Basic Accounting Test Preparation
Course Introduction
Basic Accounting introduces students to the fundamental principles and concepts of accounting, providing a solid foundation in the recording, classification, and interpretation of financial transactions. The course covers essential topics such as the accounting cycle, preparation of financial statements, double-entry bookkeeping, and basic analysis of financial data. Students gain practical skills in managing accounts, understanding debits and credits, and applying accounting standards, equipping them to comprehend how businesses track and report financial information for decision-making and regulatory purposes.
Recommended Textbook
Horngrens Accounting The Financial Chapters 12th Edition by Tracie L. Miller-Nobles
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17 Chapters
3678 Verified Questions
3678 Flashcards
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Page 2
Chapter 1: Accounting and the Business Environment
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246 Verified Questions
246 Flashcards
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Sample Questions
Q1) The most that the owner of a sole proprietorship can lose,as a result of business debts or lawsuits,is the amount he/she has invested in the business.
A)True
B)False
Answer: False
Q2) The guidelines for accounting information are called Generally Accepted Accounting Principles (GAAP).
A)True
B)False
Answer: True
Q3) ________ represent the right to receive cash in the future from customers for goods sold or for services performed.
A)Accounts Receivable
B)Accounts Payable
C)Equity
D)Expenses
Answer: A
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Page 3
Chapter 2: Recording Business Transactions
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219 Verified Questions
219 Flashcards
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Sample Questions
Q1) For Owner,Capital,the category of account and its normal balance is ________.
A)equity and a credit balance
B)assets and a debit balance
C)equity and a debit balance
D)assets and a credit balance
Answer: A
Q2) Which of the following sequences is the normal sequence of flow of accounting data?
A)Ledger Journal Source document
B)Journal Source document Ledger
C)Source document Journal Ledger
D)Source document Ledger Journal
Answer: C
Q3) The trial balance reports the balances of assets,liabilities,and equity.
A)True
B)False
Answer: True
Q4) What are two ways in which a company can improve its debt ratio?
Answer: Increase assets
Reduce debt
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Chapter 3: The Adjusting Process
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225 Verified Questions
225 Flashcards
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Sample Questions
Q1) The employees of Leichester Services Company worked the last two weeks of December,2016.They received their paychecks on January 2,2017.Which of the following accounts should appear on the income statement for the year ended December 31,2016?
A)Salaries Expense
B)Prepaid Expense
C)Salaries Payable
D)Unearned Revenue
Answer: A
Q2) Anthony Delivery Service has a weekly payroll of $34,000.December 31 falls on Tuesday and Anthony will pay its employees the following Monday (January 6)for the previous full week.Assume that Anthony has a five-day workweek and has an unadjusted balance in Salaries Expense of $925,000 at December 31.What is the December 31 balance of Salaries Expense after adjusting entries are recorded and posted?
A)$925,000
B)$959,000
C)$945,400
D)$938,600
Answer: D
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Page 5
Chapter 4: Completing the Accounting Cycle
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208 Verified Questions
208 Flashcards
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Sample Questions
Q1) Under which of the following categories would Accounts Payable appear?
A)Long-term assets
B)Current assets
C)Long-term liabilities
D)Current liabilities
Q2) At the end of the period,the accounting cycle includes adjusting the accounts,preparing financial statements,and closing the accounts.
A)True
B)False
Q3) A worksheet is a substitute for the financial statements.
A)True
B)False
Q4) The Service Revenue account is a permanent account.
A)True
B)False
Q5) The steps of the accounting cycle are followed throughout the accounting period.
A)True
B)False
Q6) List the steps of the accounting cycle that take place at the end of the period.
Q7) List the steps of the accounting cycle that take place during the period.
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Chapter 5: Merchandising Operations
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301 Verified Questions
301 Flashcards
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Sample Questions
Q1) The entry to close Sales Discounts Forfeited will include a debit to Income Summary.
A)True
B)False
Q2) Which of the following is NOT recorded in a modern perpetual inventory system?
A)units purchased and cost amounts
B)units sold and sales and cost amounts
C)timeliness of vendor deliveries
D)the quantity of merchandise inventory on hand and its cost
Q3) The balance sheet of a merchandiser looks the same as the balance sheet of a retailer,except merchandisers have the following additional current liability accounts: Estimated Returns Inventory and Refunds Payable.
A)True
B)False
Q4) Extreme Discount Merchandisers has purchased merchandise on account and paid $450 for freight in.Prepare the journal entry for freight paid.(Assume a perpetual inventory system. )
Q5) Freight in is a delivery expense to the seller.
A)True
B)False
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Chapter 6: Merchandise Inventory
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199 Verified Questions
199 Flashcards
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Sample Questions
Q1) Which of the following inventory costing methods yields the highest cost of goods sold during a period of rising inventory costs?
