Q2) The cost of capital is a weighted average of the returns demanded by the company's stockholders and lenders.
A)True
B)False
Q3) On a statement of cash flows,which is considered an investing activity?
A)Depreciation expense
B)Increase in inventory
C)Sale of securities
D)Repayment of debt
Q4) In performing vertical analysis,the base for income tax expense is:
A)net sales.
B)gross revenues.
C)net income.
D)gross profit.
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