Business Accounting
Final Test Solutions
Course Introduction
Business Accounting provides an introduction to the fundamental principles and practices of accounting within a business context. The course covers essential topics such as the accounting cycle, financial statement preparation, analysis of revenues and expenses, and the interpretation of balance sheets and income statements. Students learn how accounting information is used for decision-making by managers, investors, and other stakeholders, as well as the regulatory framework and ethical considerations in accounting. Through practical exercises and real-world examples, students develop skills to analyze financial data, track business performance, and support strategic planning and control processes.
Recommended Textbook
Financial Accounting Information for Decisions 6th Edition by John Wild
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16 Chapters
3236 Verified Questions
3236 Flashcards
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Page 2
Chapter 1: Introducing Accounting in Business
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261 Verified Questions
261 Flashcards
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Sample Questions
Q1) A company borrows $125,000 from the Eastside Bank and receives the loan proceeds in cash.This represents a(n):
A)Revenue activity
B)Operating activity
C)Expense activity
D)Investing activity
E)Financing activity
Answer: E
Q2) Beginning Assets were $437,600,Beginning Liabilities were $262,560,Common Stock sold during the year totaled $45,000,Revenue for the year was $414,250,Expenses for the year were $280,000,Dividends declared was $22,700,and Ending Liabilities is $$350,000. What is Net Income for the year?
A)$700,160
B)$331,590
C)$134,250
D)$612,560
E)$175,040
Answer: C
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Chapter 2: Analyzing and Recording Transactions
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221 Verified Questions
221 Flashcards
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Sample Questions
Q1) An account is a record of increases and decreases in a specific asset,liability,equity,revenue or expense item.
A)True
B)False
Answer: True
Q2) The purchase of supplies on credit should be recorded with a debit to Supplies and a credit to Accounts Payable.
A)True
B)False
Answer: True
Q3) A simple account form widely used in accounting to illustrate how debits and credits work is called a:
A)Dividend account
B)Common stock account
C)Drawing account
D)T-account
E)Balance column sheet
Answer: D
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4
Chapter 3: Adjusting Accounts and Preparing Financial Statements
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268 Verified Questions
268 Flashcards
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Sample Questions
Q1) On December 31,the balance in the Prepaid Subscription account was $648.This is the remaining balance of a twelve-month subscription purchased on September 30 in the current year.How much did this subscription originally cost?
A)$72
B)$648
C)$7,776
D)$864
E)$1,512
Answer: D
Q2) The Retained Earnings account has a credit balance of $17,000 before closing entries are made.If total revenues for the period are $55,200,total expenses are $39,800 and dividends are $9,000,what is the ending balance in the Retained Earnings account after all closing entries are made?
A)$8,000
B)$15,400
C)$23,400
D)$17,000
E)$32,400
Answer: C
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Chapter 4: Reporting and Analyzing Merchandising Operations
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196 Verified Questions
196 Flashcards
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Sample Questions
Q1) Credit terms include the specifics regarding the amount owed and timing of payments from a buyer to a seller.
A)True
B)False
Q2) Neutron uses a periodic inventory system.Prepare general journal entries to record the following transactions for Neutron: \(\begin{array}{|l|l|l|}
\hline \text { June } & 10 & \begin{array}{l}
\text { Neutron purchased merchandise on credit from Proton for } \$ 9,000 \text {, terms } 2 / 10, \\
\mathrm{n} / 30 . \text { FOB destination. Transportation costs of } \$ 350 \text { were paid by Proton. } \end{array} \\
\hline & 12 & \text { Neutron returned } \$ 600 \text { of merchandise from the June } 10 \text { purchase. } \\
\hline & 19 & \text { Neutron paid Proton for the June } 10 \text { purchase. }\\
\hline \end{array}\)
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Page 6
Chapter 5: Reporting and Analyzing Inventories
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202 Verified Questions
202 Flashcards
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Sample Questions
Q1) The choice of an inventory valuation method can have a major impact on gross profit and cost of sales.
A)True
B)False
Q2) A company that has operated with a 30% average gross profit ratio for a number of years had $100,000 in sales during the first quarter of this year.If it began the quarter with $18,000 of inventory at cost and purchased $72,000 of inventory during the quarter,its estimated ending inventory using the gross profit method is:
A)$30,000
B)$21,000
C)$20,000
D)$18,000
E)$27,000
Q3) GAAP and IFRS differ on the rules regarding LIFO as GAAP allows LIFO to assign costs to inventory and IFRS does not.
A)True
B)False
Q4) A major goal in accounting for inventory is ______________ costs against sales.
Q5) Identify and describe the four inventory valuation methods.
