Business Accounting
Test Preparation
Course Introduction
Business Accounting is a foundational course that introduces students to the principles and practices of accounting in a business context. The course covers essential topics such as the accounting cycle, financial statement preparation, bookkeeping, and the analysis and interpretation of financial information. Students will learn how to record business transactions, manage accounts, and ensure compliance with financial regulations. By understanding the fundamentals of assets, liabilities, revenues, and expenses, students will gain the skills needed to support effective decision-making and maintain accurate records for organizations of various sizes.
Recommended Textbook
Financial Accounting 4th Canadian Edition by Robert; Libby
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13 Chapters
1686 Verified Questions
1686 Flashcards
Source URL: https://quizplus.com/study-set/3872
Page 2
Chapter 1: Financial Statements and Business Decisions
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119 Verified Questions
119 Flashcards
Source URL: https://quizplus.com/quiz/77165
Sample Questions
Q1) A banker who is considering making a loan to a corporation would be one of the corporation's internal decision makers.
A)True
B)False
Answer: False
Q2) During 20B,its second year in operation,Banner Company delivered goods to customers for which customers paid or promised to pay $5,850,000.The amount of cash collected from customers was $5,960,000.The amount of trade receivables at the beginning of 20B was $1,200,000.What is the amount of sales revenue that Banner should report on its income statement for 20B?
A)$4,650,000.
B)$4,760,000.
C)$5,850,000.
D)$5,960,000.
Answer: C
Q3) The debts of a corporation can be generally viewed as debts of its owners.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Investing and Financing Decisions and the Accounting System
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Which of the following would cause an inflow of cash?
A)Payment of a long-term mortgage.
B)Sale of an asset for cash at less than its book value.
C)Payment of accounts payable.
D)Purchase of inventory for debt.
Answer: B
Q2) Shareholders' equity
A)is equal to liabilities and retained earnings.
B)includes retained earnings and common shares.
C)is shown on the income statement o.
D)is usually equal to cash on hand.
Answer: B
Q3) Assets are economic resources controlled by an entity as a result of past transactions or events and for which future economic benefits may be obtained.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Operating Decisions and the Accounting System
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) Expenses incurred but not paid decrease assets and shareholders' equity. A)True
B)False Answer: False
Q2) Cash basis accounting is often adequate for very small businesses such as a small retail store or a doctor's office.
A)True
B)False Answer: True
Q3) The sale of merchandise for cash usually will increase assets. A)True
B)False Answer: True
Q4) Utilities expense and wages payable are both elements of the income statement. A)True
B)False Answer: False
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Chapter 4: Adjustments,financial Statements,and the Quality of Earnings
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127 Verified Questions
127 Flashcards
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Sample Questions
Q1) Analysts,investors,and creditors use these same statements to evaluate performance as part of their share valuation and credit evaluation judgments.
A)True
B)False
Q2) Joe Company purchased supplies inventory for $5,000.Due to an error in posting,the inventory account was debited for only $500 when trade payables was credited for $5,000.During which phase of the accounting information cycle would this error be discovered?
A)Recording transaction in the journal.
B)Preparation of the financial statements.
C)Preparation of the trial balance.
D)Analysis of each transaction.
Q3) A.Explain how the income statement relates to the statement of changes in equity
B.Explain how the statement of changes in equity relates to the statement of financial position.
C.Explain how the statement of cash flows relates to the statement of financial position.
Q4) Is the adjusted trial balance a financial statement? Explain why or why not.
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Chapter 5: Communicating and Interpreting Accounting Information
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108 Verified Questions
108 Flashcards
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Sample Questions
Q1) A company acquired some land (independently appraised at $12,000)and paid for it by issuing 1,000 shares of its common shares (par $10 per share; no market price was quoted).How should this be reported on the statement of cash flows?
A)Report $12,000 as inflow and outflow of cash.
B)Report $12,000 as an inflow of cash.
C)Should not be reported on the statement of cash flows.
D)Report on a schedule of significant noncash transactions if it is material.
Q2) The amortization of a patent is treated in a similar manner to depreciation of a building when preparing the operating activities section of the statement of cash flows using the indirect method.
A)True
B)False
Q3) To prepare a statement of cash flows (indirect method),which of the following items should be added back to profit to derive "cash flow from operating activities"?
A)Depreciation expense.
B)Increase in trade receivables.
C)Gain on a sale of equipment.
D)Decrease in trade payables.
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Chapter 6: Reporting and Interpreting Sales Revenue, receivables,
and Cash
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) The concept of materiality requires a large company to record the purchase of a $10 wastepaper basket as an asset and depreciate it over its useful life.
A)True
B)False
Q2) Which of the following would not be a subclassification reported on a corporate income statement?
A)Profit before income taxes.
B)Accumulated depreciation.
C)Earnings per share.
D)Gross profit
Q3) A company's return on equity (ROE)that has been increasing over the past three years means the company has generated greater profit for the common share owners.
A)True
B)False
Q4) The income statement is a "profit statement," while the statement of financial position is a "position statement."
A)True
B)False
Page 8
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Chapter 7: Reporting and Interpreting Cost of Goods Sold and Inventory
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161 Verified Questions
161 Flashcards
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Sample Questions
Q1) Cash on hand (undeposited),cash deposited in banks,and postage stamps should be included in the cash balance reported on the statement of financial position.
