Business Accounting Review
Questions
Course Introduction
Business Accounting provides students with a comprehensive understanding of the fundamental principles and practices involved in the recording, analysis, and interpretation of financial transactions within an organization. The course covers essential topics such as bookkeeping, preparation of financial statements, accounting for assets and liabilities, and the use of accounting information for internal and external decision-making. Through practical examples and real-world scenarios, students will develop skills in applying Generally Accepted Accounting Principles (GAAP), understanding the accounting cycle, and utilizing accounting software, preparing them for more advanced studies or careers in finance and business administration.
Recommended Textbook
Financial Accounting 8th Edition by Walter T. Harrison
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13 Chapters
1996 Verified Questions
1996 Flashcards
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Page 2
Chapter 1: The Financial Statements
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162 Verified Questions
162 Flashcards
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Sample Questions
Q1) Cost of goods sold appears on the:
A)Statement of Retained Earnings as an addition to beginning retained earnings.
B)Income Statement as a deduction from sales.
C)Balance Sheet as a deduction from sales.
D)Income Statement as a deduction from gross profit.
Answer: B
Q2) Which of the following is a component of stockholders' equity?
A)Retained earnings
B)Notes payable
C)Cash
D)Fixed assets
Answer: A
Q3) An example of a regulatory body that uses accounting information is the Internal Revenue Service.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Transaction Analysis
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131 Verified Questions
131 Flashcards
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Sample Questions
Q1) To compute ending retained earnings on the Statement of Retained Earnings:
A)net income is added to the beginning retained earnings and dividends are subtracted from the beginning retained earnings.
B)net income and dividends are both added to beginning retained earnings
C)net loss and dividends are both added to beginning retained earnings
D)net income or net loss does not affect retained earnings.
Answer: A
Q2) The normal balance of an account:
A)is always a debit.
B)is always a credit.
C)is the side that increases the account balance.
D)can be determined from the journal.
Answer: C
Q3) The left hand side of a T account is the debit side and the right hand side is the credit side.
A)True
B)False
Answer: True
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Chapter 3: Accrual Accounting Income
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164 Verified Questions
164 Flashcards
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Sample Questions
Q1) A measure of a company's ability to pay current liabilities with current assets is the:
A)liability ratio.
B)current ratio.
C)debt ratio.
D)asset ratio.
Answer: B
Q2) Current assets are $40,000 and long-term assets are $50,000. Total liabilities are $60,000, of which current liabilities are 50%. The debt ratio is:
A)0)58.
B)0)67.
C)0)17.
D)0)86.
Answer: B
Q3) Accrual accounting records both cash and noncash transactions.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Internal Control Cash
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142 Verified Questions
142 Flashcards
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Sample Questions
Q1) A malicious program that enters program code without consent and performs destructive actions in the victim's computer files or programs is a(n):
A)encryption device.
B)phishing expedition.
C)computer virus.
D)Trojan horse.
Q2) Internal auditors are hired to determine whether or not the company's financial statements agree with generally accepted accounting principles.
A)True
B)False
Q3) In a bank reconciliation, outstanding checks would be added to the book balance.
A)True
B)False
Q4) Requiring employees to take annual vacations is a part of which characteristic of internal control?
A)Assignment of responsibilities
B)Separation of duties
C)Proper authorization
D)Competent and reliable personnel
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Chapter 5: Short-Term Investments Receivables
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165 Verified Questions
165 Flashcards
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Sample Questions
Q1) On December 31, 2011, the payee on a $4,500, 120-day, 10% note dated November 1, 2011, will recognize: (Use a 365 day year and round to the nearest dollar.)
A)Interest Receivable, $148.
B)Interest Receivable, $74.
C)Interest Payable, $148.
D)Interest Payable, $74.
Q2) An aging-of-accounts-receivable indicates that the amount of uncollectible accounts is $7,200. The Allowance for Uncollectible Accounts prior to adjustment has a credit balance of $2,000. The amount of the adjusting entry should be:
A)$9,200.
B)$7,200.
C)$5,200.
D)$2,000.
Q3) To increase the quick ratio from 1.2 to 2.0, Unga's Dress and Accessory Shoppe should:
A)pay off $80 in short-term notes.
B)pay off $80 in long-term notes.
C)execute a short-term note for $80.
D)issue $60 in bonds.
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Page 7
Chapter 6: Inventory and Cost of Goods Sold
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133 Verified Questions
133 Flashcards
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Sample Questions
Q1) Deciding on which inventory method a company should use affects:
A)the profits to be reported.
B)the income taxes to be paid.
C)the values of ratios reported from the balance sheet.
D)all of the above.
Q2) A company purchased inventory for $800 per unit. The inventory was marked up to sell for $1,000 per unit. The entries to record the sale for cash and the cost of a unit of inventory would include debits to which of the following accounts?
A)Sales, $1,000; Inventory, $800
B)Cash, $1,000; Cost of Goods Sold, $800
C)Cash, $800; Cost of Goods Sold, $1,000
D)Sales, $800; Inventory, $800
Q3) When inventory prices are increasing, the FIFO costing method will generally yield a cost of goods sold that is:
A)higher than cost of goods sold under the LIFO method.
B)lower than cost of goods sold under the LIFO method.
C)equal to the gross profit under the LIFO method.
