Corporate Accounting Test
Bank
Course Introduction
Corporate Accounting provides an in-depth examination of the principles, procedures, and regulatory frameworks involved in the accounting processes of corporations. The course covers the preparation and analysis of financial statements, accounting for share capital, debentures, and dividends, as well as issues related to mergers, acquisitions, and amalgamations. Students will also explore corporate governance, disclosure requirements, and recent developments in accounting standards, equipping them with practical skills and theoretical knowledge necessary for effective decision-making in a corporate environment.
Recommended Textbook
Financial and Managerial Accounting 11th Edition by
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15 Chapters
2679 Verified Questions
2679 Flashcards
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Page 2
Carl S. Warren
Chapter 1: Introduction to Accounting and Business
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Sample Questions
Q1) All financial statements are identified by the name of the business, the title of the statement, and the date or period of time.
A)True
B)False
Answer: True
Q2) An entity that is organized according to state or federal statutes and in which ownership is divided into shares of stock is a
A) proprietorship
B) corporation
C) partnership
D) governmental unit
Answer: B
Q3) An account receivable is a claim against a customer arising from a sale on account.
A)True
B)False
Answer: True
Q4) What are the three sections of the statement of cash flows?
Answer: Operating Activities, Investing Activities, and Financing Activities
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Page 3
Chapter 2: Analyzing Transactions
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Sample Questions
Q1) Accounts
A) do not reflect money amounts
B) are not used by entities that manufacture products
C) are records of increases and decreases in individual financial statement items
D) are only used by large entities with many transactions
Answer: C
Q2) Which of the following abbreviations are correct?
A) Debit "Dr", Credit "Cd"
B) Debit "Db", Credit "Cr"
C) Debit "Db", Credit "Cd"
D) Debit "Dr", Credit "Cr"
Answer: D
Q3) Journal entries can have more than two accounts as long as the debits equal the credits.
A)True
B)False
Answer: True
Q4) Prepare a journal entry on October 12 for the fees earned on account, $14,600.
Answer: 11ea9299_7dcd_eb7d_85c7_2f00c9568000_TB6235_00
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Chapter 3: The Adjusting Process
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Sample Questions
Q1) The difference between the balance of a fixed asset account and the balance of its related accumulated depreciation account is termed the book value of the asset.
A)True
B)False
Answer: True
Q2) Unearned rent, representing rent for the next six months' occupancy, would be reported on the landlord's balance sheet as a(n)
A) asset
B) liability
C) equity
D) revenue
Answer: B
Q3) Explain the difference between (a) Accrued revenues and unearned revenues. (b) Accrued expenses and prepaid expenses.
(c) Give an example of each.
Answer: 11ea9299_7dc4_c388_85c7_9d82e2411a81_TB6235_00
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Chapter 4: Completing the Accounting Cycle
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Sample Questions
Q1) During the end-of-period processing, which of the following best describes the logical order of steps?
A) preparation of adjustments, adjusted trial balance, financial statements
B) preparation of income statement, adjusted trial balance, balance sheet
C) preparation of adjusted trial balance, cross-referencing, journalizing
D) preparation of adjustments, adjusted trial balance, posting
Q2) Notes receivable due in 350 days appear on the
A) balance sheet in the current assets section
B) balance sheet in the fixed assets section
C) balance sheet in the current liabilities section
D) income statement as an expense
Q3) Entries required to close the balances of the temporary accounts at the end of the period are called final entries.
A)True
B)False
Q4) The difference between a classified balance sheet and one that is classified is that the classified one has subheadings.
A)True
B)False
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Chapter 5: Accounting for Merchandising Businesses
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Sample Questions
Q1) Which one of the following is not a difference between a retail business and a service business?
A) in what is sold
B) the inclusion of gross profit in the income statement
C) accounting equation
D) merchandise inventory included in the balance sheet
Q2) Sales to customers who use nonbank credit cards, such as American Express, are generally treated as credit sales.
A)True
B)False
Q3) A retailer purchases merchandise with a catalog list price of $15,000. The retailer receives a 15% trade discount and credit terms of 2/10, n/30. How much cash will be needed to pay this invoice within the discount period?
A) $15,000
B) $14,700
C) $12,750
D) $12,495
Q4) Based upon the following data, determine the cost of merchandise sold for August.
