Business Accounting
Practice Questions
Course Introduction
Business Accounting provides a comprehensive introduction to the fundamental principles and practices of accounting within a business context. Students will learn how to analyze, record, and summarize financial transactions, prepare key financial statements, and interpret accounting information to support effective managerial decision-making. The course covers essential topics such as double-entry bookkeeping, accrual accounting, financial statement analysis, and the regulatory environment governing financial reporting. By exploring both theoretical concepts and real-world applications, students gain the foundational skills necessary for understanding corporate finances, budgeting, and ethical considerations in accounting.
Recommended Textbook Survey of Accounting 7th Edition by Carl Warren
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15 Chapters
1730 Verified Questions
1730 Flashcards
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Page 2
Chapter 1: The Role of Accounting in Business
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100 Flashcards
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Sample Questions
Q1) Reporting the financial condition of a business at a point in time and the changes in the financial condition of a business over a period of time are the two major objectives of:
A)tax accounting.
B)union contracts.
C)managerial accounting.
D)financial accounting.
Answer: D
Q2) Define accounting and its role in business.
Answer: Accounting provides information for managers that can be used in operations of a business.Accounting provides information to external stakeholders to use in assessing the economic performance and condition of the business.
Q3) Expressing financial data as if a business will continue operating for an indefinite period time refers to which concept?
A)Business entity concept
B)Going concern concept
C)Objectivity concept
D)Adequate disclosure concept
Answer: B
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Page 3
Chapter 2: Basic Accounting Concepts
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Sample Questions
Q1) Johnson,Inc.receives $5,000 cash for fees earned.What is the effect of this transaction?
A)Total assets remain unchanged.
B)Cash flow from Financing Activities will increase.
C)Net income will increase.
D)Retained earnings will remain unchanged.
Answer: C
Q2) How can a company earn a large net income and have a small balance in retained earnings?
Answer: The company may pay out most of its earnings in dividends.
Q3) For EFG Co.,the transaction "receipt of a utility bill" would:
A)increase total assets.
B)decrease total assets.
C)have no effect on total assets.
D)decrease total liabilities.
Answer: C
Q4) Retained earnings will be increased by the amount in the dividend account.
A)True
B)False
Answer: False
Page 4
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Chapter 3: Accrual Accounting Concepts
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115 Flashcards
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Sample Questions
Q1) On April 1,Tenity,Inc.paid $3,300 for an insurance premium on a three-year insurance policy.At the end of December,Tenity's fiscal year-end,what should be the balance in the prepaid insurance account?
A)$1,100
B)$2,475
C)$3,300
D)$2,200
Answer: B
Q2) Which of the following is not reported as revenue on the income statement?
A)Unearned revenue
B)Fees revenue
C)Commissions revenue
D)Rent revenue
Answer: A
Q3) Which of the following is an example of an accrued expense?
A)Salary owed but not yet paid
B)Fees received but not yet earned
C)Supplies on hand
D)A two-year premium paid on a fire insurance policy
Answer: A
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Chapter 4: Accounting for Merchandising Businesses
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145 Flashcards
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Sample Questions
Q1) When merchandise that was sold is returned,the seller decreases accounts payable.
A)True
B)False
Q2) A sales invoice included the following information: merchandise price,$4,500; transportation,$300; terms 1/10,n/eom,FOB shipping point.Assuming that a credit for merchandise returned of $600 is granted prior to payment,that the transportation is prepaid by the seller,and that the invoice is paid within the discount period,what is the amount of cash received by the seller?
A)$3,861
B)$4,158
C)$4,161
D)$4,200
Q3) Which financial statement reconciles net income with net cash flows from operating activities?
A)Balance sheet
B)Statement of retained earnings
C)Statement of cash flows
D)Income statement
Q4) Based on the following data,determine the cost of merchandise sold for October.
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Chapter 5: Sarbanes-Oxley, internal Control, and Cash
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112 Verified Questions
112 Flashcards
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Sample Questions
Q1) The depositor reconciles the bank's statement to the depositor's records.
A)True
B)False
Q2) The ratio of cash to monthly cash expenses can be used to .