A)True
B)False
Q2) G Co.,which is a biotechnology firm,reported the following revenues on their 2012 income statement: Product sales $582.2 million,Royalties $214.7 million,Contract revenue $107.0 million and Interest income $64.1 million.Their cost of sales were reported as $104.5 million.What was their gross profit percentage?
A)82.1%
B)86.9%
C)88.4%
D)89.2%
Q3) In order to achieve effective control of cash,it is important that one person assume the jobs for handling cash and accounting for cash.
A)True
B)False
Q4) What are "cash equivalents"? Specifically where would they appear on the financial statements?
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Chapter 8: Reporting and Interpreting Property, plant, and Equipment; Intangibles; and Natural Resources
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142 Verified Questions
142 Flashcards
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Sample Questions
Q1) If merchandise for resale is purchased for $2,000,terms 2/10,n/30,the entry to record the purchase should be which of the following (assuming a periodic inventory system and the gross method)?
A)Choice A
B)Choice B
C)Choice C
D)Choice D
Q2) The lower of cost and net realizable value rule for inventory is an example of the application of:
A)The conservatism principle
B)The historical cost principle
C)The materiality constraint
D)The matching principle
Q3) When the periodic inventory system is used,the year-end statement of financial position may easily be prepared without taking a physical inventory.
A)True
B)False
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Page 10
Chapter 9: Reporting and Interpreting Liabilities
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) A company purchases a remote site building for computer operations.The building will be suitable for operations after some expenditures.The wiring must be replaced to computer specifications.The roof is leaky and must be replaced.All rooms must be repainted and recarpeted and there will also be some plumbing work done.Which of the following statements is true?
A)The cost of the building will not include the repainting and recarpeting costs.
B)The cost of the building will include the cost of replacing the roof.
C)The cost of the building is the purchase price of the building,while the additional expenditures are all capitalized as Building Improvements.
D)The wiring is part of the computer costs,not the building cost.
Q2) Which of the following is true of depletion recorded for natural resources?
A)It recognizes increases in market value with the passage of time.
B)It matches the cost of resources used up with the revenues that are earned.
C)It is also recorded on buildings and equipment used in extracting the resource.
D)It is determined by a method similar to declining balance depreciation.
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11
Chapter 10: Reporting and Interpreting Bond Securities
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) A low trade payables turnover ratio caused by an aggressive cash management strategy,while the current ratio is adequate,would be perceived by analysts as a weakness.
A)True
B)False
Q2) Liquidity ratios measure a company's
A)operating cycle.
B)revenue-producing ability.
C)short-term debt paying ability.
D)long-range solvency.
Q3) Which of the following is usually NOT considered to be a long-term liability?
A)Bonds payable.
B)Mortgages payable.
C)Accrued post-retirement benefits.
D)CCP contributions payable.
Q4) Future income tax obligations should be reported on which of the following?
A)A corporation's income tax return.
B)A corporation's statement of financial position.
C)A corporation's income statement.
D)Statement of changes in equity.
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Chapter 11: Reporting and Interpreting Stockholders Equity
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161 Verified Questions
161 Flashcards
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Sample Questions
Q1) A high growth rate company may have a low times interest earned ratio because it has used debt to finance property,plant and equipment assets that are not yet generating a level of profits expected to materialize in the future.
A)True
B)False
Q2) On November 1,20A,Duval Company sold (issued)300,$1,000,ten-year,7% bonds at 97.The bonds were dated November 1,20A,and interest is payable each November 1 and May 1.What would be the amount of discount amortization at each semi-annual interest date (assume straight-line amortization)?
A)$50
B)$100
C)$450
D)$600
Q3) Amortization of a premium on a bond payable increases interest revenue.
A)True
B)False
Q4) Bonds sold below par are said to be issued at a discount.
A)True
B)False
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Chapter 12: Statement of Cash Flows
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136 Verified Questions
136 Flashcards
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Sample Questions
Q1) Which of the following accounts would appear in the general ledger of a partnership?
A)Retained earnings account.
B)Dividends paid account.
C)Common share accounts.
D)Drawings accounts.
Q2) A common share is the basic voting share issued by a corporation.Usually it has no par value,but par value shares also can be issued.
A)True
B)False
Q3) A primary advantage of a general partnership,compared with a corporation,does not include which of the following?
A)Ease of formation.
B)Limited liability for the owners.
C)No income tax on the business itself.
D)Complete control by the partners.
Q4) What are the advantages of issuing corporate bonds instead of issuing common shares to raise needed funds?
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Chapter 13: Analyzing Financial Statements
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124 Verified Questions
124 Flashcards
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Sample Questions
Q1) Calculate C Co's return on equity (ROE)for 2012.
A)25.6%
B)27.1%
C)30.9%
D)31.8%
Q2) A primary objective of financial statements is to provide information to current and potential investors and creditors.
A)True
B)False
Q3) The ratio of quick assets to current liabilities is known as which of the following?
A)Working capital.
B)Current ratio.
C)Quick ratio.
D)Cash coverage.
Q4) Liquidity ratios are evaluated by comparing them over time for a single company or by comparing them with ratios for similar companies.
A)True
B)False
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Page 15