Corporate Accounting
Final Exam
Course Introduction
Corporate Accounting provides an in-depth examination of the accounting processes, principles, and standards specific to corporations. The course covers the preparation and analysis of financial statements, accounting for share capital, debentures, and dividends, corporate income tax issues, as well as the treatment of mergers, acquisitions, and consolidation of companies. Students will also explore regulatory requirements, ethical considerations, and corporate governance in accounting, gaining practical skills in interpreting and applying accounting information for business decision-making, compliance, and reporting in the corporate sector.
Recommended Textbook
Financial And Managerial Accounting Principles International Edition 9th Edition by Crosson
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29 Chapters
4463 Verified Questions
4463 Flashcards
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Page 2
Chapter 1: Uses of Accounting Information and the Financial Statements
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170 Verified Questions
170 Flashcards
Source URL: https://quizplus.com/quiz/72011
Sample Questions
Q1) Net assets equal assets plus liabilities.
A)True
B)False Answer: False
Q2) The modern definition of accounting focuses on the role of accounting in making economic decisions rather than on how to do accounting.
A)True
B)False Answer: True
Q3) Two major goals of business are to achieve profitability and to achieve liquidity.
A)True
B)False
Answer: True
Q4) An accounting measurement is concerned with all except which of the following?
A) Money measure
B) Financial position
C) Separate entity
D) Business transaction
Answer: B
Page 3
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Chapter 2: Analyzing Business Transactions
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Sample Questions
Q1) Office supplies become expenses
A) when they are consumed (used up).
B) when they are paid for.
C) at no time, since they are an asset.
D) when they are purchased.
Answer: A
Q2) Which of the following accounts is decreased with a credit?
A) Advertising Fees Earned
B) Insurance Expense
C) Common Stock
D) Unearned Revenue
Answer: B
Q3) Briefly discuss the differences between Prepaid Insurance and Insurance Expense.
Answer: Prepaid Insurance appears on the balance sheet as an asset and represents unexpired insurance coverage.Insurance Expense appears on the income statement and represents insurance that has expired.
Q4) In a financial report,a double line is placed below the final total(s).
A)True
B)False
Answer: True
Page 4
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Chapter 3: Measuring Business Income
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Sample Questions
Q1) The post-closing trial balance contains
A) nominal accounts only.
B) both real accounts and nominal accounts.
C) real accounts only.
D) neither real accounts nor nominal accounts.
Answer: C
Q2) Accrual accounting recognizes revenues and expenses at the point that cash changes hands.
A)True
B)False
Answer: False
Q3) If no adjustments are needed for a particular company,its
A) trial balance will be identical to its adjusted trial balance.
B) post-closing trial balance will be identical to its trial balance.
C) trial balance, adjusted trial balance, and post-closing trial balance will be identical.
D) adjusted trial balance will be identical to its post-closing trial balance.
Answer: A
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Chapter 3: Supplement - Closing Entries and the Work Sheet
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Sample Questions
Q1) A work sheet is useful for all except which of the following?
A) Recording transactions from source documents
B) Recording closing entries
C) Recording adjusting entries
D) Preparing financial statements
Q2) Monty Milko is the only accountant employed at Gamma Enterprises,Inc.When asked by the company president if the financial statements had been prepared yet,Milko answered that he had completed all of his work except the preparation of the statements.He added that the net income that would appear on the current income statement would be $369,075.Identify the two instances where Milko would have learned the net income before he actually prepared the income statement.
Q3) Despite the many uses of microcomputers,they cannot be used to prepare work sheets.
A)True
B)False
Q4) The heading of a work sheet might include the line "As of December 31,20xx."
A)True
B)False
Page 6
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Chapter 4: Financial Reporting and Analysis
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Sample Questions
Q1) Sales returns and allowances are deducted from gross sales on the balance sheet.
