Accounting Principles
Exam Solutions
Course Introduction
Accounting Principles introduces students to the fundamental concepts and practices that underpin the field of accounting. This course covers the basic principles of financial accounting, including the accounting cycle, preparation and interpretation of financial statements, and the application of Generally Accepted Accounting Principles (GAAP). Students will learn how to record business transactions, adjust accounts, and analyze financial information to assist in decision-making. The course also provides an overview of accounting ethics, the role of accounting in organizations, and current trends in the accounting profession, laying a solid foundation for further study or careers in business and finance.
Recommended Textbook
Corporate Financial Accounting 15th Edition by Carl S. Warren
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15 Chapters
3080 Verified Questions
3080 Flashcards
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Page 2
Chapter 1: Accounting and Business
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244 Verified Questions
244 Flashcards
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Sample Questions
Q1) Owned by two or more individuals
A)Proprietorship
B)Partnership
C)Corporation
Answer: B
Q2) Which of the following is a manufacturing business?
A) General Motors
B) Facebook
C) American Airlines
D) Target Answer: A
Q3) Has three sections: operating, investing and financing
A)Income statement
B)Balance sheet
C)Statement of stockholder's equity
D)Statement of cash flows
Answer: D
Q4) What are the three sections of the statement of cash flows?
Answer: Operating Activities, Investing Activities, and Financing Activities
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Chapter 2: Double-Entry Accounting
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216 Verified Questions
216 Flashcards
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Sample Questions
Q1) Which are the parts of the T account?
A) title, date, total
B) date, debit side, credit side
C) title, debit side, credit side
D) title, debit side, total
Answer: C
Q2) A credit to the cash account will increase the account.
A)True
B)False
Answer: False
Q3) Which side of the account increases the cash account?
A) credit
B) neither a debit nor a credit
C) debit
D) either a debit or a credit
Answer: C
Q4) Transactions are listed in the journal chronologically.
A)True
B)False
Answer: True
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Chapter 3: Adjustments: Accruals and Deferrals
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204 Verified Questions
204 Flashcards
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Sample Questions
Q1) If the adjustment for depreciation for the year is inadvertently omitted, the assets on the balance sheet at the end of the period will be understated.
A)True
B)False
Answer: False
Q2) On January 2, Safe Motorcycling Monthly received a check for $72 from a subscriber for a 12-month subscription. The January issue was mailed on January 15. Prepare the necessary entries for the month of January.
Answer: 11ea84e6_b031_0b41_9a63_25fab172908d_TB2281_00_TB2281_00
11ea84e6_b031_0b42_9a63_df6e8171898b_TB2281_00_TB2281_00
The second entry can be made either on January 15 when the issue is mailed or on the 31 with other adjusting entries.
Q3) When preparing an income statement vertical analysis, each revenue and expense is expressed as a percent of net income.
A)True
B)False
Answer: False
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Page 5
Chapter 4: The Accounting Cycle
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212 Verified Questions
212 Flashcards
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Sample Questions
Q1) The usual presentation of the retained earnings statement is (1) Beginning balance, (2) Net income or loss, (3) Dividends, (4) Stockholders' contributions, (5) Ending balance.
A)True
B)False
Q2) Explain how net income or loss is determined by using the end-of-period spreadsheets.
Q3) A fiscal year that ends when business activities have reached their lowest point is called the natural business year.
A)True
B)False
Q4) The income statement is prepared from
A) the adjusted trial balance
B) the Income Statement columns of the end-of-period spreadsheet
C) either the adjusted trial balance or the Income Statement columns of the end-of-period spreadsheet
D) both the adjusted trial balance and the Income Statement columns of the end-of-period spreadsheet
Q5) List and describe the purpose of the four closing entries.
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Chapter 5: Accounting for Retail Businesses
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272 Verified Questions
272 Flashcards
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Sample Questions
Q1) Account used to record inventory on hand under a perpetual inventory system.
A)Freight
B)Delivery Expense
C)Inventory
D)Sales discount
E)Purchases Returns and Allowances
F)Debit memo
G)Purchases discount
H)Trade discount
Q2) Merchandise with a list price of $4,700 is purchased on account, terms FOB shipping point, 1/10, n/30. The seller prepaid freight costs of $100. Prior to payment, $1,600 of the merchandise is returned. The invoice is paid within the discount period.