D)equal to cost of goods sold under the LIFO method.
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8
Chapter 7: Plant Assets Intangibles
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181 Verified Questions
181 Flashcards
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Sample Questions
Q1) A capital expenditure is:
A)debited to an expense account.
B)credited to an expense account.
C)debited to an asset account.
D)debited to a stockholders' equity account.
Q2) If Valtrex Inc. sells a major plant asset:
A)depreciation expense should be recorded through the date of sale.
B)the book value of the asset should be credited to the asset account.
C)no gain should be recognized if depreciation expense was taken on the asset before the asset was sold.
D)a loss should be recognized, but not a gain, if depreciation expense was taken on the asset before the asset was sold.
Q3) Long-lived tangible assets that are used in the operation of the business are called:
A)intangible assets.
B)natural resources.
C)plant assets.
D)goodwill.
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Chapter 8: Liabilities
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Sample Questions
Q1) Bonds with a 6% interest rate were issued when the market rate of interest was 7%. This bond was issued at:
A)par value.
B)a premium.
C)a discount.
D)face value.
Q2) Which is the preferred method to use when amortizing a bond discount or premium?
A)Effective-interest method of amortization
B)Market-interest rate method of amortization
C)Straight-line method of amortization
D)Both straight-line and market-interest rate methods of amortization are equally preferable
Q3) Amortizing the premium on bonds payable is reported as additional revenue when the bond matures.
A)True B)False
Q4) Sales tax collected by the merchant is an expense on their books.
A)True
B)False
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Chapter 9: Stockholders Equity
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177 Verified Questions
177 Flashcards
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Sample Questions
Q1) No-par stock does not have a par value, but can have a stated value, which makes it similar to par value stock.
A)True
B)False
Q2) When a company has both common stock and preferred stock, the book value per share of common stock is calculated by:
A)dividing the amount in the common stock account by the number of shares of common stock outstanding.
B)dividing the amount in the common stock account by the sum of the number of shares of common stock and preferred stock outstanding.
C)dividing total stockholders' equity less preferred equity by the number of shares of common stock outstanding.
D)dividing total stockholders' equity by the number of shares of common stock outstanding.
Q3) Legal capital is an arbitrary amount assigned by a company to a share of stock.
A)True
B)False
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Chapter 10: Long-Term Investments International Operations
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144 Flashcards
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Sample Questions
Q1) Which of the following is the method used when one company owns less than 20% of the shares of another company?
A)Market value method
B)Consolidation method
C)Equity method
D)Amortized method
Q2) Goodwill arises when a parent company:
A)pays more to acquire a subsidiary company than the market value of the subsidiary's net assets.
B)pays less to acquire a subsidiary company than the market value of the subsidiary's net assets.
C)pays more to acquire a subsidiary company than the book value of the subsidiary's net assets.
D)pays less to acquire a subsidiary company than the book value of the subsidiary's net assets.
Q3) The Allowance to Adjust Investment to Market is reported in the Long-Term Assets section of the balance sheet.
A)True
B)False
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Chapter 11: The Income Statement the Statement of
Stockholders Equity
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145 Flashcards
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Sample Questions
Q1) The Securities Exchange Act of 1934 requires companies that issue their stock publicly to file audited financial statements with the SEC.
A)True
B)False
Q2) Corrections to the beginning balance of Retained Earnings for errors of an earlier period are called:
A)prior-period adjustments.
B)cumulative error adjustments.
C)cumulative effect of change in accounting principle.
D)extraordinary items.
Q3) The gain or loss on the disposal of a business segment is shown:
A)on the balance sheet net of the income tax consequences.
B)on the income statement net of the income tax consequences.
C)as part of other comprehensive income.
D)as part of extraordinary items.
Q4) Comprehensive income is:
A)used to determine net income.
B)used to determine earnings per share.
C)used to determine net income and earnings per share.
D)not used to determine net income or earnings per share.
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Chapter 12: The Statement of Cash Flows
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Sample Questions
Q1) A statement of cash flows:
A)predicts future cash flows.
B)determines the ability of the company to pay dividends and interest.
C)evaluates management decisions.
D)is all of the above.
Q2) Retained Earnings had a balance on January 1, 2011 and December 31, 2011, respectively, of $255,300 and $413,000. Net income for the year was $188,700 and the only other event affecting Retained Earnings was the declaration of dividends. If there was no change in the Dividends Payable account during the year, the payments for dividends:
A)were $376,000.
B)were $31,000.
C)were $38,000.
D)cannot be determined from the information given.
Q3) Cash received from customers would be reported on the statement of cash flows:
A)under operating activities.
B)under investing activities.
C)under financing activities.
D)in the schedule of noncash investing and financing activities.
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Page 14
Chapter 13: Financial Statement Analysis
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Sample Questions
Q1) A company in the grocery store business should have a higher inventory turnover than a company in the automobile sales industry.
A)True B)False
Q2) An efficient capital market is one in which market prices fully reflect all information available to the public.
A)True B)False
Q3) Horizontal analysis evaluates financial data:
A)for one year.
B)for the future.
C)over a period of time.
D)none of the above.
Q4) A firm's ability to pay current liabilities can be evaluated using working capital, the current ratio, and the debt ratio.
A)True
B)False
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