A)True
B)False
Q2) Using the following amounts taken from the balance sheet and income statement of a business,compute the measures listed below.After each answer,write "L" if it is a measure of liquidity or "P" if it is a measure of profitability.Round to two decimal places.
\[\begin{array} { l r l r }
\text { Current assets } & \$ 30,000 & \text { Average stockholders' equity } & \$ 60,000 \\
\text { Average total assets } & 120,000 & \text { Net sales } & 64,000 \\
\text { Current liabilities } & 20,000 & \text { Net income } & 3,000 \\
\text { Long-term liabilities } & 40,000 & & \end{array}\]
a. Current ratio
b. Return on equity
c. Return on assets
d. Working capital
Q3) State the definition of a current asset.
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Page 7
Chapter 5: The Operating Cycle and Merchandising Operations
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Sample Questions
Q1) Using the following information,calculate for 2010 (a)net sales,(b)cost of goods sold,(c)gross margin,and (d)net income.
\(\begin{array}{lr}
\text { Freight-In } & \$ 200 \\
\text { Merchandise Inventory, December 31, } 2009 & 15,000 \\
\text { Sales } & 60,000 \\
\text { Purchases Returns and Allowances } & 300 \\
\text { Advertising Expense } & 4,000 \\
\text { Purchases } & 20,000 \\
\text { Merchandise Inventory, December 31, } 2010 & 5,000 \\
\text { Sales Returns and Allowances } & 500 \\
\text { General and Administrative Expenses } & 7,000 \end{array}\)
Q2) Which of the following attributes of internal control would be violated if the accounting clerk wrote checks to pay accounts payable?
A) Adequate design of documents
B) Sound personnel procedures
C) Periodic independent verification
D) Separation of duties
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Chapter 6: Inventories
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Sample Questions
Q1) Use this inventory information for the month of June to answer the following question. \(\begin{array}{rlll}
\text { June }&1 & \text { Beginning inventory } & 10 \text { units @ } \$ 120 \\
&5 & \text { Purchase } & 60 \text { units @ } \$ 112 \\ &14 & \text { Sale } & 40 \text { units } \\
&21 & \text { Purchase } & 30 \text { units @ } \$ 116 \\ &30 & \text { Sale } & 28 \text { units }
\end{array}\)
What is cost of goods sold under the specific identification method?
A) More information is needed.
B) $3,704
C) $7,696
D) $7,736
Q2) Under the perpetual inventory system,cost of goods sold is not recorded until the end of the accounting period.
A)True
B)False
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Page 9
Chapter 7: Cash and Receivables
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179 Verified Questions
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Sample Questions
Q1) What is a contingent liability,and how does it relate to the discounting of a note receivable at the bank?
Q2) An example of a cash equivalent is
A) a 120-day time deposit.
B) notes receivable.
C) accounts receivable.
D) a 60-day certificate of deposit.
Q3) Securitization delays the receipt of cash from sales made on credit. A)True B)False
Q4) The following data exist for Conner Company: \(\begin{array}{lrr} &2010&2009\\ \text { Accounts Receivable } & \$ 80,000 & \$ 90,000 \\ \text { Sales } & 510,000 & 410,500 \end{array}\) Calculate the receivable turnover and the average days' sales uncollected for 2010.Round answers to one decimal place.
Q5) Bad debts are considered as an expense of selling on credit. A)True B)False
Page 10
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Chapter 8: Current Liabilities and Fair Value Accounting
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Sample Questions
Q1) For notes payable whose interest is stated separately,the adjusting entry would consist of a debit to Interest Expense and a credit to Interest Payable.
A)True
B)False
Q2) All of the following can be employee payroll withholdings except A) state income taxes.
B) medical insurance premium payments.
C) charitable contributions.
D) federal unemployment tax.
Q3) Ronald Company has current assets of $115,000 and current liabilities of $75,000 of which accounts payable are $65,000.Arnold's cost of goods sold is $420,000,its merchandise inventory increased by $20,000,and accounts payable were $45,000 the prior year.Calculate Ronald's working capital,payables turnover,and days' payable.
Q4) Commercial paper consists of secured loans that are sold to the public.
A)True
B)False
Q5) Only the unused portion of a line of credit is recognized as a liability.