Record the foregoing transactions of the buyer in the sequence indicated below, assuming a perpetual inventory system is used. (a) Purchased the merchandise. (b) Recorded receipt of the credit memo for merchandise returned. (c) Paid the amount owed.
Q3) Prepare a balance sheet for Fernandez Company assuming the current portion of the notes payable is $30,000.
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Chapter 6: Inventories
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204 Flashcards
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Sample Questions
Q1) Unsold consigned merchandise should be included in the consignee's inventory.
A)True
B)False
Q2) What is the amount of cost of goods sold for the year according to the average cost method?
A) $1,380
B) $1,375
C) $1,510
D) $1,250
Q3) If ending inventory for the year is overstated, stockholders' equity reported on the balance sheet at the end of the year is understated.
A)True
B)False
Q4) During a period of consistently rising prices, the method of inventory that will result in reporting the greatest cost of goods sold is
A) FIFO
B) LIFO
C) average cost
D) weighted average
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Chapter 7: Internal Control and Cash
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197 Verified Questions
197 Flashcards
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Sample Questions
Q1) Green Valley Bank sent Comstock Industries its end-of-month bank statement for July. The end of month balance by the bank is $11,237. The statement shows that a deposit for $4,250 is in transit at the end of the statement period. The statement also revealed that checks for $87, $105, and $95 are outstanding. Green Valley collected a $4,000 note receivable plus $120 of interest revenue. The bank charges $20 for the collection service. The bank charges a monthly account fee of $35. The end-of-month balance per company books is $11,135.
(a) Prepare a bank/account reconciliation.
(b) Write any necessary journal entries for the reconciliation.
(c) If the balance sheet were prepared for Comstock Industries on July 31, what amount should be reported for cash?
Q2) Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the company. This item is a(n)
A) deduction from the balance per company's records
B) addition to the balance per bank statement
C) deduction from the balance per bank statement
D) addition to the balance per company's records
Q3) List the principal advantages of electronic funds transfers.
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Page 9
Chapter 8: Receivables
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Sample Questions
Q1) At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of $2,000. The Accounts Receivable balance is analyzed by aging the accounts and, the amount estimated to be uncollectible is $15,000. The amount to be recorded in the adjusting entry for the bad debt expense is $15,000.
A)True
B)False
Q2) The direct write-off method of accounting for uncollectible accounts
A) emphasizes balance sheet relationships
B) is often used by small companies and companies with few receivables
C) emphasizes cash realizable value
D) emphasizes the matching of expenses with revenues
Q3) Blackwell Industries received a 120-day, 9% note for $180,000, dated August 10 from a customer on account.
Required: (a) Determine the due date of the note.
(b) Determine the maturity value of the note.
(c) Journalize the entry to record the receipt of the payment of the note at maturity.
Q4) If a note receivable is dishonored, what is the effect on the accounting equation?
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Chapter 9: Long-Term Assets: Fixed and Intangible
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240 Verified Questions
240 Flashcards
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Sample Questions
Q1) Exterior and interior painting
A)Ordinary maintenance and repairs
B)Asset improvements
C)Extraordinary repairs
Q2) For income tax purposes, most companies use an accelerated deprecation method called double declining balance.
A)True
B)False
Q3) Residual value is not incorporated in the initial calculations for double-declining-balance depreciation.
A)True
B)False
Q4) Equipment costing $80,000 with a useful life of 10 years and a residual value of $8,000 has been depreciated for 6 years by the straight-line method. Assume a fiscal year ending December 31. (a) What is the book value at the end of the sixth year of use? (b) If early in the seventh year it is estimated that the remaining usefull life is 5 years (instead of 4 ) and the residual value is \( \$ 6,000 \), what is the amount of depreciation for the seventh year?
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Chapter 10: Liabilities: Current, Installment Notes, and Contingencies
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179 Verified Questions
179 Flashcards
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Sample Questions
Q1) Federal income taxes withheld increase the employer's payroll tax expense.
