College Accounting Exam Review
Course Introduction
College Accounting introduces students to the fundamental principles and procedures of accounting, focusing on the accounting cycle for service and merchandising businesses. The course covers topics such as financial statement preparation, recording and analyzing transactions, adjusting entries, internal controls, payroll, and the use of accounting systems. Emphasis is placed on developing practical skills in bookkeeping, understanding the role of accounting in decision-making, and interpreting financial information. This foundational course prepares students for further study in accounting and equips them with essential skills for managing financial records in small businesses or entry-level accounting positions.
Recommended Textbook
College Accounting A Practical Approach 12th Edition by Jeffrey Slater
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25 Chapters
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Chapter 1: Accounting Concepts and Procedures
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Sample Questions
Q1) Bonnie's Baskets purchases $4,000 worth of office equipment on account.This causes:
A)Cash and Capital to decrease.
B)Office Equipment and Accounts Payable to increase.
C)Office Equipment to decrease and Accounts Payable to increase.
D)Accounts Payable to increase and Capital to decrease.
Answer: B
Q2) The accounting equation states that total assets must always equal total liabilities plus owner's equity.
A)True
B)False
Answer: True
Q3) Crystal Clear Imagery received and paid a utility bill for $500 for the month of November.This transaction will:
A)increase Cash and increase Utility Expense.
B)decrease Cash and increase Utility Expense.
C)increase Cash and decrease Utility Expense.
D)increase Utility Expense and decrease Withdrawal.
Answer: B
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Page 3
Chapter 2: Debits and Credits: Analyzing and Recording
Business Transactions
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Sample Questions
Q1) Dennis,owner of Dennis' Golf Center,withdrew $900 in cash from the business.Record the transaction by:
A)debiting Dennis,Withdrawals,$900; crediting Cash,$900.
B)debiting Accounts Receivable,$900; crediting Cash,$900.
C)debiting Expense,$900; crediting Cash,$900.
D)debiting Dennis,Withdrawals,$900; crediting Dennis,Capital,$900.
Answer: A
Q2) Net income or net loss for a period is calculated by the following formula:
A)total revenues - total withdrawals.
B)total revenues - total expenses - total withdrawals.
C)total revenues - total expenses.
D)total revenues - total expenses + capital.
Answer: C
Q3) ___ 10.Supplies
A)Dr.(debit)
B)Cr.(credit)
Answer: A
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Chapter 3: Beginning the Accounting Cycle
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Sample Questions
Q1) Record the following selected transactions for January in a two-column journal,identifying each entry by letter:
(a)Earned $7,000 fees; customer will pay later.
(b)Purchased equipment for $45,000,paying $20,000 in cash and the remainder on credit
(c)Paid $3,000 for rent for January.
(d)Purchased $2,500 of supplies on account.
(e)A.Allen $1,000 investment in the company.
(f)Received $7,000 in cash for fees earned previously.
(g)Paid $1,200 to creditors on account.
(h)Paid wages of $6,250.
(i)Received $7,150 from customers on account.
(j)A.Allen withdrawal of $1,750.
Answer: 11ed4d30_4643_f0b4_ae97_935c1390a1e7_TB5851_00
Q2) If Accounts Payable has been credited,it is most likely that:
A)a collection from a customer was made.
B)a service was provided to a cash customer.
C)the company made a purchase on account.
D)None of these are possible.
Answer: C
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Page 5
Chapter 4: The Accounting Cycle Continued
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Sample Questions
Q1) If the balance of supplies at the start of the month was $900 and at the end of the month you had $450 on hand,the adjustment for Supplies would be:
A)$450.
B)$550.
C)$350.
D)$900.
Q2) Which of the following accounts would appear on the balance sheet?
A)Accumulated Depreciation
B)Depreciation Expense
C)Fees Earned
D)None of these are correct.
Q3) The estimated value of an item at the end of its useful life is:
A)depreciation expense.
B)residual value.
C)accumulated depreciation.
D)None of these answers are correct.
Q4) Depreciation Expense is debited when recording the depreciation for the period.
A)True
B)False
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Chapter 5: The Accounting Cycle Completed
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Sample Questions
Q1) The balance in the J.Higgins,Withdrawals account was $4,200.The entry to close the account would include a:
A)debit to Income Summary,$4,200.