A)True
B)False
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Chapter 9: Long Term Assets
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Sample Questions
Q1) Indicate whether each of the following items normally would be considered a capital expenditure (C)or a revenue expenditure (R).
_____ 1.Oil change for company vehicle
_____ 2.Replacement of a few roof shingles
_____ 3.Cost to overhaul the heating system
_____ 4.Battery replacement for company vehicle
_____ 5.Painting factory walls
_____ 6.Installation of expensive paneling in executive offices
Q2) One reason for an asset's limited useful life is obsolescence.
A)True
B)False
Q3) On January 1,2008,North Side Manufacturing Company purchased for $40,000 a machine that will produce an estimated 75,000 units of Product X.The machine has an estimated useful life of four years and an estimated residual value of $8,000.Calculate the following amounts,rounding answers to the nearest dollar: (a)the carrying value of the machine after it has been used for three and one-half years,under the straight-line method; (b)depreciation expense for 2010,under the production method (assume that 13,000 units were produced that year); and (c)accumulated depreciation at the end of 2009,under the double-declining-balance method.(Show your work.)
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Page 12
Chapter 10: Long-Term Liabilities
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Sample Questions
Q1) Comment on the change in both the carrying value and the balance of the Unamortized Bond Premium account over the life of a bond issue.
Q2) Interest coverage ratio is a measure of A) financial leverage.
B) income after taxes and interest divided by interest expense.
C) stockholders' control.
D) protection from default on interest.
Q3) All of the following are operating leases except a
A) monthly lease on a building that can be canceled with 90 days' notice.
B) ten-year lease on a new building.
C) two-year lease on a truck with an option to renew for one more year.
D) five-year lease of a computer with an option to buy for a small amount at the end of the lease.
Q4) The effective interest method of amortization of bond premiums and discounts is superior to the straight-line method because it results in a(n)
A) more variable interest rate.
B) uniform rate of interest.
C) interest rate that increases or decreases slightly over time.
D) interest rate that is close to the market interest rate.
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Chapter 11: Contributed Capital
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Sample Questions
Q1) A disadvantage of the corporate form of business is
A) centralized authority and responsibility.
B) its status as a separate legal entity.
C) government regulation.
D) continuous existence.
Q2) The sale of treasury stock cannot result in
A) an increase in Retained Earnings.
B) the crediting of Paid-in Capital, Treasury Stock.
C) the debiting of Paid-in Capital, Treasury Stock.
D) an increase in total stockholders' equity.
Q3) Duncan Corporation has 2,000 shares of $100 par value,6 percent cumulative preferred stock and 20,000 shares of $10 par value common stock outstanding.In its first four years of operation,Duncan Corporation paid cash dividends as follows: 2007,$15,000; 2008,$0; 2009,$20,000; 2010,$25,000.Calculate the total cash dividends received by owners of preferred and common stock in each year.
Q4) Start-up and organization costs should be amortized over ten years or more.
A)True
B)False
Q5) Define outstanding stock.
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Chapter 12: Investments
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Sample Questions
Q1) When a parent company owns 100 percent of the outstanding stock of a subsidiary,Goodwill from Consolidation will appear on the consolidated balance sheet when the
A) cost of the parent's investment exceeds the book value and the fair value of the investee's net identifiable assets.
B) cost of the parent's investment exceeds the book value of the parent's net assets.
C) book value of the parent's net assets exceeds the fair value of the parent's net assets.
D) fair value of the investee's net identifiable assets exceeds the cost of the parent's investment.
Q2) All of the following are conditions that could affect the valuation of investments on the balance sheet except
A) changes in the general purchasing power of the dollar.
B) changes in the operations of investee companies.
C) changes in the market value of the investments.
D) changes due to discount or premium amortization.
Q3) When are eliminating entries made,where are they entered,and why are they needed?
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Chapter 13: The Corporate Income Statement and the Statement of Stockholders Equity
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Sample Questions
Q1) The recognition point for revenues,expenses,gains and losses is the same for tax and financial reporting purposes.
A)True
B)False
Q2) What issues must be considered when determining whether or not an uninsured loss from tornado destruction should be treated as an extraordinary item?