A)specific identification
B)weighted-average
C)last-in,first-out
D)first-in,first-out
Q2) Which of the following is the correct formula to calculate days' sales in inventory?
A)Days' sales in inventory = 365 days × Inventory turnover
B)Days' sales in inventory = 365 days + Inventory turnover
C)Days' sales in inventory = 365 days / Inventory turnover
D)Days' sales in inventory = 365 days - Inventory turnover
Q3) The specific identification method of inventory costing is required to be used by businesses that sell unique,easily identified inventory items.
A)True
B)False
Q4) The lower-of-cost-or-market rule demonstrates accounting conservatism in action.
A)True
B)False
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8
Chapter 7: Accounting Information Systems
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164 Verified Questions
164 Flashcards
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Sample Questions
Q1) When using a purchases journal,Accounts Payable is always credited.
A)True
B)False
Q2) Australia Company sells a product for $500 cash to Martin and Lewis Enterprises.This transaction will be recorded in the ________.
A)cash payments journal
B)sales journal
C)cash receipts journal
D)purchase journal
Q3) Compatibility
A)Can accommodate changes in the business over time.
B)Provides information that will improve decision making and reduce uncertainty.
C)Benefits received outweigh the cost of the system.
D)Works smoothly with the business's employees and organization structure.
E)Provides safeguards for a business's assets and reduces the likelihood of fraud and errors.
Q4) When using Quickbooks,the Vendors tab is used to record a bill that has been received.
A)True
B)False
Page 9
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Chapter 8: Internal Control and Cash
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258 Flashcards
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Sample Questions
Q1) A petty cash fund was established with a $400 balance.It currently has cash of $43 and petty cash tickets totaling $357.Which of the following would be included in the entry to replenish the fund?
A)a credit to Petty Cash for $357
B)a debit to Petty Cash for $43
C)a credit to Cash for $43
D)a debit to various expenses for $357
Q2) Which of the following is TRUE of the internal control component-information system?
A)Internal auditors monitor company controls to safeguard assets,and external auditors monitor the controls to ensure that the accounting records are accurate.
B)Control procedures are designed to ensure that the business's goals are achieved.
C)Only authorized users have access to various parts of the information system.
D)The information system is the "tone at the top" or the culture of the business.
Q3) There are three parties to a check: the depositor,the maker,and the bank.
A)True
B)False
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Chapter 9: Receivables
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233 Verified Questions
233 Flashcards
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Sample Questions
Q1) Factoring is an option available to a business to reduce the risk of uncollectible accounts receivable.
A)True
B)False
Q2) When comparing the direct write-off and allowance methods,the major difference is
A)when to record bad debts expense
B)when to recognize revenue
C)determining the balance of the Allowance for Bad Debts account
D)developing adequate procedures for granting credit
Q3) Logan Sales provides the following information: Net credit sales: $790,000
Beginning net accounts receivable: $43,000
Ending net accounts receivable: $22,000
Calculate the accounts receivable turnover ratio.(Round your answer to the nearest whole number. )
A)18 times
B)24 times
C)36 times
D)34 times
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Page 11
Chapter 10: Plant Assets, natural Resources, and Intangibles
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212 Verified Questions
212 Flashcards
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Sample Questions
Q1) Westin Delivery Service Company owns a delivery truck.Which of the following costs,associated with the truck,will be treated as a revenue expenditure?
A)oil change and lubrication
B)major engine overhaul
C)modification for new use
D)addition to storage capacity
Q2) On January 1,2018,Jordan Company acquired a machine for $1,090,000.The estimated useful life of the asset is five years.Residual value at the end of five years is estimated to be $60,000.Calculate the depreciation expense per year using the straight-line method.
A)$218,000
B)$206,000
C)$266,000
D)$272,500
Q3) The book value of a plant asset is reported on the balance sheet as the cost of the asset minus accumulated depreciation.
A)True
B)False
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Chapter 11: Current Liabilities and Payroll
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221 Verified Questions
221 Flashcards
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Sample Questions
Q1) Because a company usually does not know the amount of the year-end bonus at year-end,no liability is recorded.
A)True
B)False
Q2) The expense for warranty costs is recorded in the period ________.
A)when the product is sold
B)when the product is repaired or replaced
C)when cash is paid to repair or replace the product
D)when cash is collected from the sale of the product
Q3) Fast Bikes Company offers warranties on all their bikes.They estimate warranty expense at 3.5% of sales.At the beginning of 2018,the Estimated Warranty Payable account had a credit balance of $1900.During the year,Fast Bikes had $296,000 in sales and had to pay out $5900 in warranty payments.At the end of the year,what is the ending balance in the Estimated Warranty Payable accounts?
A)$6360
B)$7800
C)$8460
D)$10,360
Q4) What is a contingent liability? Provide two examples of contingencies.