B)credit to Income Summary,$4,200.
C)debit to J.Higgins,Capital,$4,200.
D)debit to J.Higgins,Withdrawals,$4,200.
Q2) When the balance in the Income Summary account is a credit,the company has:
A)incurred a net loss.
B)incurred a net income.
C)had more expenses than revenue.
D)made an error in their closing entries.
Q3) When revenue is closed:
A)Owner's Capital will be debited.
B)Income Summary will be debited.
C)Income Summary will be credited.
D)None of these are correct.
Q4) The trial balance prepared after all of the temporary accounts have been closed is called a post-closing trial balance.
A)True
B)False
Page 7
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Chapter 6: Banking Procedure and Control of Cash
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Sample Questions
Q1) The entry to establish the petty cash fund was not completed.This would cause:
A)cash to be understated.
B)cash to be overstated.
C)assets to be understated.
D)assets to be overstated.
Q2) A petty cash fund is set up:
A)to pay for large expenses.
B)to pay for small expenses.
C)for the owner to withdraw money for personal use conveniently.
D)None of these answers are correct.
Q3) Advantages of on-line banking include:
A)convenience.
B)transaction speed.
C)effectiveness.
D)All of the above are correct.
Q4) ________ Owner withdrew money from the company for personal use
Q5) ________ Replenishment of petty cash
Q6) The Petty Cash account should always be debited when the fund is replenished.
A)True
B)False
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Chapter 7: Calculating Pay and Payroll Taxes: The
Beginning of the Payroll Process
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Sample Questions
Q1) Ocean's Auction House's payroll for April includes the following data: \[\begin{array}
{ | l | r | }
\hline \text { Gross salaries } & \$ 20,000 \\
\hline \text { Salaries subject to FICA: } & \\
\hline 6.2 \% \text { Social Security } & 17,500 \\
\hline 1.45 \% \text { Medicare } &20,000 \\
\hline \text { Salaries subject to: } & \\
\hline \text { 0.8\% FUTA } & 1,000 \\
\hline \text {2.7\% SUTA } & 1,000 \\
\hline
\end{array}\] The employer's payroll tax for the period would be:
A)$1,558.
B)$1,403.
C)$1,935.
D)$2,090.
Q2) Kim received $1,850 for working 40 hours.What was Kim's rate of pay per hour?
A)$46.25
B)$44.00
C)$45.00
D)$40.00
Page 9
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Chapter 8: Paying,recording,and Reporting Payroll and Payroll Taxes: The Conclusion of the Payroll Process
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Sample Questions
Q1) Wages and Salaries Expense is:
A)equal to net pay.
B)equal to gross pay.
C)equal to the employer's taxes.
D)None of the above are correct.
Q2) The employer pays the same amount as the employee for Federal Unemployment taxes.
A)True
B)False
Q3) Compute the employers payroll tax.________
Q4) Wages and Salaries Payable would be used to record:
A)gross earnings of the employees.
B)net earnings of the employees not paid.
C)cumulative earnings of the employees
D)the paid portion of the earnings.
Q5) The payroll tax expense is recorded at the same time the payroll is recorded.
A)True
B)False
Q6) Compute the total federal income tax.________
Q7) Why are the employee deductions recorded as payables on the employer's books? Page 10
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Chapter 9: Sales and Cash Receipts
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Sample Questions
Q1) Determine the amount of cash collected at the time of making a sale of $1,000 worth of merchandise subject to a 6% sales tax.
$ ________
Q2) Which of the following statements about subsidiary ledgers is most accurate?
A)The subsidiary ledger accounts will never equal the control account in the general ledger.
B)The accounts receivable subsidiary ledger is a book of accounts that provides supporting detail for Accounts Receivable.
C)The subsidiary ledger accounts will equal the amount in the Sales account.
D)All of these answers are correct.
Q3) The normal balance of Sales Tax Payable is a credit.
A)True
B)False
Q4) The general ledger and the accounts receivable subsidiary ledger are the same book.
A)True
B)False
Q5) Define and compare the accounts receivable subsidiary ledger with the controlling account,Accounts Receivable.
