Business Accounting
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Course Introduction
Business Accounting introduces the fundamental principles and practices of accounting within a business context. The course covers topics such as the accounting cycle, preparation and interpretation of financial statements, asset and liability management, revenue and expense recognition, and the use of accounting information for decision-making. Students will learn how to record, analyze, and communicate financial information effectively, gaining practical skills in bookkeeping, internal controls, and compliance with accounting standards. Emphasis is placed on understanding how accounting supports business operations and strategy, providing a foundation for further study in the field or practical application in a professional environment.
Recommended Textbook
Financial Accounting A Business Process Approach 3rd Edition by Jane L. Reimers
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11 Chapters
2570 Verified Questions
2570 Flashcards
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Chapter 1: Business: Whats It All About
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Sample Questions
Q1) All liabilities represent the costs incurred to generate revenues.
A)True
B)False
Answer: False
Q2) In 2012,Baroque,Inc.,a U.S.corporation,earned profits of $200,000 before taxes.After paying federal income taxes of 30%,all of Baroque's after-tax income was paid to its only shareholder.The federal income tax rate on corporate dividends is 15%.How much tax will Baroque's shareholder pay on these dividends?
A)$21,000
B)$30,000
C)$60,000
D)$102,000
Answer: A
Q3) A control is an activity performed to minimize or eliminate risk.
A)True
B)False
Answer: True
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Chapter 2: Qualities of Accounting Information
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Sample Questions
Q1) Name one type of detective control that would be useful in a computerized information system.
Answer: A detective control includes using computerized reports that list any unusual amounts or activity.
Q2) Identify each of the following items as either an accrual or deferral.
a.Accrual
b.Deferral
_____ 1.Account receivable
_____ 2.Account payable
_____ 3.Prepaid insurance
_____ 4.Interest receivable
_____ 5.Prepaid advertising
Answer: a,a,b,a,b
Q3) The three basic elements of the balance sheet are ________.
A)operating activities,investing activities,and financing activities.
B)assets,liabilities,and shareholders' equity
C)revenues,expenses,and net income or loss
D)retained earnings,net income,and dividends
Answer: B
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Chapter 3: Accruals and Deferrals: Timing Is Everything in Accounting
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Sample Questions
Q1) A computerized accounting system requires users to type in a password before they are allowed to enter data in the system.This control is primarily designed to ________.
A)prevent errors in recording and updating the financial accounting information
B)prevent unauthorized access to the financial accounting records
C)prevent loss of the data in the financial accounting records
D)eliminate the risk of incorrect acceptance
Answer: B
Q2) Miss Happ of Ace Electronics forgot to make the adjusting entry for depreciation on the company's equipment.As a result of this mistake ________.
A)total liabilities are too low
B)net income is too high
C)net income is too low
D)shareholders' equity is too low
Answer: B
Q3) Generally accepted accounting principles require the use of accrual accounting.
A)True
B)False
Answer: True
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Chapter 4: Payment for Goods and Services: Cash and Accounts Receivable
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Sample Questions
Q1) Ace Electronics accepted a promissory note from Fenstermaker,who promised to pay Ace $2,000 plus 6% interest at the end of six months.When Ace first accepts the note,it should record interest receivable of ________.
A)$120
B)$0
C)$60
D)$240
Q2) MasterCard charges Team Shirts 4% of sales.On June 15,Team Shirts sold $4,000 worth of T-shirts on MasterCard accounts.Team Shirts paid a fee of $174.40 to MasterCard.
A)True
B)False
Q3) The accounts receivable turnover will be worse if a company accepts major credit cards.
A)True B)False
Q4) Corporations use the allowance method because it is required by GAAP.
A)True
B)False
Page 6
Q5) What is the purpose of a bank reconciliation?
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Chapter 5: The Purchase and Sale of Inventory
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Sample Questions
Q1) A purchase allowance is a record of the company's request to a vendor for goods or services.
A)True
B)False
Q2) Which statement below is TRUE about the purchase of inventory?
A)Large firms tend to have entire departments for purchasing and for accounts payable.
B)All firms,large and small,need to keep detailed records of what they are buying and paying for.
C)The person who records inventory purchases should not have access to the inventory.
D)All of these statements are true.
Q3) Explain the lower of cost or market (LCM)rule.
Q4) Which statement below best explains the credit terms of 2/10,n/30?
A)The buyer will receive a 2 percent discount if it pays within ten days of the purchase.
B)The buyer will receive a 10 percent discount if it pays within two days.
C)The buyer will receive a 10 percent discount if it pays within thirty days.
D)The buyer will receive a 2 percent discount if it pays within thirty days.
Q5) Describe the operating cycle for a merchandising firm.
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Chapter 6: Acquisition and Use of Long-Term Assets
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Sample Questions
Q1) RET Company uses the activity (units-of-production)method to depreciate long-term assets.The company owns a truck that cost $24,000.The truck is estimated to have a salvage value of $2,000 and a useful life of 200,000 miles.How much depreciation expense would be reported on the income statement in a year in which the truck is driven 50,000 miles?
