Corporate Accounting
Test Preparation
Course Introduction
Corporate Accounting is a specialized branch of accounting that focuses on the financial activities and reporting requirements of corporations. This course covers essential topics such as the preparation and analysis of financial statements, accounting for share capital and debentures, valuation of goodwill and shares, corporate restructuring, amalgamation, internal reconstruction, and liquidations. Students will also explore regulatory frameworks governing corporate entities, current accounting standards, and ethical considerations. The course is designed to equip learners with the practical skills and theoretical knowledge necessary to understand and manage the complex accounting issues faced by modern corporations.
Recommended Textbook
Corporate Financial Accounting 15th Edition by Carl
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15 Chapters
3080 Verified Questions
3080 Flashcards
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Page 2
S. Warren
Chapter 1: Accounting and Business
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244 Verified Questions
244 Flashcards
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Sample Questions
Q1) Which of the following are guidelines for behaving ethically?
I.Identify the consequences of a decision and its effect on others.
II.Consider your obligations and responsibilities to those affected by the decision.
III.Identify your decision based on personal standards of honesty and fairness.
A) I and II.
B) II and III.
C) I and III.
D) I, II, and III.
Answer: D
Q2) Krammer Company has liabilities equal to one fourth of the total assets. Krammer's stockholders' equity is $45,000. Using the accounting equation, what is the amount of liabilities for Krammer?
Answer: Assets = Liabilities + Stockholders' Equity
4x = x + $45,000
3x = $45,000
x = $15,000 in liabilities
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Page 3
Chapter 2: Double-Entry Accounting
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216 Verified Questions
216 Flashcards
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Sample Questions
Q1) Which of the following entries records the receipt of cash from clients on account?
A) Accounts Payable, debit; Fees Earned, credit
B) Accounts Receivable, debit; Fees Earned, credit
C) Accounts Receivable, debit; Cash, credit
D) Cash, debit; Accounts Receivable, credit
Answer: D
Q2) The ____ is where a transaction can first be found in the accounting records. A) chart of accounts
B) income statement
C) balance sheet
D) journal Answer: D
Q3) Debiting the cash account will increase the account.
A)True
B)False
Answer: True
Q4) Prepare a journal entry on October 12 for the fees earned on account, $14,600. Omit explanation.
Answer: 11ea84e6_b038_faf4_9a63_03d6a891bead_TB2281_00_TB2281_00
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Chapter 3: Adjustments: Accruals and Deferrals
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204 Verified Questions
204 Flashcards
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Sample Questions
Q1) If the debit portion of an adjusting entry is to an asset account, then the credit portion must be to a liability account.
A)True
B)False
Answer: False
Q2) A company receives $6,500 for two season tickets sold on September 1. If $2,500 is earned by December 31, the adjusting entry made at that time is a debit to Cash, $2,500, and a credit to Ticket Revenue, $2,500.
A)True
B)False
Answer: False
Q3) The term used to describe an expense that has not been paid and has not yet been recognized in the accounts by a routine entry is
A) prepaid
B) deferred
C) accrued
D) matched
Answer: C
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5
Chapter 4: The Accounting Cycle
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212 Verified Questions
212 Flashcards
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Sample Questions
Q1) The unadjusted, adjusted, and final trial balances are prepared during the accounting cycle of a period.
A)True
B)False
Q2) When the end-of-period spreadsheet is complete, the adjustment columns should have
A) total credits greater than total debits if a net income was earned
B) total debits greater than total credits if a net loss was incurred
C) total debits greater than total credits if a net income was earned
D) total debits equal to total credits
Q3) The entry to close the dividends account would be
A) debit Retained Earnings, $3,000; credit Dividends, $3,000
B) debit Retained Earnings, $12,000; credit Dividends, $12,000
C) debit Dividends, $3,000; credit Retained Earnings, $3,000
D) debit Dividends, $12,000; credit Retained Earnings, $12,000
Q4) Prepaid expenses that benefit a relatively short period of time are listed on the balance sheet as current assets.
A)True
B)False
Q5) List and describe the purpose of the four closing entries.
Page 6
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Chapter 5: Accounting for Retail Businesses
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272 Verified Questions
272 Flashcards
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Sample Questions
Q1) On the income statement in the single-step form, the total of all expenses is deducted from the total of all revenues.