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Chapter 10: Purchases and Cash Payments
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Sample Questions
Q1) Before paying an invoice,the accounting department must check:
A)the purchase order.
B)the invoice.
C)the receiving report.
D)All of the above are correct.
Q2) F.O.B.shipping point means:
A)the buyer pays for the freight.
B)the seller pays for the freight.
C)the title passes at time of shipment.
D)Both A and C are correct.
Q3) The accounts payable subsidiary ledger should equal the control account in the general ledger.
A)True B)False
Q4) Individual amounts are recorded during the month to the accounts payable ledger. A)True B)False
Q5) Determine the amount to be paid within the discount period for purchase with an invoice price of $10,000,subject to credit terms of 2/10,n/30.
$ ________
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Chapter 11: Preparing a Worksheet for a Merchandise Company
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Sample Questions
Q1) The trial balance columns on the worksheet are populated using the:
A)general journal.
B)general ledger.
C)subsidiary ledger.
D)None of the above.
Q2) \(\begin{array} { | l | l | l | l | }
\hline & \text { Column } 1 & \text { Column } 2 & \text { Column } 3 \\
\hline \begin{array} { l }
\text { Purchase returns } \\
\text { and allowances }
\end{array} & & & \\
\hline \end{array}\)
Q3) Recording the adjustment for supplies will:
A)increase the total liability and increase the total expenses.
B)increase the total assets and increase the total expenses.
C)decrease the total assets and increase the total expenses.
D)decrease the total assets and decrease the total expenses.
Q4) Why is beginning and ending inventory kept as two separate figures in the cost of goods sold section?
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Chapter 12: Completion of the Accounting Cycle for a Merchandise Company
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Sample Questions
Q1) All adjusting entries can be reversed.
A)True
B)False
Q2) Non-operating expenses are found in the Cost of Goods Sold section of the income statement.
A)True
B)False
Q3) The information to prepare the Statement of Owner's Equity comes from the:
A)income statement columns on the worksheet.
B)adjustments columns on the worksheet.
C)balance sheet columns on the worksheet.
D)general ledger.
Q4) Other Expense is used to record:
A)selling expenses.
B)administrative expenses.
C)operating expenses.
D)non-operating expenses.
Q5) Gross profit minus Operating Expenses equals Net Income.
A)True
B)False
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Chapter 13: Accounting for Bad Debts
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Sample Questions
Q1) Last year,Congo Corporation had net credit sales of $690,000 and it had uncollectible accounts of $31,050.Based on last year,what would the percent of estimated uncollectible accounts be this year?
A)7.10%
B)3.55%
C)4.50%
D)45.00%
Q2) Evaluate the differences of the effect on the financial statements between the income statement approach and the balance sheet approach for estimating bad debts expense on the financial statement presentation.
Q3) Estimating Bad Debts Expense is an example of:
A)recording accrued expense.
B)the matching principle.
C)the balance sheet approach.
D)recording accrued sales.
Q4) The income statement approach estimates a percentage of sales that is uncollectible.
A)True
B)False
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Chapter 14: Notes Receivable and Notes Payable
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Sample Questions
Q1) A $10,000,7% note is dated May 18 and is due in 90 days.Using a 360-day year,the maturity value would be:
A)$10,000.
B)$10,700.
C)$10,175.
D)$10,525.
Q2) Interest on a $3,000,10% promissory note for four months is:
A)$300.
B)$30.
C)$100.
D)$75.
Q3) The proper entry to make when a note is paid on the maturity date depends on whether the note is an interest-bearing or non-interest-bearing note.
A)True
B)False
Q4) When an account receivable is exchanged for a note receivable,a shift in assets occurs.
A)True
B)False
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Chapter 15: Accounting for Merchandise Inventory
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Sample Questions
Q1) In a perpetual inventory system,the Merchandise Inventory account is updated:
A)at the end of the accounting period.
B)once each month.
C)when merchandise is purchased.
D)The account never needs updating.
Q2) The retail method is used by many merchandising businesses to estimate the amount of inventory.
A)True
B)False
Q3) Tack Room Clothing uses the retail method to estimate cost of ending inventory for its interim reports.From the following facts,estimate Tack Room's ending inventory at cost at August 31.
