Accounting Principles II
Practice Questions
Course Introduction
Accounting Principles II is a continuation of the foundational concepts introduced in Accounting Principles I, with a focus on the accounting procedures for corporations and more complex business organizations. This course covers topics such as the accounting for stockholders equity, long-term liabilities, investments, and cash flows, as well as an introduction to managerial and cost accounting principles. Students will learn how to prepare and analyze financial statements, understand internal controls, and apply accounting concepts to decision-making processes. The course emphasizes the application of accounting information to real-world business scenarios, further developing analytical and problem-solving skills necessary for careers in accounting and finance.
Recommended Textbook
Horngren's Accounting Volume 2 10th Canadian Edition by Tracie L. Miller Nobles
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7 Chapters
1392 Verified Questions
1392 Flashcards
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Page 2
Chapter 1: Partnerships
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202 Verified Questions
202 Flashcards
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Sample Questions
Q1) When a partner contributes an asset with an outstanding obligation into a partnership,such as a building with a mortgage,the obligation is transferred to the partnership.
A)True
B)False Answer: True
Q2) It is not possible for the withdrawals account of a partner to be nil before closing entries.
A)True
B)False Answer: False
Q3) Each partner in a partnership:
A) has limited liability for the debts of the business
B) pays his or her share of the partnership business income tax
C) has co-ownership of the assets of the partnership
D) shares in a jointly held capital account
Answer: C
Q4) Refer to Table 12-13.Assuming that the business earns $135,000,allocate the income to Burns and Allan.
Answer: 11ea8586_2da5_4917_a31f_0f4133a254d4_TB5022_00
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Chapter 2: Corporations: Share Capital and the Balance Sheet
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180 Verified Questions
180 Flashcards
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Sample Questions
Q1) Cash dividends:
A) do not affect the retained earnings of a corporation
B) decrease both the assets and the total shareholders' equity of the corporation
C) increase retained earnings
D) increase the assets and decrease the total shareholders' equity of the corporation
Answer: B
Q2) Referring to Table 13-9,what is the total value of the common shares on December 31,2017,assuming no dividends were declared?
A) $500,000
B) $398,000
C) $260,000
D) $520,000
Answer: B
Q3) An investor has the choice of investing in common shares,preferred shares or bonds (long-term debt).Explain the benefits,cons and riskiness of each option.
Answer: 11ea8586_2dad_fafd_a31f_05d73266d55f_TB5022_00
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Chapter 3: Corporations: Retained Earnings and the
Income Statement
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205 Verified Questions
205 Flashcards
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Sample Questions
Q1) In 2017 Niklan Plastic Products Ltd.(NPPL_discovered an error made in the year ended December 31,2016.An inventory error caused net income of the prior period to be understated by $35,000.Retained Earnings at January 1,2017,as previously reported,stood at 567,800.Net income for the year ended December 31,2017 was $253,000 and cash dividends were $50,000.Prepare the statement of retained earnings for NPPL for the year ended December 31,2017.
Answer: Niklan Plastic Products Ltd.
Statement of Retained Earnings
For the year ended December 31, 2017 \(\begin{array}{llr}
\text {Retained earnings, Jan. 1, 2017 } &\$567,800\\ \end{array}\)
Adjustment to correct error \(\begin{array}{lr}
\text { In recording closing inventory in } 2016 \text { (see Note XX) } & \underline{35,000} \\
\text { Retained earnings, Jan. 1, 2017, as adjusted } & 602,800 \\
\text { Net Income for } 2017 & 253,000 \\
\text { Dividends for } 2017 & \underline{50,000} \\
\text { Retained earnings, Dec. 31, 2017 } & \underline{ \$ 805,000} \end{array}\)
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Chapter 4: Long-Term Liabilities
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186 Verified Questions
186 Flashcards
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Sample Questions
Q1) Io Corporation has an opportunity to acquire a factory in another part of the country.After careful analysis,Io has decided to raise the necessary capital for the acquisition by issuing $4,000,000 of 8%,10-year bonds dated March 1,2017,with interest payments on March 1 and September 1.Assume the bonds are issued on July 1,2017 at 108 plus accrued interest at a time when the market rate of interest was 6.9%.Io's year end is December 31 and the company uses the effective-interest method to amortize any bond discount or premium.
a_Prepare the entry to record the issuance of the bonds on July 1,2017.
b_Prepare the entry on September 1,2017,to record the interest payment.
c_Prepare the entry to record the accrued interest on December 31,2017.
d_Prepare necessary closing entry on December 31,2017.
e_Prepare the March 1,2018 entry to record the interest payment.
Q2) Earning more income on borrowed money than the related interest expense increases the earnings for common shareholders and is termed trading on the equity. A)True
B)False
Q3) Refer to Table 15-6.The entry to record the issuance of the bond at par plus accrued interest on August,1,2017 will include a credit to interest payable of what amount?
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Page 6
Chapter 5: Investments and International Operations
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191 Verified Questions
191 Flashcards
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Sample Questions
Q1) Currency exchange rates are affected by the demand for a country's currency.
A)True
B)False
Q2) The primary difference in accounting for non-strategic investments in shares and bonds is that International Financial Reporting Standards (IFRS_require that most investments be reported at fair value.If fair value is not easily ascertained,Accounting Standards for Private Enterprises (ASPE_allow the use of cost as the valuation basis.
A)True
B)False
Q3) A short-term investment acquired at a cost of $50,000 in 2016 is sold in 2017 for $45,800.After the proper adjusting entry was prepared in 2016,the short-term investment had a carrying value of $43,200.In 2017,the investor should report a(n):
A) Loss on Sale of Short-Term Investment of $4,200
B) Loss on Sale of Short-Term Investment of $2,600
C) Loss on Sale of Short-Term Investment of $6,800
D) Gain on Sale of Short-Term Investment of $2,600
Q4) Described what is meant by a strong or weak currency.Explain two underlying reasons why currencies change in relation to each other.
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Page 7
Chapter 6: The Cash Flow Statement
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207 Verified Questions
207 Flashcards
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Sample
Questions
Q1) Sureteck Industries prepares its cash flow statement using the direct method.Sureteck sold a piece of equipment used in their operations with a book value of $7,000 at a gain of $2,500.The amount to be reported on the cash flow statement under investing activities is:
A) $2,500
B) $7,000
C) $9,500
D) $4,500
Q2) Which of the following describes the operating activities as shown in the cash flow statement?
A) includes increases and decreases in long-term assets
B) includes transactions affecting the capitalization of the business
C) includes transactions that primarily impact current assets and current liabilities
D) shows the beginning and ending balance of cash
Q3) Reported in a separate schedule that accompanies the cash flow statement
Q4) Refer to Table 17-6.Prepare the operating activities section of the cash flow statement using the indirect method.
Q5) Another name for cash receipts and cash payments
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Chapter 7: Financial Statement Analysis
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Sample Questions
Q1) The fact that cost of goods sold decreased by 20% from 2016 to 2017 would most likely be revealed by:
A) trend analysis
B) horizontal analysis
C) vertical analysis
D) ratio analysis
Q2) Ratio of cost of goods sold to average inventory; measures the number of times a company sells its average inventory during a year
Q3) Refer to Table 18-2.If net sales increased 15%,and gross margin increased 10%,then cost of goods sold must have:
A) decreased 20.0%
B) increased 20.0%
C) decreased 12.5%
D) increased 12.5%
Q4) When preparing a horizontal analysis of financial statements,subtract the later year amount from the earlier year amount and divide by the earlier year amount.
A)True
B)False
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