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Chapter 6: Reporting and Analyzing Cash and Internal Controls
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196 Verified Questions
196 Flashcards
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Sample Questions
Q1) The Cash Over and Short account:
A)Is used to record a credit balance in the cash account
B)Is an income statement account used for recording the income effects of cash overages and cash shortages from errors in making change and from missing petty cash receipts
C)Is not necessary in a computerized accounting system
D)Can never have a debit balance
E)Can never have a credit balance
Q2) After preparing a bank reconciliation,a company must prepare journal entries to adjust the book balance to the correct balance.Only the items reconciling the _____________ balance require adjustment.
Q3) Deposits in transit are deposits made and recorded by the depositor,but not yet recorded on the bank statement.
A)True
B)False
Q4) The voucher register is a journal that is used to record all approved vouchers within the company.
A)True
B)False
8
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Chapter 7: Reporting and Analyzing Receivables
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169 Verified Questions
169 Flashcards
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Sample Questions
Q1) A promissory note received from a customer in exchange for an account receivable:
A)Is a cash equivalent for the recipient
B)Is an account receivable for the recipient
C)Is a note receivable for the recipient
D)Is a short-term investment for the recipient
E)Is a note payable for the recipient
Q2) During a given year,Compaq had net sales of $32,000 million and average account receivables were $6,850 million.Its accounts receivable turnover is equal to 0.21.
A)True
B)False
Q3) Companies can report a credit card expense as a discount deducted from sales or as a selling expense.
A)True B)False
Q4) The _______________________ method uses both past and current receivables to estimate the allowance amount and assumes that the longer an amount is past due,the more likely it is to be uncollectible.
Q5) Explain the options a company has when converting its receivables to cash.
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Chapter 8: Reporting and Analyzing Long-Term Assets
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208 Verified Questions
208 Flashcards
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Sample Questions
Q1) Another name for a capital expenditure is:
A)Revenue expenditure
B)Asset expenditure
C)Long-term expenditure
D)Contributed capital expenditure
E)Balance sheet expenditure
Q2) Natural resources are reported on the balance sheet at cost plus accumulated depletion.
A)True
B)False
Q3) Natural resources are assets that include standing timber,mineral deposits,oil wells and gas fields.
A)True
B)False
Q4) A company purchased equipment valued at $825,000 on January 1.The equipment has an estimated useful life of seven years or six million units.The equipment is estimated to have a salvage value of $35,000.Assuming the double declining balance method of depreciation,what is the annual depreciation for the second year if .5 million units were produced?
Q5) Why is the useful life of a plant asset so difficult to predict?
Page 10
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Chapter 9: Reporting and Analyzing Current Liabilities
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188 Verified Questions
188 Flashcards
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Sample Questions
Q1) ____________________________ are banks authorized to accept deposits of amounts payable to the federal government,including amounts due for payroll taxes.
Q2) A company had a fixed interest expense of $6,000,its income before interest expense and any income taxes was $18,000 and its net income was $8,400.The company's times interest earned ratio is equals to
A)0.33
B)0.71
C)1.40
D)3.00
E)12,000
Q3) Payments of FUTA are made quarterly to a federal depository bank if the total amount due exceeds $1,000.
A)True
B)False
Q4) Unearned revenue is another name for sales.
A)True
B)False
Q5) Vacation benefits are a type of _______________ liability.
Q6) Gross pay less all deductions is called ____________________.
11
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Chapter 10: Reporting and Analyzing Long-Term Liabilities
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188 Verified Questions
188 Flashcards
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Sample Questions
Q1) Bonds with a par value of less than $1,000 are known as:
A)Junk bonds
B)Baby bonds
C)Callable bonds
D)Unsecured bonds
E)Convertible bonds
Q2) _________________________ leases are short-term or cancelable leases in which the lessor retains the risks and rewards of ownership.
Q3) _______________ bonds have specific assets of the issuing company pledged as collateral.
Q4) A company issued 25-year,8% bonds with a par value of $900,000.The company received $1,000,000 cash for the bonds.Using the straight-line method,the amount of interest expense for the first semiannual interest period is:
A)$36,000
B)$34,000
C)$38,000
D)$40,000
E)$32,000
Q5) Identify and explain the advantages and disadvantages of bond financing.
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Chapter 11: Reporting and Analyzing Equity
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208 Verified Questions
208 Flashcards
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Sample Questions
Q1) The total amount of stock that a corporation's charter allows it to issue is referred to as:
A)Issued stock
B)Outstanding stock
C)Common stock
D)Preferred stock
E)Authorized Stock
Q2) _______________________ generally consists of a company's cumulative net income less any net losses and dividends declared since its inception.
Q3) _____________________ is a class of stock assigned a value by the corporation in its charter.
Q4) The price-earnings (PE)ratio is calculated by dividing ___________________________ by ________________________________.