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Chapter 6: Inventories
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Sample Questions
Q1) During periods of increasing costs, an advantage of the LIFO inventory cost method is that it matches more recent costs against current revenues.
A)True
B)False
Q2) During periods of rapidly rising costs, the use of the LIFO method results in illusory or inventory profits.
A)True
B)False
Q3) If a manufacturer ships merchandise to a retailer on consignment, the unsold merchandise should be included in the inventory of the A) consignee
B) retailer
C) manufacturer
D) shipper
Q4) If a fire destroys the merchandise inventory, the gross profit method can be used to estimate the cost of merchandise destroyed.
A)True
B)False
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Page 8
Chapter 7: Sarbanes-Oxley, Internal Control, and Cash
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Sample Questions
Q1) When the petty cash fund is replenished, the petty cash account is credited for the total of all expenditures made since the fund was last replenished.
A)True
B)False
Q2) The Sarbanes-Oxley Act of 2002 was passed by Congress due to the public outcry after the financial scandals of the early 2000s.
A)True
B)False
Q3) Which of the following should not be considered cash by an accountant?
A) money orders
B) bank checking accounts
C) postage stamps
D) travelers' checks
Q4) Depositing all cash, checks, etc. in a bank and paying with checks is an internal control procedure over cash.
A)True
B)False
Q5) Why would a bank require a company to maintain a compensating balance?
Q6) List and define each of the five elements of internal control.
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Chapter 8: Receivables
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Sample Questions
Q1) In accounting for uncollectible receivables, the balance in Allowance for Doubtful Accounts will directly impact the amount of the adjustment when applying which method?
A) direct write-off method
B) percentage of sales method
C) Analysis of receivables method
D) both (b) and (c)
Q2) At the beginning of the year, the balance in the Allowance for Doubtful Accounts is a credit of $640. During the year, $350 of previously written-off accounts were reinstated and accounts totaling $410 are written-off as uncollectible. The end of the year balance (before adjustment) in the Allowance for Doubtful Accounts should be
A) $760
B) $410
C) $580
D) $700
Q3) Discuss the (1) focus and (2) financial statement emphasis of (a) the percent of sales and (b) the analysis of receivables methods of estimating bad debts.
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Chapter 9: Fixed Assets and Intangible Assets
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Sample Questions
Q1) When a company sells machinery at a price equal to its book value, this transaction would be recorded with an entry that would include the following:
A) debit Cash and Accumulated Depreciation; credit Machinery
B) debit Machinery; credit Cash and Accumulated Depreciation
C) debit Cash and Machinery; credit Accumulated Depreciation
D) debit Cash and Depreciation Expense; credit Accumulated Depreciation
Q2) When a plant asset is traded for another similar asset, losses on the asset traded are recognized.
A)True
B)False
Q3) Determine the depreciation, for the year of acquisition and for the following year, of a fixed asset acquired on October 1 for $500,000, with an estimated life of 5 years, and residual value of $50,000, using (a) the declining-balance method at twice the straight-line rate and (b) the straight-line method. Assume a fiscal year ending December 31.
Q4) A machine costing $85,000 with a 5-year life and $5,000 residual value was purchased January 2, 2011. Compute depreciation for each of the five years, using the declining-balance method at twice the straight-line rate.
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Chapter 10: Current Liabilities and Payroll
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Sample Questions
Q1) Grayson Bank agrees to lend the Trust Company $100,000 on January 1. Trust Company signs a $100,000, 8%, 9-month note. The entry made by Trust Company on January 1 to record the proceeds and issuance of the note is:
A) Interest Expense 8,000 Cash 92,000
Notes Payable 100,000
B) Cash 100,000 Notes Payable 100,000
C) Cash 108,000 Interest Expense 8,000
Notes Payable 108,000
D) Notes Payable 100,000 Interest Payable 6,000
Cash 100,000
Interest Expense 6,000
Q2) Most employers are levied a tax on payrolls for
A) sales tax
B) medical insurance premiums
C) federal unemployment compensation tax
D) union dues
Q3) One of the more popular defined contribution plans is the 401k plan.
A)True
B)False
Q4) List five internal controls that relate directly to payroll.
Page 12
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Chapter 11: Corporations: Organization, Stock Transactions, and Dividends
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Sample Questions
Q1) The authorized stock of a corporation
A) must be recorded in a formal accounting entry.