A)$6,500
B)$6,000
C)$5,500
D)$5,000
Q2) Capitalizing a cost means to record the cost as an asset.
A)True
B)False
Q3) Which statement below best describes the meaning of return on assets (ROA)?
A)It answers the question: "How much profit does the company have for each dollar of revenues?"
B)It is the percentage of profit earned from collecting accounts receivable. C)It indicates how well management uses a company's assets to generate net income. D)It measures the leverage during a period.
Q4) Explain the cost principle.
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Chapter 7: Accounting for Liabilities
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Sample Questions
Q1) Explain the difference between a bond discount and a bond premium.
Q2) On NOVEMBER 30,2011,Just in Thyme,Inc.issued $10,000 of 20-year,9% bonds at 100.The bonds pay interest SEMIANNUALLY on May 31 and November 30.How much cash did Just in Thyme receive when the bonds were issued?
A)$10,000
B)$10,900
C)$9,100
D)$0
Q3) On January 1,2011,Ace Electronics borrowed $40,000 on a five-year,7% note.The loan will be repaid in 5 equal installments of $9,756 each year,beginning on December 31,2011.On its statement of cash flows for the year ended December 31,2011,Ace will show cash paid for interest as ________ activity.
A)$(9,756),an operating
B)$(2,800),a financing
C)$(9,756),a financing
D)$(2,800),an operating
Q4) Present value is the amount a future sum of money is worth today.
A)True
B)False
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Chapter 8: Accounting for Shareholders Equity
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Sample Questions
Q1) A corporation's distribution of new shares of stock to the corporation's current shareholders is called a ________.
A)cash dividend
B)liquidating dividend
C)stock dividend
D)stock split
Q2) If 10,000 shares of $2 par value common stock are issued for $10 per share,then additional paid-in capital will increase by ________.
A)$120,000
B)$100,000
C)$80,000
D)$20,000
Q3) Treasury stock is a(n)_____ account.
A)asset
B)contra-asset
C)equity
D)contra-equity
Q4) What are dividends?
Q5) What is retained earnings.How is it calculated?
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Chapter 9: Preparing and Analyzing the Statement of Cash Flows
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Sample Questions
Q1) During the year,Team Shirts,Inc.had net cash from operating activities of $50,000; it paid $20,000 in dividends; it purchased equipment for $30,000; and it purchased office supplies for $10,000.Free cash flow for the year was ________.
A)$0
B)$(10,000)
C)$10,000
D)$100,000
Q2) Cash transactions related to loans and cash contributions from and distributions to owners are investing activities.
A)True
B)False
Q3) Which of the following events is not a source of cash?
A)amortization of a copyright
B)receipt of loan proceeds
C)sale of treasury stock
D)collection of an account receivable
Q4) Explain how the operating activities section of the statement of cash flows is prepared using the indirect method.
Q5) Why is evaluating a company's cash flow important for analysts?
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Chapter 10: Using Financial Statement Analysis to Evaluate
Firm Performance
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Sample Questions
Q1) Cash from operations to current liabilities measures a company's profitability.
A)True
B)False
Q2) Which financial statement(s)do you need to calculate the asset turnover ratio?
A)only the income statement
B)only the balance sheet
C)both the income statement and the balance sheet
D)both the statement of cash flows and the income statement
Q3) Which of these is part of OTHER comprehensive income?
A)dividends paid to owners
B)revenues minus expenses
C)unrealized gains and losses on certain types of investments
D)net income
Q4) Jack is comparing Team Shirts to Xtreme T's.He found that the gross profit ratio was 47% for Team Shirts and 50% for Xtreme T's.This is an example of ________ analysis.
A)horizontal
B)vertical
C)time-series
D)ratio
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Chapter 11: Quality of Earnings, corporate Governance, and Ifrs
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Sample Questions
Q1) Which of the following is evidence of a company's positive ethical climate?
A)The company controller leaves work after lunch every Friday to play golf with his friends.
B)The company president has a framed motto on his desk that says: "Winning isn't the most important thing,it's the only thing."
C)The company's annual audit is performed by a firm of independent CPAs which has a purely business relationship with the company.
D)To ensure the statements are prepared properly,the company pays its external auditors extra to prepare its financial statements as well as audit them.
Q2) What is whistle-blowing?
A)an announcement that the financial statements might be issued late this year
B)an employee disclosure of suspected fraud within a company
C)a warning from the SEC to management that a company's annual report is inadequate
D)an announcement that this year's earnings will not meet analysts' expectations
Q3) Discuss the difference between U.S.GAAP and IFRS in terms of rule-based versus principle-based approaches to accounting.
Q4) Describe how U.S.GAAP differ from IFRS in the way inventory may be recorded.
Page 13
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