A)assess how long a company with positive cash flows from investing activities can continue to operate
B)assess how long a company with negative cash flows from operations can continue to operate
C)assess how long a company with negative cash flows from investing activities can continue to operate
D)assess how long a company with positive cash flows from financing activities can continue to operate
Q3) Risks can be analyzed to:
A)assess their likelihood of occurring.
B)separate responsibilities for related operations.
C)observe employees' behavior and the accounting system.
D)ensure compliance with reporting,legal,and regulatory requirements.
Q4) List the advantages of Electronic Funds Transfers.
Q5) What is the purpose of the Sarbanes-Oxley Act of 2002,and why was it enacted?
Page 7
Q6) What is a special-purpose cash fund? What is its purpose? Give two examples.
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Chapter 6: Receivables and Inventories
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105 Flashcards
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Sample Questions
Q1) Using the last-in,first-out method,what is the cost of the merchandise inventory of 30 units on November 30?
A)$600
B)$660
C)$640
D)$700
Q2) A 90-day,10% note for $10,000 dated April 1 is received from a customer on account.The face value of the note is:
A)$10,000.
B)$11,000.
C)$1,000.
D)$9,000.
Q3) When merchandise sold is assumed to be in the order in which the expenditures were made,the inventory costing method is called:
A)first-in,last-out.
B)last-in,first-out.
C)first-in,first-out.
D)average cost.
Q4) Beginning inventory,purchases,and sales for Product XCX are as follows:
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Chapter 7: Fixed Assets and Intangible Assets
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Sample Questions
Q1) A machine was purchased for $68,000.It has a useful life of 5 years and a residual value of $8,000.Determine the annual depreciation expense using the straight-line method?
A)$20,000
B)$12,000
C)$60,000
D)$16,000
Q2) You are examining the financial statements of a company.You observe patent amortization expense of $1.5 million and a loss on impairment of goodwill for $25 million.
Q3) Which of the following is a characteristic of fixed assets?
A)Fixed assets are offered for sale as part of normal operations.
B)Fixed assets do not exist physically.
C)Fixed assets are long-term or relatively permanent assets.
D)Fixed assets that are no longer used in operations are still classified as fixed assets.
Q4) Fixed assets are reported at their book value on the balance sheet.
A)True
B)False
Q5) Determine the cost of the land,based on the following data.
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Chapter 8: Liabilities and Stockholders Equity
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Sample Questions
Q1) Federal unemployment compensation tax is a tax that is paid only by employers.
A)True
B)False
Q2) When the market rate of interest is more than the contract rate of a bond,the bond will sell for a discount.
A)True
B)False
Q3) If bonds are issued at a premium,the stated interest rate is:
A)higher than the market rate of interest.
B)lower than the market rate of interest.
C)too low to attract investors.
D)adjusted to a higher rate of interest.
Q4) Liabilities that are due and payable beyond one year or paid out of noncurrent assets are termed long-term liabilities.
A)True
B)False
Q5) The ratio of liabilities to total assets is also called the debt ratio.
A)True
B)False
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Chapter 9: Financial Statement Analysis
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Sample Questions
Q1) The excess of current liabilities over quick assets is referred to as working capital.
A)True
B)False
Q2) A company with working capital of $600,000 and a current ratio of 3.25 pays a $200,000 short-term liability.The amount of working capital immediately after payment is:
A)$400,000.
B)$600,000.
C)$800,000.
D)$200,000.
Q3) Revenue and expense data for Reuters Company are as follows:
Q4) If a company has issued only one class of stock,the earnings per share is determined by dividing net income by the number of shares outstanding.
A)True
B)False
Q5) Condensed data taken from the ledger of Crawford Company at December 31,2016 and 2015,are as follows:
Q6) The following items are reported on a company's balance sheet:
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Chapter 10: Accounting Systems for Manufacturing
Businesses
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119 Verified Questions
119 Flashcards
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Sample Questions
Q1) If the cost of materials is not a significant portion of the total product cost,the materials may be classified as a part of factory overhead cost.
A)True
B)False
Q2) In a job order cost accounting system,the effect of the flow of direct materials into production will be:
A)increase in Work-in-Process and decrease in Materials Inventory.
B)increase in Materials Inventory and decrease in Work-in-Process.