Q5) The date the board of directors votes to pay a dividend is called the:
A)Date of stockholders' meeting
B)Date of declaration
C)Date of record
D)Date of payment
E)Liquidating date
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Chapter 12: Reporting and Analyzing Cash Flows
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179 Verified Questions
179 Flashcards
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Sample Questions
Q1) The purchase of long-term assets by issuing a note payable for the entire amount is reported on the statement of cash flows in the:
A)Operating activities
B)Financing activities
C)Investing activities
D)Schedule of noncash financing and investing activities
E)None of these as this is not reported on the statement of cash flows
Q2) A cash equivalent must be readily convertible to a known amount of cash and must be sufficiently close to its maturity so its market value is unaffected by interest rate changes.
A)True
B)False
Q3) Terri's accounts receivable increased during the year by $5.9 million.It had a bad debt expense of $1.4 million,and its allowance for uncollectible accounts increased by $2.4 million.What is the amount of cash Terri received from customers during the reporting period if its sales were $45.0 million?
Q4) Explain the purpose and format of the statement of cash flows.Also,describe its use to decision makers.
Q5) All cash transactions eventually affect noncash ___________ accounts.
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Chapter 13: Analyzing and Interpreting Financial Statements
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186 Verified Questions
186 Flashcards
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Sample Questions
Q1) The dollar change for a financial statement item is calculated by:
A)Subtracting the analysis period amount from the base period amount
B)Subtracting the base period amount from the analysis period amount
C)Subtracting the analysis period amount from the base period amount,dividing the result by the base period amount,then multiplying that amount by 100
D)Subtracting the base period amount from the analysis period amount,dividing the result by the base period amount,then multiplying that amount by 100
E)Subtracting the base period amount from the analysis amount,then dividing the result by the base amount
Q2) Internal users of financial information:
A)Are not directly involved in operating a company
B)Are those individuals involved in managing and operating the company
C)Include shareholders and lenders
D)Include directors and customers
E)Include suppliers,regulators and the press
Q3) Explain the purpose of financial statement analysis for both external and internal users.
Q4) Explain the form and content of a complete income statement.
Page 15
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Chapter 14: Investments and International Operations
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178 Verified Questions
178 Flashcards
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Sample Questions
Q1) A company had net income of $82,000,net sales of $781,000 and average total assets of $300,000.Its profit margin and total asset turnover were respectively:
A)10.5%; 0.38
B)10.5%; 2.6
C)9.52%; 2.6
D)27.3%; 1
E)27.3%; 9.52
Q2) Held-to-maturity securities are equity securities a company intends and is able to hold until maturity.
A)True B)False
Q3) As a long-term investment,Elmer's Equipment Enterprise purchased 35% of Sticky Supplies Inc.'s 300,000 shares for $350,000 at the beginning of the fiscal year of both companies.On the purchase date,the fair value and book value of Sticky's net assets were equal.During the year,Sticky's earned net income of $430,000 and distributed cash dividends of 0.42 cents per share.The fair value of Sticky's assets at the end of the year totaled $349,450.What is the journal entry,if any to record the net income for the investment in Sticky?
Q4) Return on total assets is computed by dividing ___________ by __________.
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Chapter 15: Reporting and Analyzing Partnerships
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126 Verified Questions
126 Flashcards
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Sample Questions
Q1) The withdrawals account of each partner is closed to retained earnings at the end of the accounting period.
A)True
B)False
Q2) A partnership recorded the following journal entry: \(\begin{array}{|l|l|l|}
\hline\text { Cash} & 70,000 & \\
\hline \text { B. Tanner, Capital } & 10,000 & \\
\hline \text { R. Jackson, Capital } & 10,000 & \\
\hline \text { H. Rivera, Capital } & & 90,000 \\
\hline \end{array}\)
This entry reflects:
A)Acceptance of a new partner who invests $70,000 and receives a $20,000 bonus
B)Withdrawal of a partner who pays a $10,000 bonus to each of the other partners
C)Addition of a partner who pays a bonus to each of the other partners
D)Additional investment into the partnership by Tanner and Jackson
E)Withdrawal of $10,000 each by Tanner and Jackson upon the admission of a new partner
Q3) Explain the steps involved in the liquidation of a partnership.
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Chapter 16: Reporting and Preparing Special Journals
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165 Verified Questions
165 Flashcards
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Sample Questions
Q1) Enterprise resource planning software is primarily used for recording journal entries.
A)True
B)False
Q2) Assume that a company uses a sales journal,a purchases journal,a cash receipts journal,a cash disbursements journal and a general journal.A sales return for credit on account would be recorded in the:
A)Sales journal
B)General journal
C)Cash receipts journal
D)Accounts receivable ledger
E)Cash disbursements journal
Q3) Accounting information processes are structured to eliminate the need for professional judgment.
A)True
B)False
Q4) The __________________ principle requires that an accounting information system must be able to adapt to changes in the company,business environment and needs of decision makers.
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