Q3) The results of discontinued operations appear below extraordinary gains and losses in the income statement.
A)True
B)False
Q4) Income taxes expense represents the amount of income taxes
A) computed in accordance with the income tax code.
B) applicable to the amount of taxable income for the period.
C) applicable to the amount of income from continuing operations for the period.
D) actually payable to the IRS for the period.
Q5) Diluted earnings per share should be a more conservative (lower)figure than basic earnings per share.
A)True B)False
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Chapter 14: The Statement of Cash Flows
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Sample Questions
Q1) Royer Corporation engaged in this transaction: Paid employee wages. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.
A) Financing activities section
B) Investing activities section
C) Does not represent a cash flow
D) Operating activities section
Q2) Why does the acquisition of land in exchange for common stock qualify as a noncash investing and financing transaction?
Q3) When preparing a statement of cash flows using the indirect method,an increase in accounts receivable is deducted from net income.
A)True
B)False
Q4) The acquisition of treasury stock with cash is shown as an investing activity on the statement of cash flows.
A)True
B)False
Q5) On the lines below,provide the components for the calculation of free cash flow.
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Chapter 15: The Changing Business Environment - a Managers Perspective
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Sample Questions
Q1) Integrity standards of management accountants include
A) refraining from accepting hospitality gifts from coworkers.
B) refraining from activities that the company does not actively endorse.
C) avoiding actual or apparent conflicts of interest.
D) avoiding only those conflicts of interest that occur between coworkers.
Q2) Although some management accountants strive to update their knowledge and skills,such updating is not within the realm of management accountants' ethical standards.
A)True
B)False
Q3) Financial accounting comprises all rules governing the accounting for and reporting of financial information that must be disclosed to people outside the company.
A)True
B)False
Q4) In today's competitive business environment,managers
A) need only be concerned with quality.
B) must provide the highest value at the highest cost to customers.
C) must provide the highest value at the lowest cost to customers.
D) need not be concerned with the cost to the customers.
Page 18
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Chapter 16: Cost Concepts and Cost Allocation
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Sample Questions
Q1) Which of the following is not considered important in the proper allocation of overhead costs?
A) Forecasting production activity
B) Estimating total overhead costs
C) Selecting an appropriate activity base
D) Estimating the selling price of the product
Q2) Which of the following types of product costs appear in the financial statements?
A) Normal costs
B) Estimated costs
C) Standard costs
D) Actual costs
Q3) Cost of goods manufactured decreases the Work in Process Inventory account.
A)True
B)False
Q4) A cost is classified as an overhead cost if it is not directly traceable to an end product or a cost object.
A)True
B)False
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Chapter 17: Costing Systems- Job Order Costing
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Sample Questions
Q1) Few actual production processes fit the definitions of job order costing or process costing exactly.
A)True
B)False
Q2) Bear Country produces hand-carved wooden bears and uses a job order costing system.The following are data on the three jobs worked on in the company's first month of operations:
\(\begin{array}{lrrr}
&\text { Smokey } & \text { Rocky } & \text { Curious }\\
\text { Number of bears } & 180 & 100 & 80 \\
\text { Direct labor hours worked } & 400 & 200 & 140 \\
\text { Direct materials cost } & \$ 4,500 & \$ 2,700 & \$ 2,000 \\
\text { Direct labor cost } & \$ 6,000 & \$ 3,000 & \$ 2,100
\end{array}\) Overhead cost is applied to job orders on the basis of direct labor hours at a predetermined rate of $10 per hour.The Smokey and Rocky bears were completed during the month,and the Curious bears remained in work in process at the end of the month.
a. Compute the cost transferred to finished goods during the month.
b. Compute the unit cost for a Rocky bear.
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Page 20
Chapter 18: Costing Systems- Process Costing
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Sample Questions
Q1) The Bakersfield Company has the following information available: \(\begin{array}{lrr}
&\text { Costs from Beginning}&\text { Costs from}\\ &\text { Inventory}&\text { Current Period}\\
\text { Direct materials } & \$ 3,650 & \$ 31,620 \\
\text { Conversion costs } & 9,120 & 143,100 \end{array}\)
At the beginning of the period,there were 800 units in process that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs.During the current period,5,800 units were started and completed.Ending inventory contained 400 units that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs.(Assume that the company uses the FIFO process costing method.)