C)increase in Factory Overhead and decrease in Materials Inventory.
D)increase in Work-in-Process and decrease in Supplies.
Q3) In a job order cost accounting system,when goods that have been ordered are received,the receiving department personnel inspects the goods and completes the:
A)purchase order.
B)sales invoice.
C)receiving report.
D)purchase requisition.
Q4) Use the correct number to designate each item below:
Q5) KCT Printing Company uses a job order cost system.
Page 12
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Chapter 11: Cost Behavior and Cost-Volume-Profit Analysis
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140 Flashcards
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Sample Questions
Q1) If a business sells two products,it is not possible to estimate the break-even point.
A)True
B)False
Q2) Refer to the information provided for Kennedy Co.What was Kennedy's sales mix last year?
A)40% Arks,60% Bins
B)43% Arks,57% Bins
C)54% Arks,46% Bins
D)64% Arks,36% Bins
Q3) If variable costs per unit decreased because of a decrease in utility rates,the break-even point would:
A)decrease.
B)increase.
C)remain the same.
D)increase or decrease,depending upon the percentage increase in utility rates.
Q4) For purpose of analysis,mixed costs can generally be separated into their variable and fixed components.
A)True
B)False
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Chapter 12: Differential Analysis and Product Pricing
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Sample Questions
Q1) When evaluating whether to lease or sell equipment,the book value of the equipment is considered to be a sunk cost and not a differential cost.
A)True
B)False
Q2) When choosing whether or not to replace a fixed asset,management will consider the price at which the asset can be sold.
A)True
B)False
Q3) Hill Co.can further process Product O to produce Product P.Product O is currently selling for $60 per pound and costs $42 per pound to produce.Product P would sell for $82 per pound and would require an additional cost of $13 per pound to produce.The differential cost of producing Product P is $13 per pound.
A)True
B)False
Q4) When standard costs are used in applying the cost-plus approach to product pricing,the standards should be based upon normal levels of performance.
A)True
B)False
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14
Chapter 13: Budgeting and Standard Cost Systems
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169 Flashcards
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Sample Questions
Q1) Estimated cash payments are planned reductions in cash from all of the following except:
A)manufacturing and selling and administrative expenses.
B)capital expenditures.
C)notes receivables and accounts receivable collections.
D)payments for interest or dividends.
Q2) The budget process involves all of the following except:
A)establishing specific goals.
B)executing plans to achieve the goals.
C)periodically comparing actual results with the goals.
D)dismissing all managers who fail to achieve operational goals specified in the budget.
Q3) Standards are designed to evaluate price and quantity variances separately.
A)True B)False
Q4) The sales budget is the starting point for preparation of the direct labor cost budget. A)True B)False
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15
Chapter 14: Performance Evaluation for Decentralized Operations
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Sample Questions
Q1) In evaluating the profit center manager,the income from operations should be compared:
A)across profit centers.
B)to historical performance or budget.
C)to the competitor's net income.
D)to the total company's earnings per share.
Q2) The profit margin for Division E is 28% and the investment turnover is 3.0.What is the rate of return on investment for Division E?
A)84%
B)28%
C)14%
D)9%
Q3) PDT Co.has two divisions,East and West.Invested assets and condensed income statement data for each division for the past year ended December 31 are as follows:
Q4) The profit center income statement should include only controllable revenues and expenses.
A)True
B)False
Page 16
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Chapter 15: Capital Investment Analysis
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Sample Questions
Q1) Sommers Company is evaluating a project requiring a capital expenditure of $300,000.The project has an estimated life of 5 years and no salvage value.The estimated net income and net cash flow from the project are as follows:
Q2) The payback period is determined using which of the following formulas?
A)Amount to be invested/Annual average net income
B)Annual net cash flow/Amount to be invested
C)Annual average net income/Amount to be invested
D)Amount to be invested/Annual net cash flows
Q3) The process by which management allocates available investment funds among competing investment proposals is called:
A)investment capital management.
B)capital budgeting.
C)cost-volume-profit analysis.
D)capital rationing.
Q4) A present value index can be used to rank competing capital investment proposals when the net present value method is used.
A)True
B)False
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