B) only reflects the initial capital needs of the company.
C) is indicated in its by-laws.
D) is indicated in its charter.
Q2) On January 1, 20xx, Swenson Corporation had 40,000 shares of $10 par value common stock issued and outstanding. All 40,000 shares had been issued in a prior period at $20.00 per share. On February 1, 20xx, Swenson purchased 2,000 shares of treasury stock for $24 per share and later sold the treasury shares for $21 per share on March 1, 20xx. The journal entry to record the purchase of the treasury shares on February 1, 20xx, would include a
A) credit to Treasury Stock for $48,000.
B) debit to Treasury Stock for $48,000.
C) debit to a loss account for $6,000
D) credit to a gain account for $6,000.
Q3) On April 10, a company acquired land in exchange for 1,000 shares of $20 par common stock with a current market price of $73. Journalize this transaction.
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Page 13
Chapter 12: Long-Term Liabilities: Bonds and Notes
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Sample Questions
Q1) The Miracle Corporation issues 1,000, 10-year, 8%, $1,000 bonds dated January 1, 2011, at 96. The journal entry to record the issuance will show a
A) debit to Discount on Bonds Payable for $40,000.
B) debit to Cash of $1,000,000.
C) credit to Bonds Payable for $960,000.
D) credit to Cash for $960,000.
Q2) When the effective-interest method is used, the amortization of the bond premium
A) increases interest expense each period
B) decreases interest expense each period
C) increases interest expense in some periods and decreases interest expense in other periods
D) has no effect on the interest expense in any period
Q3) If $1,000,000 of 8% bonds are issued at 103 1/2, the amount of cash received from the sale is
A) $1,080,000
B) $965,000
C) $1,000,000
D) $1,035,000
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Chapter 13: Investments and Fair Value Accounting
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Sample Questions
Q1) On April 1, 2011, Albert Company purchased $50,000 of Tetter Company's 12% bonds at 100 plus accrued interest of $2,000. On June 30, 2011, Albert received its first semiannual interest. On February 1, 2011, Albert sold $40,000 of the bonds at 103 plus accrued interest. The journal entry Albert will record on April 1, 2011 for the purchase of the bonds will include:
A) a credit to Interest Payable for $2,000.
B) a debit to Investments - Tetter Company for $52,000.
C) a credit for Cash of $50,000.
D) a debit to Investments - Tetter Company for $50,000.
Q2) Generally accepted accounting principles (GAAP) require the use of fair value accounting for all assets and liabilities.
A)True
B)False
Q3) The financial statements resulting from combining parent and subsidiary statements are called consolidated statements.
A)True
B)False
Q4) Discuss the appropriate financial treatment when an investor has a greater than 50% ownership in another company.
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Chapter 14: Statement of Cash Flows
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Sample Questions
Q1) Repayments of bonds would be shown as a cash outflow in the investing section of the statement of cash flows.
A)True
B)False
Q2) Preferred stock issued in exchange for land would be reported in the statement of cash flows in
A) the cash flows from financing activities section
B) the cash flows from investing activities section
C) a separate schedule
D) the cash flows from operating activities section
Q3) On the statement of cash flows, the cash flows from operating activities section would include
A) receipts from the issuance of capital stock
B) receipts from the sale of investments
C) payments for the acquisition of investments
D) cash receipts from sales activities
Q4) The statement of cash flows is one of the basic financial statements.
A)True
B)False
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Chapter 15: Financial Statement Analysis
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Sample Questions
Q1) Based on the following data for the current year, what is the accounts receivable turnover? \(\begin{array}{ll}
\$ 500,000 & \text { Net sales on account churing year } \\ 300,000 & \text { Cost of merchandise sold during year } \\ 45,000 & \text { Accounts receivable, beginning of year } \\ 35,000 & \text { Accounts receivable, end of year } \\ 90,000 & \text { Inventory, beginning of year } \\ 110,000 & \text { Inventory, end of year } \end{array}\)
A) 12.5
B) 11.1
C) 10.0
D) 14.3
Q2) In the vertical analysis of an income statement, each item is generally stated as a percentage of total assets.
A)True
B)False
Q3) In horizontal analysis, the current year is the base year. A)True B)False
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