The equivalent units of production for direct materials and conversion costs,respectively,were
A) 6,200 for direct materials and 6,360 for conversion costs.
B) 5,400 for direct materials and 6,520 for conversion costs.
C) 6,200 for direct materials and 5,960 for conversion costs.
D) 7,000 for direct materials and 6,520 for conversion costs.
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Page 21
Chapter 19: Value-Based Systems- Abm and Lean
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Sample Questions
Q1) Activity-based costing applies only to production-related activities.
A)True
B)False
Q2) A just-in-time operation seeks to eliminate all product support functions.
A)True
B)False
Q3) In a just-in-time environment,managing the production process focuses on
A) total processing time per unit.
B) allocating overhead more accurately.
C) reducing inventories.
D) units produced per direct labor hour.
Q4) Customer relations are usually part of
A) the supply chain.
B) the value chain.
C) both the value chain and the supply chain.
D) neither the value chain nor the supply chain.
Q5) Activity costs per unit equal total activity costs divided by total volume. A)True B)False
Q6) How do managers measure an activity's performance?
Page 22
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Chapter 20: Cost Behavior Analysis
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Sample Questions
Q1) Given the following cost and activity observations for Notwen Company's maintenance costs,use the high-low method to calculate Notwen's monthly fixed costs for maintenance. \[\begin{array} { c c r }
& \text { Cost } & \text { Units Produced } \\
\text { January } & \$ 130,000 & 25,000 \\
\text { February } & 180,500 & 35,000 \\
\text { March } & 151,100 & 28,000 \\
\end{array}\]
A) $11,250
B) $4,550
C) $3,750
D) $2,650
Q2) If fixed costs are $24,000,variable costs are $25 per unit,and the product sells for $45,the total contribution margin at the breakeven point is $1,200.
A)True
B)False
Q3) Explain what cost-volume-profit analysis is and how managers use it.Give examples of some purposes for which it might be used.
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Page 23
Chapter 21: The Budgeting Process
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Sample Questions
Q1) Sarusse,Inc.,produces two products in a single plant utilizing two departments: Shaping and Assembly.Direct labor hour and dollar requirements for 2010 are being projected using 2009 unit standard labor information.Departmental data and routing sequence information are shown below.
\[\begin{array} { | l | c | c | }
\hline { \text { Product } } & \text { Shaping } & \text { Assembly } \\ \hline \text { R2D2 } & 0.5 & 0.4 \\
\text { T3E3 } & 0.7 & 0.6 \\ \text { Labor rate per hour } & \$ 9 & \$ 12 \\
\hline
\end{array}\]
Management has forecasted that 20,000 units of product R2D2 and 70,000 units of product T3E3 must be produced during 2010. Prepare a direct labor budget for 2010 that shows the budgeted direct labor cost for each department and the company as a whole.
Q2) Zero-based budgeting requires the preparation of budget from scratch. A)True B)False
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Page 24
Chapter 22: Performance Management and Evaluation
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Sample Questions
Q1) Economic value added is synonymous with shareholder wealth created by an investment center.
A)True
B)False
Q2) Performance reports allow comparisons between actual performance and budget expectations.
A)True
B)False
Q3) As the staff accountant for Investment Centers Beta and Gamma,compute the residual income for each investment center,using the following information: \(\begin{array}{lrr}
& \text { Beta } & \text { Gamma } \\
\text { Operating income } & \$ 850,000 & \$ 1,000,000 \\
\text { Actual ROI } & 28 \% & 49 \% \\
\text { Desired ROI } & 32 \% & 35 \% \\
\text { Assets invested } & \$ 585,000 & \$ 750,000 \\ \end{array}\)
Q4) Why is it important that a manager's evaluation be based only on those revenues and costs that he or she can control?