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Chapter 12: Partnerships
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171 Flashcards
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Sample Questions
Q1) Which of the following is TRUE of a partnership balance sheet?
A)Each partner's assets will be shown separately.
B)Each partner's liabilities will be shown separately.
C)Each partner's equity will be shown separately.
D)Each partner's assets,liabilities,and equity will be shown separately.
Q2) Irrespective of the original profit-and-loss-sharing ratio,the bonus received by existing partners-by admitting a new partner-will be allocated equally.
A)True
B)False
Q3) A withdrawing partner acquires a bonus if the assets they receive in the dissolution are worth more than the book value of their equity.
A)True
B)False
Q4) In a partnership,the entry to close net loss ________.
A)increases assets
B)increases liabilities
C)decreases Partners' Capital accounts
D)decreases the Income Summary account
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14
Chapter 13: Corporations
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277 Flashcards
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Sample Questions
Q1) Risingstar Corporation currently has 129,000 shares outstanding of $3 par value common stock.The stock was originally issued for $14 per share.On March 15,the board of directors declares a 13% stock dividend when the stock is selling for $22 per share.Which of the following is the correct journal entry to record this transaction? (Do not round intermediate calculations. )
A)debit Common Stock Dividend Distributable $50,310,debit Paid-In Capital in Excess of Par-Common for $318,630 and credit Retained Earnings $368,940
B)debit Stock Dividends $368,940 and credit Common Stock Dividend Distributable
$368,940
C)debit Stock Dividends $368,940,credit Common Stock Dividend Distributable $50,310 and credit Paid-In Capital in Excess of Par-Common $318,630
D)debit Paid-In Capital in Excess of Par-Common $368,940 and credit Retained Earnings
$368,940
Q2) If a company retires preferred stock,________.
A)total stockholders' equity will decrease
B)total stockholders' equity will increase
C)the company can record a gain or loss on retirement of stock
D)the number of outstanding shares will increase
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Chapter 14: Long-Term Liabilities
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Sample Questions
Q1) A mortgage payable is a long-term debt that is backed with a security interest in specific property.
A)True
B)False
Q2) On January 1,2019,Commercial Equipment Sales issued $28,000 in bonds for $15,700.These are six-year bonds with a stated interest rate of 10%,and pay semiannual interest on June 30 and December 31.Commercial Equipment Sales uses the straight-line method to amortize the Bond Discount.What amount is debited to Interest Expense on June 30,2019?
A)$1400
B)$2425
C)$1025
D)$25,067
Q3) Premium on Bonds Payable is additional Interest Expense of the company that issues the bond.
A)True
B)False
Q4) Debt is a less expensive source of capital than stock.
A)True
B)False
Page 16
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Chapter 15: Investments
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Sample Questions
Q1) Equity securities in which the investor lacks the ability to participate in the decisions of the investee company are classified as ________ investments.
A)controlling interest equity
B)no significant influence equity
C)significant influence equity
D)available-for-sale equity
Q2) On October 1,2018,North Co.invested excess cash of $80,000 by purchasing bonds of South Inc.At year-end,December 31,2018,the market price of the bonds was $77,000.The investment is categorized as a trading debt investment.Journalize the adjusting entry needed at December 31,2018.Omit explanation.
Q3) A 9% rate of return on total assets means that the company earned $0.09 for each $1.00 invested in the company's average long-term assets.
A)True
B)False
Q4) An equity security does not represent an ownership interest in a corporation,although it pays dividends.
A)True
B)False
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Chapter 16: The Statement of Cash Flows
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Sample Questions
Q1) Which of the following sections of the statement of cash flows include activities that increase and decrease long-term assets?
A)the financing activities section
B)the operating activities section
C)the investing activities section
D)the non-cash investing and financing section
Q2) Free cash flow is calculated by adding cash payments planned for investments in long-term assets and cash dividends to the amount of net cash provided by operating activities.
A)True
B)False
Q3) When preparing the statement of cash flows,the amount of net cash provided by operating activities differs between the direct and indirect methods.
A)True
B)False
Q4) Financing activities on the statement of cash flows affect the long-term liability and equity accounts.
A)True B)False
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Chapter 17: Financial Statement Analysis
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Sample Questions
Q1) When performing vertical analysis of an income statement,the base amount is
A)total expenses
B)net sales revenue
C)sales revenue
D)gross profit
Q2) Martin Company's cost of goods sold is 40% of net sales revenue.This means that for every $1 of net sales revenue,Martin has $0.60 of gross profit.
A)True
B)False
Q3) The debt ratio is the ratio of total debt divided by total equity.
A)True
B)False
Q4) Horizontal analysis provides a year-to-year comparison of a company's performance in different periods.
A)True
B)False
Q5) What is an annual report? Briefly describe the key parts of the annual report.
Q6) What is a common-size statement? Why are these statements useful?
Page 19
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