Business Accounting
Final Exam Questions
Course Introduction
Business Accounting introduces students to the fundamentals of financial and managerial accounting within a business context. The course covers essential topics such as recording financial transactions, preparing and interpreting financial statements, analyzing costs, budgeting, and understanding basic accounting principles and standards. Emphasis is placed on the role of accounting in decision-making, effective financial reporting, and ethical considerations in business practices. Through practical exercises and real-world examples, students will develop the skills needed to manage and analyze financial information for organizations.
Recommended Textbook
Cornerstones of Financial Accounting 2nd Edition by Jay Rich
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12 Chapters
1918 Verified Questions
1918 Flashcards
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Page 2
Chapter 1: Accounting and the Financial Statements
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202 Verified Questions
202 Flashcards
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Sample Questions
Q1) Dividend payments appear on the Statement of Retained Earnings.
A)True
B)False
Answer: True
Q2) Both net income and dividends can be found on this financial statement: ____________________.
Answer: Statement of Retained Earnings
Q3) The financial statement in which you list revenues,starting with sales revenue (service revenue),is called the ____________________.
Answer: Income Statement
Q4) In which section of the annual report would you find: "The financial statements,in our opinion,present fairly the financial position,operating results,and cash flows,in conformity with generally accepted accounting principles"?
A)Management report
B)Notes to the Financial Statements
C)Management's Discussion and Analysis
D)Report of the Independent Accountants
Answer: D
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Chapter 2: The Accounting Information System
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Sample Questions
Q1) The payment of employee salaries has what effect on the accounting equation?
A)Assets and stockholders' equity decrease
B)Liabilities and stockholders' equity decrease
C)Assets decrease and liabilities increase
D)Assets increase and liabilities decrease
Answer: A
Q2) Which of the following statements is true?
A)Only the effects of internal transactions must be recognized and recorded in the accounting system.
B)An internal transaction represents a business activity between an entity and its environment.
C)Evidence used to record transactions affecting a business entity comes from source documents.
D)Only the effects of external events must be recognized,measured,and recorded in an entity's accounting system.
Answer: C
Q3) The ____________________ is a list of all the accounts used by an entity.
Answer: chart of accounts
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4
Chapter 3: Accrual Accounting
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Sample Questions
Q1) Income statement accounts are also known as which of the following?
A)Temporary accounts
B)Real accounts
C)Permanent accounts
D)Asset accounts
Answer: A
Q2) The university satellite office operates five days per week with a daily payroll of $5,000.Employees are paid every Saturday for the workweek just completed (Monday through Friday).The last day of the month is Wednesday,October 31.What is the effect of
the correct adjustment at October 31?
A)Increases Stockholders' equity and Wages Payable by $15,000
B)Increases Wages Payable and decreases Cash by $10,000
C)Decreases Stockholders' equity and increases Wages Payable by 15,000
D)Increases Wages Payable and increases Wages Expense by $25,000
Answer: C
Q3) The difference between accrual-based revenue and accrual-based expenses in the period the activity occurred is called ____________________.
Answer: net income
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Chapter 4: Internal Control and Cash
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Sample Questions
Q1) If a company erroneously records a $50 check received from a customer as $500 in its records,which of the following must occur when reconciling its bank statement?
A)The company must increase the balance per its records by $500.
B)The company must increase the balance per its records by $450.
C)The company must decrease the balance per its records by $500.
D)The company must decrease the balance per its records by $450.
Q2) "You Decide" Essay
You are an entrepreneur about to open a coffee and internet cafe near your college campus.You have decided to accept cash and credit and will use college student employees.While you plan to be at the shop during most hours that the business will be open,you have made one of the student employees your assistant manager to manage in your absence.
Describe at least five procedures that you might use to provide adequate internal control over cash and credit sales and bank deposits.
Q3) Why is cash management necessary?
Q4) Explain how checking accounts,bank statements,and a bank reconciliation are used to help a company control its cash.
Q5) What adjustments are often necessary after the reconciliation of a bank account?
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Chapter 5: Sales and Receivables
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Sample Questions
Q1) Refer to the Ace Computing Company.The entry required to recognize the bad debts expense for 2012 will act to:
A)Increase total assets and retained earnings
B)Decrease total assets and retained earnings
C)Decrease total assets and increase net income
D)Increase total assets and decrease net income
Q2) Refer to Aardvark Resale.Determine the balance of Accounts Receivable at December 31,2012.
Q3) Refer to AT&U Company.If the company uses the aging of accounts receivable approach to estimate its bad debts,what will be the net realizable value of its accounts receivable after the adjustment for bad debt expense?
A)$640,000
B)$595,000
C)$620,000
D)$615,000
Q4) Refer to Abundant Returns.Determine the balance of Accounts Receivable at December 31,2012.
Q5) How efficiently a company is using the resources at its disposal is called
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Chapter 6: Cost of Goods Sold and Inventory
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Sample Questions
Q1) Under a perpetual inventory system,each time goods are purchased,the inventory account is transferred to sales revenue.
A)True
B)False
Q2) Under the periodic inventory system,all purchases are assumed to occur before any ______.
Q3) "You Decide" Essay
You are the Orlando store manager for Kruge Enterprises.When you came in this morning,you found the front door ajar.Once Security had arrived and you eventually got inside,you discovered that most of your inventory had been stolen.In order to file a claim with your insurance company you need to estimate the amount of inventory you had yesterday at closing time.Unfortunately,Kruge Enterprises uses a periodic inventory system.How can you estimate your lost inventory amount?