\(\begin{array} { l l }
\text { August } 1 \text { inventory at cost } & \$ 900 \\
\text { August } 1 \text { inventory at retail } & 1,200 \\
\text { Net purchases at cost } & 9,000 \\
\text { Net purchases at retail } & 12,000 \\
\text { Net sales at retail } & 12,500
\end{array}\)
Q4) The ________ holds the merchandise of another business to be sold.
Page 18
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Chapter 16: Accounting for Property, plant, equipment, and Intangible Assets
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Sample Questions
Q1) \(\begin{array} { | l | l | l | l | l | }
\hline & \text { Column 1 } & \text { Column 2 } & \text { Column 3 } & \text { Column } 4 \\
\hline \text { Coal deposit } & & & & \\
\hline
\end{array}\)
Q2) Assembly costs,and any other costs necessary to get a machine ready for operation,except for freight costs,would be added to the cost of the machine.
A)True
B)False
Q3) If a plant asset is fully depreciated and discarded,no ________ or ________ will be realized.
Q4) Assets that are not expected to provide benefits for a number of accounting periods are called:
A)current assets.
B)fixed assets.
C)long-term assets.
D)property,plant,and equipment.
Q5) Payments for ordinary maintenance of an asset are called ________.
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Chapter 17: Partnership
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Sample Questions
Q1) When the assets are sold at a loss and one partner cannot make up the deficit,the other partners have unlimited liability and must make up the deficit.
A)True
B)False
Q2) John and Brad have average capital balances of $25,000 and $10,000,respectively.The partners have agreed to allow $20,000 salary allowances.The partners will share income and losses in a 1:2 ratio.How much will each partner's capital account change if net income is $70,000?
Q3) A partner may withdraw assets valued at more than book equity if:
A)the remaining partners are anxiously awaiting the partner's retirement.
B)partnership assets are overvalued.
C)partnership assets are undervalued.
D)Both A and C
Q4) A partnership is defined by the Uniform Partnership Act.
A)True
B)False
Q5) Discuss (a)the purpose of the articles of partnership,and (b)indicate the items that should be included.
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Chapter 18: Corporations: Organizations and Stock
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Sample Questions
Q1) Common stockholders have all the following rights except:
A)the right to prior claims of profit over preferred stockholders.
B)the right to vote.
C)the right to sell their stock.
D)the right to share in assets upon liquidation after creditors and preferred stockholders.
Q2) Describe a stock subscription plan.
Q3) Which of the following is a characteristic of a corporation?
A)The stockholders have limited liability.
B)When stockholders sell their shares,the corporation is dissolved.
C)A corporation cannot own property in its name.
D)Cash dividends to the stockholders are non-taxable.
Q4) Each share of capital stock of a corporation gives its owner the right to:
A)share in the assets if the corporation liquidates.
B)set company policy.
C)hire and fire employees.
D)manage the daily operations of the business.
Q5) When a corporation has only one class of stock,it will be common stock.
A)True
B)False
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Chapter 19: Corporations: Stock Values,
Stocks, and Retained
Earnings
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Q1) When treasury stock was sold at cost,Cash was debited and Common Stock was credited.This error would cause:
A)the period end assets to be overstated.
B)the period end liabilities to be overstated.
C)the total period end stockholders' equity to be overstated.
D)None of these are correct.
Q2) A stock split has no effect on retained earnings.
A)True
B)False
Q3) A stock split:
A)causes decrease in the number of shares outstanding.
B)increases the par or stated value in proportion.
C)reduces retained earnings.
D)None of these answers are correct.
Q4) Treasury stock is:
A)stock that is issued in a stock dividend.
B)stock that has been reacquired by the corporation.
C)previously issued stock that has been canceled.
D)unissued,but authorized stock.
22
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Chapter 20: Corporations and Bonds Payable
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Q1) Allan Corporation issued 300,8%,10-year,$1,000 bonds on July 1.The annual bond interest date is June 30,and the bonds were issued at face value.The amount of interest expense reported for the current year is:
A)$0.
B)$24,000.
C)$12,000.
D)None of the above are correct.
Q2) The interest rate on which cash payments to bondholders are based is the:
A)market rate.