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Chapter 23: Standard Costing and Variance Analysis
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Q1) Managers are constantly comparing the costs of what was expected to happen with the costs of what did happen.By examining the differences,or variances,managers can learn much valuable information.Identify and discuss the steps involved in variance analysis.
Q2) Direct labor time standards express the hourly labor cost per function or job classification that exists during the current accounting period.
A)True
B)False
Q3) Comparing "what did happen" with "what should have happened" aids in the performance evaluation of a company.
A)True
B)False
Q4) The standard fixed overhead rate is usually based on the expected number of standard machine hours.
A)True
B)False
Q5) Discuss the keys to preparing a performance report based on standard costs and related variances.
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Chapter 24: Short Run Decision Analysis
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Sample Questions
Q1) The cost of a previously purchased machine is an example of a sunk cost.
A)True
B)False
Q2) There are products or services that can be either sold in a basic form or be processed further.
A)True
B)False
Q3) Fixed costs are irrelevant in make-or-buy decisions.
A)True
B)False
Q4) The point where joint products or services become separable and identifiable is known as split-off point.
A)True
B)False
Q5) Discuss the qualitative factors that should be considered in short-run decision making.
Q6) Why is the book value of equipment irrelevant when considering the replacement of equipment?
Q7) What are the two steps in the analysis for a sales mix decision?
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Chapter 25: Capital Investment Analysis
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Sample Questions
Q1) The accounting rate-of-return method does not consider the time value of money.
A)True
B)False
Q2) Memphis Co.is going to purchase a machine for $83,200 that will increase cash flows by $40,000 in the first year,$30,000 the second year,and $25,000 the third year.The machine will have no residual value.The minimum rate of return is 10 percent.The present value factors for the three years are 0.909,0.826,and 0.751,respectively. The machine's net present value is
A) $21,800.
B) ($3,285).
C) $79,915.
D) ($4,286).
Q3) When using the net present value method to compare keeping an old building or disposing of it and acquiring a new building,the current cash residual value of the old building should be
A) a subtraction from the price paid for the new building.
B) viewed as a cash flow.
C) an addition to the price paid for the new building.
D) irrelevant to the decision.
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Page 28
Chapter 26: Pricing Decisions, incltarget Costing and Transfer Pricing
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Sample Questions
Q1) The gross margin-based price is computed by adding total production costs per unit to the total production costs per unit times the gross margin markup percentage.
A)True
B)False
Q2) Under microeconomic theory,total revenue will continue to increase,but the rate of increase will diminish as more and more units are sold.
A)True
B)False
Q3) Transfer prices are used for internal decisions and performance evaluation purposes and are not made known to the outside world.
A)True
B)False
Q4) Cost and price information are irrelevant to transfer prices.
A)True
B)False
Q5) Both internal and external factors can influence the pricing decision. A)True
B)False
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Chapter 27: Quality Management and Measurement
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79 Verified Questions
79 Flashcards
Source URL: https://quizplus.com/quiz/71984
Sample Questions
Q1) The first step in ensuring the production of high-quality products is to have a sound product design.
A)True
B)False
Q2) The primary focus of a management information system is on the management of A) people.
B) costs.
C) activities.
D) time.
Q3) A management information system is not designed to provide data about individual customers.
A)True
B)False
Q4) Total quality management requires all business functions to work together to ensure product quality.
A)True
B)False
Q5) The Deming Application Prize for quality originated in Japan.
A)True
B)False
Page 30
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Chapter 28: Financial Analysis of Performance
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164 Verified Questions
164 Flashcards
Source URL: https://quizplus.com/quiz/71983
Sample Questions
Q1) The ability to pay bills when due and to meet unexpected needs for cash most closely describes
A) cash flow adequacy.
B) long-term solvency.
C) liquidity.
D) profitability.
Q2) Ratio analysis is useful only if the ratio states a meaningful relationship between two numbers.
A)True
B)False
Q3) Common-size statements are useful in assessing the changes in the composition of statements over time.
A)True
B)False
Q4) Rule-of-thumb measures are the best standards of comparison in financial performance evaluation.
A)True
B)False
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