Q4) A company using a periodic inventory system must total the selling prices of the units on hand at the end of the period in order to value the ending inventory.
A)True
B)False
Q5) Shipping terms of ____________________ mean that the buyer pays shipping costs.
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Chapter 7: Operating Assets
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Sample Questions
Q1) Equipment with a residual value of $50,000 at the end of 10 years was acquired at the beginning of 2011 for $500,000.Assuming the use of the straight-line depreciation method,the journal entry to record depreciation expense for 2012 will have a debit to
A)Depreciation Expense and a credit to Accumulated Depreciation for $50,000.
B)Accumulated Depreciation and a credit to Equipment for $50,000.
C)Depreciation Expense and a credit to Equipment for $45,000.
D)Depreciation Expense and a credit to Accumulated Depreciation for $45,000.
Q2) Capitalizing an expenditure rather than recording it as a revenue expenditure
A)impacts the total book value of plant assets reported on the balance sheet and the amount of net income reported during a period.
B)impacts the total book value of plant assets on the balance sheet,but has no effect on the amount of net income reported during an accounting period.
C)impacts the amount of net income reported during an accounting period,but has no effect on the total book value of plant assets on the balance sheet.
D)has no impact on the book value of plant assets on the balance sheet or the amount of income reported on the income statement.
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Chapter 8: Current and Contingent Liabilities
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Sample Questions
Q1) An adjusting entry to record accrued interest on a note payable includes a debit to Interest Expense and a credit to ____________________.
Q2) An example of a current liability that must be accrued is
A)accounts payable
B)current maturity of long-term debt
C)revenue received in advance
D)wages payable
Q3) Which of the following would appear on the balance sheet as a current liability?
A)A probable loss in the amount of $4 million from a pending lawsuit.
B)A possible loss in the amount of $4 million from a pending lawsuit.
C)A probable loss from a pending lawsuit,the amount of which is not yet determinable.
D)A lawsuit for $4 million for which the likelihood of loss is remote.
Q4) Why is the liability for warranties recognized during the period when products are sold rather than the period when warranty claims are satisfied?
Q5) The current ratio is calculated as follows: Current Assets / Current Liabilities.
A)True
B)False
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Page 10
Chapter 9: Long-Term Liabilities
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Sample Questions
Q1) When bonds are sold for less than the par amount,this means that the A)maturity value will be less than the par amount.
B)maturity value will be greater than the par amount.
C)bonds are sold at a premium.
D)stated rate of interest is less than the yield rate of interest.
Q2) The amount of money the borrower agrees to repay at maturity is usually referred to as the ____________________
Q3) Keller Company issued $1,000,000,8%,7 year bonds with interest payable semiannually when the yield rate was 8%.The bonds issued at A)$887,037
B)$1,000,000
C)$1,112,963
D)This question cannot be answered without the time value of money tables.
Q4) When the yield rate of interest is greater than the stated rate,then the bond will be issued at a discount.
A)True B)False
Q5) Discount on Bonds Payable is shown on the balance sheet as a
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Chapter 10: Stockholders Equity
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Sample Questions
Q1) If a corporation issues cumulative,participating preferred stock,which of the following is true regarding the rights of the preferred stockholders?
A)They must forego dividends for any periods when no dividends are declared.
B)They will share in the dividends that exceed a specified amount.
C)They will received a fixed dividend regardless of the amount of dividends declared.
D)They will have an option to convert their shares to common stock at a specified date.
Q2) Lasik Vision,Inc.began business on June 1,2014.The corporate charter authorized issuance of 1,000 shares of no-par common stock and 4,000 shares of $6 par,6% cumulative preferred stock.As of the beginning of 2015,200 shares of common stock had been issued and none of the preferred stock had been issued.If the company issues 400 shares of common stock on March 1,2015 for $10 per share,the journal entry would include a
A)$4,000 credit to paid-in capital in excess par--common stock
B)$4,000 credit to common stock
C)$2,400 credit to paid-in capital in excess of par--common stock
D)$2,400 credit to common stock
Q3) What is the difference between authorized,issued,and outstanding shares?
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Chapter 11: The Statement of Cash Flows
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Sample Questions
Q1) Refer to Medstar Ambulance Service.How much was paid to retire the $1,000,000 note issue during 2014?
A)$ 800,000
B)$1,200,000
C)$1,045,000
D)$1,075,000
Q2) Which of the following operating activities results in a cash outflow?
A)Paying creditors for merchandise
B)Collecting accounts receivable
C)Making cash sales
D)Receiving deposits recorded as unearned revenue
Q3) What is the amount of cash and cash equivalents at the end of 2014?
Q4) Some companies use a work sheet approach as a tool to aid in preparing the statement of cash flows.
A)True B)False
Q5) Operating activities involve the acquiring and selling of goods and services for cash or on account.
A)True
B)False
13
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Chapter 12: Financial Statement Analysis
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Sample Questions
Q1) Many companies assist the users of the financial statements by providing information about the company's accounting policy choices in the first note to the financial statements.
A)True
B)False
Q2) Which of the following statements is true regarding the relationship of the current ratio and the acid test ratio?
A)The current ratio is based on a more conservative measure of liquidity.
B)Both ratios focus on the relationship between all or part of a company's current assets and all of its current liabilities.
C)Both ratios focus on the relationship between all of a company's current assets and all or part of its current liabilities.
D)For a company which carries no inventories,the current ratio and acid test ratio will be significantly different.
Q3) Why is liquidity important for businesses?
Q4) What do profitability ratios measure?
Q5) ____________________ assets generally include cash,accounts receivable,and short-term investments.
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