B)discount rate.
C)contract rate.
D)amortization rate.
Q3) Which of the following statements is true?
A)Bondholders would be paid before stockholders in a liquidation.
B)Dividends are required to be paid to stockholders.
C)Bondholders are owners while stockholders are creditors.
D)Stockholders receive a fixed interest while bondholders are paid only if earnings are sufficient.
Q4) Accrued interest on bonds which sold at face value.
23
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Chapter 21: Statement of Cash Flows
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Q1) Operating expenses other than depreciation for the year were $400,000.Accrued expenses payable increased by $35,000.Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:
A)$400,000.
B)$435,000.
C)$365,000.
D)$35,000.
Q2) The statement of cash flows provides information about all of the following except:
A)organizing activities.
B)investing activities.
C)operating activities.
D)financing activities.
Q3) If $200,000 of a company's own stock is sold,it is shown in the financing activities section.
A)True
B)False
Q4) Discuss the purpose of a statement of cash flows,and describe its components.
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Chapter 22: Analyzing Financial Statements
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Q1) \[\begin{array} { | l | c | c | c | c | }
\hline & & \text { Asset } & & \\
& \text { Liquidity } & \text { Management } & \text { Debt } & \text { Profitability } \\
\hline \text { Return on sales } & & & & \\
\hline \end{array}\]
Q2) A form of analysis in which each item on a report is shown as a percent of net sales is called a vertical analysis of the income statement.
A)True
B)False
Q3) Topiary's Unlimited has a cost of goods sold of $1,900,000.The beginning merchandise inventory was $125,000 and its ending merchandise inventory is $133,000.Topiary's merchandise inventory turnover ratio is:
A)65.5 times.
B)33.8 times.
C)14.7 times.
D)0.1 times.
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Chapter 23: The Voucher System
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Q1) \(\begin{array} { | l | l | l | l | l | }
\hline & \text { Column 1 } & \text { Column 2 } & \text { Column 3 } & \text { Column 4 } \\
\hline \text { Supplies } & & & & \\
\hline \end{array}\)
Q2) The check register would contain a column for all except: A)the payee name.
B)a debit to Vouchers Payable.
C)a credit to Cash.
D)All of the above would be included in columns.
Q3) To maintain good internal control procedures,the person filing a purchase requisition should never approve the payment. A)True
B)False
Q4) If an account is not paid on time using the net method,the account ________ must be recorded.
Q5) The voucher system is a form of internal control. A)True B)False
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Chapter 24: Departmental Accounting
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Q1) The photography department in a department store experienced the following revenue and expenses during October: \[\begin{array} { | l | r | }
\hline \text { Sales } & \$ 23,500 \\
\hline \text { Cost of Goods Sold } & 8,200 \\
\hline \text { Direct Operating Expenses } & 1,000 \\
\hline \text { Indirect Operating Expenses } & 2,300 \\
\hline
\end{array}\] The photography departmental gross profit on sales is:
A)$15,300.
B)$20,200.
C)$13,000.
D)$14,300.
Q2) When preparing an income statement showing departmental contribution margin:
A)indirect expenses are combined with direct expenses.
B)indirect departmental expenses are added to contribution margin.
C)direct expenses are subtracted from contribution margin on sales.
D)None of these answers are correct.
Q3) A indirect expense should be traceable to a respective department.
A)True
B)False
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Chapter 25: Manufacturing Accounting
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Q1) Omega.com sold 25 jet skis for $7,000 which cost $5,000.The entry to record the sale would include:
A)credit to Finished Goods Inventory $5,000.
B)credit to Sales for $7,000.
C)debit to Cost of Goods Sold for $5,000.
D)all of the above.
Q2) Finished goods ending inventory was overstated.This error will cause:
A)the cost of goods manufactured to be overstated.
B)the cost of goods sold to be overstated.
C)the net income to be overstated.
D)All of these are correct.
Q3) Overhead includes labor costs of assembly line workers but not their supervisors.
A)True
B)False
Q4) The second step in determining total manufacturing costs is to calculate:
A)the raw material cost for the month.
B)the direct labor cost for the month.
C)factory overhead cost for the month.
D)None of these answers are correct.
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