Business Accounting
Exam Materials
Course Introduction
Business Accounting is a foundational course designed to introduce students to the principles and practices of financial and managerial accounting. The course covers essential topics such as the accounting cycle, preparation and analysis of financial statements, recording economic transactions, and understanding the role of accounting information in decision-making processes. Students will gain insight into budgeting, internal controls, and the regulatory environment affecting business accounting. Through practical exercises and case studies, learners will develop the skills necessary to interpret and communicate financial data effectively, supporting strategic business planning and operational efficiency.
Recommended Textbook
Cornerstones of Financial Accounting 2nd Edition by Jay Rich
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12 Chapters
1918 Verified Questions
1918 Flashcards
Source URL: https://quizplus.com/study-set/3782
Page 2
Chapter 1: Accounting and the Financial Statements
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202 Verified Questions
202 Flashcards
Source URL: https://quizplus.com/quiz/75499
Sample Questions
Q1) Which one of the following groups is considered an internal user of financial statements?
A)A supplier considering selling to the company on credit.
B)The labor union representing employees of a company that is involved in labor negotiations
C)The financial analysts for a brokerage firm who are preparing recommendations for the firm's brokers on companies in a certain industry,
D)Managers of the company that supervise production workers.
Answer: D
Q2) A non-classified balance sheet typically does<b> not</b> have a distinction between which of the following items?
A)Assets and Liabilities
B)Current and Noncurrent items
C)Liabilities and Stockholders' Equity
D)Resources invested by the owners and amounts borrowed from creditors
Answer: B
Q3) ____________________ is a liquidity measure that is calculated by subtracting current assets from current liabilities.
Answer: Working capital
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Page 3
Chapter 2: The Accounting Information System
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177 Verified Questions
177 Flashcards
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Sample Questions
Q1) Which of the following is an internal event for a business entity?
A)An attorney provides services for clients.
B)An attorney purchases computer equipment.
C)An attorney uses computer equipment to maintain business records and prepare legal documents.
D)An attorney receives cash payments from clients who were billed for legal services.
Answer: C
Q2) Which of the following accounts is decreased by a debit entry?
A)Unearned Revenue
B)Prepaid Insurance
C)Cash
D)Insurance Expense
Answer: A
Q3) The issuance of common stock increases a company's assets and stockholders' equity.
A)True
B)False
Answer: True
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Chapter 3: Accrual Accounting
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162 Verified Questions
162 Flashcards
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Sample Questions
Q1) The Dividend account is known as which of the following?
A)Temporary account
B)Closing account
C)Real account
D)Both b and c
Answer: A
Q2) Refer to California Condos.On January 1,the balance of Unearned Rent Revenue was $0.The company collected cash from tenants of its apartment building totaling $600,000 during 2013.How much should be reported as unearned rent revenue as of December 31,2013?
Answer: $260,000
$600,000 (Cash collected)- $340,000 (Rent Revenue)= $260,000
Q3) Chicago Works employs 20 workers.Each employee is paid wages of $25 per hour and works an 8-hour workday,Monday through Friday.Employee wages are paid every Friday for the workweek just ending.
A) Compute the dollar amount of the weekly payroll.
B) The last payday of the year was Friday, December 26. Prepare the adjusting entry for wages on Wednesclay, December 31 , the last day of the fiscal period.
Answer: no answee
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Page 5
Chapter 4: Internal Control and Cash
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162 Verified Questions
162 Flashcards
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Sample Questions
Q1) Which of the following is an example of a debit memo?
A)Notice of a bank service charge
B)Notice of interest earned on a checking account
C)Outstanding checks
D)A company's transposition error in the recording of a deposit
Q2) Refer to Dance Town Academy.How will the bank services charges be handled on a bank reconciliation?
A)add to the balance from the company records
B)subtract from the balance from the company records
C)add to the bank statement balance
D)subtract from the bank statement balance
Q3) In the reconciliation of a bank statement,deposits in transit should be:
A)added to the unadjusted balance per the company's records.
B)subtracted from the unadjusted balance per the company's records.
C)added to the unadjusted bank statement balance.
D)subtracted from the unadjusted bank statement balance.
Q4) A check that "bounced" or was returned by the bank due to lack of funds is called a(n)____________________.
Q5) A check written by a company but not yet presented to the bank for payment is called a(n)____________________.
Page 6
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Chapter 5: Sales and Receivables
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) Beginning accounts receivable were $200,000 and ending accounts receivable were $300,000.Assuming cash collections totaled $1,100,000,what were credit sales?
A)$1,200,000
B)$1,100,000
C)$1,300,000
D)$1,500,000
Q2) Refer to Accutemp Heating & Air.Identify the maturity date of the note.
Q3) Refer to Accelerated Solutions.What is the balance of Accounts Receivable at December 31,2012?
A)$700,000
B)$340,000
C)$690,000
D)$710,000
Q4) Under the allowance method of accounting for bad debts,the company estimates the amount of bad debts before those debts actually occur.
A)True
B)False
Q5) Identify two methods of accelerating cash from sales.
Q6) Net sales is total sales less sales discounts and ________________
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Chapter 6: Cost of Goods Sold and Inventory
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191 Verified Questions
191 Flashcards
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Sample Questions
Q1) Refer to the information provided for Klump Co.If the company uses the LIFO inventory costing method,ending inventory at June 30th is:
A)$1,823.25
B)$1,811.75
C)$1,810.00
D)$1,806.25
Q2) For a merchandising company,the cost of goods sold is subtracted from net sales to arrive at gross profit.
A)True
B)False
Q3) When merchandise is sold FOB destination,the seller is responsible for the shipping costs.
A)True B)False
Q4) Shipping terms of ____________________ mean that the buyer pays shipping costs.