A)True
B)False
Q2) On January 1, Year 1, Zero Company obtained a $52,000, 4-year, 6.5% installment note from Regional Bank. The note requires annual payments consisting of principal and interest of $15,179, beginning on December 31 of the current year. The December 31, Year 1 carrying amount in the allocation of periodic payments table for this installment note will be equal to:
A) $27,635
B) $40,201
C) $36,821
D) $39,000
Q3) Current liabilities are
A) due and receivable within one year
B) due and to be paid out of current assets within one year
C) due, but not payable for more than one year
D) payable if a possible subsequent event occurs
Q4) The proceeds of a discounted note are equal to the face value of the note.
A)True
B)False
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Chapter 11: Liabilities: Bonds Payable
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172 Verified Questions
172 Flashcards
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Sample Questions
Q1) Allows the bond holder to exchange bond for shares of stock
A)carrying amount
B)face value
C)callable bond
D)indenture
E)term bond
F)convertible bond
G)serial bond
Q2) Bonds Payable has a balance of $1,000,000 and Discount on Bonds Payable has a balance of $10,000. If the issuing corporation redeems the bonds at 97 1/2 what is the amount of gain or loss on redemption?
A) $10,000 loss
B) $25,000 loss
C) $25,000 gain
D) $15,000 gain
Q3) A bond is usually divided into a number of individual bonds of $500 each.
A)True
B)False
Q4) How should any unamortized premium be reported on the balance sheet of the issuing corporation?
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Chapter 12: Corporations: Organization, Stock Transactions, and Dividends
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190 Verified Questions
190 Flashcards
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Sample Questions
Q1) While some businesses have been granted charters under state laws, most businesses receive their charters under federal laws.
A)True
B)False
Q2) The declaration and issuance of a stock dividend does not affect the total amount of a corporation's assets, liabilities, or stockholders' equity.
A)True
B)False
Q3) The balance in Retained Earnings should be interpreted as representing surplus cash left over for dividends.
A)True
B)False
Q4) The declaration of a stock dividend decreases a corporation's stockholders' equity and increases its liabilities.
A)True
B)False
Q5) Alma Corp. issues 1,000 shares of $10 par common stock at $14 per share. Journalize the transaction.
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Chapter 13: Statement of Cash Flows
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186 Verified Questions
186 Flashcards
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Sample Questions
Q1) Connor Designs Company has cash flows for operating activities of $425,000. Cash flows used for investments in property, plant, and equipment totaled $65,000, of which 70% of this investment was used to replace machinery to maintain its current operations.
What is the free cash flow for Connor Designs?
Q2) Firefly Inc. sold land for $225,000 cash. The land had been purchased five years earlier for $275,000. The loss on the sale was reported on the income statement. On the statement of cash flows, what amount should Firefly report as an investing activity from the sale of the land?
A) $225,000
B) $275,000
C) $50,000
D) $500,000
Q3) Exchange of land for note payable
A)Operating activities
B)Financing activities
C)Investing activities
D)Schedule of noncash financing and investing
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Chapter 14: Financial Statement Analysis
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206 Verified Questions
206 Flashcards
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Sample Questions
Q1) Based on the data for Privett Company, what is the amount of quick assets?
A) $168,000
B) $96,000
C) $60,000
D) $61,000
Q2) an analysis of a company's ability to pay its current liabilities
A)solvency
B)leverage
C)times interest earned
D)horizontal analysis
E)vertical analysis
F)common-sized financial statements
G)current position analysis
H)profitability analysis
Q3) What are the dividends per common share for Diane Company?
A) $20.00
B) $3.00
C) $0.67
D) $1.50
Q4) The following data are available for Martin
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Chapter 15:Investments
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Sample Questions
Q1) Sutton Company purchased 10% of the outstanding stock of Roberts Company on January 1. Roberts reported net income of $155,000 and declared dividends of $40,000 during the year. How would these events be reported by Sutton using the fair value method?
Q2) Long-term investments are held for all of the listed reasons below except A) to earn the interest or dividend income
B) for their long-term gain potential
C) to have influence over another business entity
D) to meet current cash needs
Q3) The equity method is usually more appropriate for accounting for investments where the purchaser does not have significant influence over the investee.
A)True
B)False
Q4) The amount of interest paid when buying a bond as an investment should be credited to Interest Revenue.
A)True
B)False
Q5) Compare and contrast why companies invest cash in short-term temporary investments vs. long-term investments.
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