Q5) Under the FIFO method of inventory costing,the units in the ending inventory represent the oldest purchase(s).
A)True
B)False
8
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Chapter 7: Operating Assets
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133 Verified Questions
133 Flashcards
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Sample Questions
Q1) The two items that must be <b>estimated</b> with respect to a plant asset in order to properly allocate cost to the affected accounting periods are ____________________ and ____________________
Q2) You have determined that a company uses straight line depreciation.However,the depreciation expense is different than you expected it to be.What could be the reason for this difference?
A)Different residual values
B)Same residual values
C)Same useful lives
D)Cannot be determined
Q3) Refer to Fantasy Cruise Lines.Compute the amount of depreciation expense for the year ended December 31,2012.
A)$ 90,000
B)$100,000
C)$180,000
D)$200,000
Q4) An accumulated ________ account is used when writing off natural resources.
Q5) A _________________ is the right to produce or sell a published work.
Q6) Explain what costs are included in the acquisition cost of operating assets.
Page 9
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Chapter 8: Current and Contingent Liabilities
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139 Verified Questions
139 Flashcards
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Sample Questions
Q1) A(n)____________________ usually guarantees the repair or replacement of defective goods during a period ranging from a few days to several years following the sale.
Q2) The amount of a current liability reported on the balance sheet for interest payable includes
A)all interest to be paid within one year into the future related to amounts borrowed in past transactions.
B)all interest to be paid in the future related to amounts borrowed in past transactions.
C)all interest currently owed related to amounts borrowed in past transactions.
D)all interest paid-to-date related to amounts borrowed in past transactions.
Q3) Which of the following would appear only in the footnotes accompanying the financial statements?
A)A probable loss in the amount of $4 million from a pending lawsuit.
B)A loss that is likely to occur in the amount of $4 million related to a pending lawsuit.
C)A probable loss from a pending lawsuit,the amount of which is not yet determinable.
D)A liability resulting from a recent lawsuit settlement.
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Chapter 9: Long-Term Liabilities
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119 Verified Questions
119 Flashcards
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Sample Questions
Q1) A company issued $1,000,000 of 10% notes that resulted in interest expense of $100,000 per year.What is the company's net cash outflow if the effective tax rate is 40%?
A)$100,000
B)$ 60,000
C)$ 40,000
D)$160,000
Q2) A potential advantage of debt financing over equity financing is that it fixes the amount of compensation to the lender.
A)True
B)False
Q3) Bonds sell at a premium when the
A)issuing company has a better reputation than other companies in the same business.
B)market rate of interest is less than the stated interest rate at the time of issue.
C)yield rate of interest is more than the stated rate at the time of issue.
D)issuing company agrees to repay the maturity before the due date.
Q4) ____________________ bonds may be retired by the issuing company before their specified due date.
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11
Chapter 10: Stockholders Equity
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182 Verified Questions
182 Flashcards
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Sample Questions
Q1) When a corporation is in the process of being dissolved,any additional dividends are referred to as ____________________ dividends.
Q2) Which of the following items is included as part of comprehensive income but <b>not</b> as part of net income?
A)Income tax expense
B)Unrealized holding gains or losses
C)Gains or losses on the sale of equipment
D)Gains or losses on the sale of investments
Q3) A corporation began operations on October 1,2014,with 3,000 shares of $2 par common stock authorized.The company issued common stock on several occasions during 2014 and 2015.On December 31,2015,the company repurchased 1,000 shares of its outstanding shares and then reissued 500 of these shares on March 1,2016.On June 1,2016,the company's board of directors declared a 2-for-1 stock split.As a result of this stock split,which of the following is true?
A)Assets decreased.
B)The number of shares issued decreased.
C)Total liabilities decreased.
D)Total stockholders' equity remained the same.
Q4) What is treasury stock and how is it reported in the financial statements?
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Chapter 11: The Statement of Cash Flows
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165 Verified Questions
165 Flashcards
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Sample Questions
Q1) Operating cash flows generally involve income statement items (which are reflected in Retained Earnings)and balance sheet items (such as changes in current assets and current liabilities).
A)True
B)False
Q2) The following additional information was obtained from the company's records:
1. Cash additions to property, plant, and equipment during 2014 were \( \$ 2,300 \). An additional \( \$ 250 \) of plant assets were acquired through debt in a noncash transaction. Depreciation expense for 2014 was \( \$ 400 \). Gains on disposals of property, plant and equipment during 2014 were \( \$ 40 \).
2. The cash proceeds from the sale of investments in 2014 was \( \$ 120 \). There was a \( \$ 30 \) gain on the sale of the investments.
3. Proceeds from long-term debt issued during 2014 was \( \$ 200 \).
4. The issuance of common stock totaled \( \$ 30 \) in 2014 . Refer to Maritime Marine Services.What was the amount of accumulated depreciation on the property,plant and equipment disposed of during 2014?
Q3) When a company sells its own common stock,it is a(n)____________________ activity on the statement of cash flows.
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Chapter 12: Financial Statement Analysis
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) Inventory is more liquid than accounts receivable because receivables must be collected and some customers may not be willing to pay,while inventory need only be sold in a retail store.
A)True
B)False
Q2) Which of the following combinations of ratios will best analyze a company's income statement performance?
A)Gross profit percentage,return on common equity,and debt-to-equity
B)Gross profit percentage,earnings per share,and net profit margin percentage
C)Gross profit percentage,current ratio,and return on common equity
D)Gross profit percentage,net profit margin percentage,and debt-to-equity
Q3) If a company's current ratio is 1.5 and the current liabilities are $150,000,then the current assets are
A)$300,000
B)$225,000
C)$100,000
D)$75,000
Q4) The least liquid of all assets is cash.
A)True
B)False
Page 14
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