A)True
B)False
Q2) Calculate income from operations for Jonas Company based on the following data: \[\begin{array} { | l | r | }
\hline \text { Sales } & \$ 764,000 \\
\hline \text { Operating expenses } & 52,500 \\
\hline \text { Cost of goods sold } & 538,000 \\
\hline
\end{array}\]
A) $485,500
B) $711,500
C) $173,500
D) $226,000
Q3) Buyers and sellers do not normally record the list prices of merchandise and the trade discounts in accounts.
A)True
B)False
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Chapter 6: Inventories
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204 Verified Questions
204 Flashcards
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Sample Questions
Q1) Assume that three identical units of merchandise were purchased during October, as follows:
\(\begin{array}{|l|r|l|c|r|}
\hline & & & \text { Units } &{\text { Cost }} \\
\hline \text { October } & 5 & \text { Purchase } & 1 & \$ 5 \\
\hline & 12 & \text { Purchase } & 1 & 13 \\
\hline & 28 & \text { Purchase } & 1 & 15 \\
\hline \text { Total } & & & \underline{3} & \$ 33 \\ \hline \end{array}\)
Assume one unit is sold on October 31 for $28. Determine cost of goods sold, gross profit, and ending inventory under the average cost method.
Q2) Assuming that the company uses the perpetual inventory system, determine the cost of goods sold for the sale of May 20 using the FIFO inventory cost method.
A) $120
B) $180
C) $136
D) $144
Q3) List three different security measures taken to safeguard inventory.
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Page 8
Chapter 7: Internal Control and Cash
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197 Verified Questions
197 Flashcards
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Sample Questions
Q1) interest revenue earned by the note above
A)added to the company's books
B)subtracted from the company's books
C)added to the bank statement balance
D)subtracted from the bank statement balance
Q2) Accompanying the bank statement was a debit memo for bank service charges. What entry is required in the company's accounts?
A) debit Miscellaneous Expense; credit Cash
B) debit Cash; credit Other Income
C) debit Cash; credit Accounts Payable
D) debit Accounts Payable; credit Cash
Q3) a $1,000 note from one of your customers was collected by the bank
A)added to the company's books
B)subtracted from the company's books
C)added to the bank statement balance
D)subtracted from the bank statement balance
Q4) The petty cash fund eliminates the need for a bank checking account.
A)True
B)False
Q5) Why would a bank require a company to maintain a compensating balance?
Page 9
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Chapter 8: Receivables
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183 Verified Questions
183 Flashcards
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Sample Questions
Q1) Receivables that are expected to be collected in cash in eighteen months or less are reported in the current asset section of the balance sheet.
A)True
B)False
Q2) If the maker of a promissory note fails to pay the note on the due date, the note is said to be
A) displaced
B) disallowed
C) dishonored
D) discounted
Q3) The direct write-off method of accounting for uncollectible accounts
A) emphasizes balance sheet relationships
B) is often used by small companies and companies with few receivables
C) emphasizes cash realizable value
D) emphasizes the matching of expenses with revenues
Q4) Suppose that at the end of the year there is an outstanding note receivable. The adjusting entry to recognize the interest to be paid has what effect on the accounting equation?
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Page 10
Chapter 9: Long-Term Assets: Fixed and Intangible
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Sample Questions
Q1) Computer equipment was acquired at the beginning of the year at a cost of $63,000 that has an estimated residual value of $3,000 and an estimated useful life of 5 years. Determine the (a) depreciable cost (b) double-declining-balance rate, and (c) double-declining-balance depreciation for the first year.
Q2) The amount of depreciation expense for the first full year of use of a fixed asset costing $95,000, with an estimated residual value of $5,000 and a useful life of 5 years, is $19,000 by the straight-line method.
A)True
B)False
Q3) The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called
A) depletion
B) deferral
C) amortization
D) depreciation
Q4) What would be the cost basis of a used machine with a purchase price of $77,000, requiring an overhaul costing $8,000, installation costs of $5,000, and special acquisition fees of $3,000?
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Page 11
Chapter 10: Liabilities: Current, Installment Notes, and Contingencies
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179 Verified Questions
179 Flashcards
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Sample Questions
Q1) Sadie White receives an hourly rate of $30, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 48; federal income tax withheld, $300; social security tax rate, 6.0%; and Medicare tax rate, 1.5%. What is the net amount to be paid to White?
A) $1,443
B) $1,143
C) $1,260
D) $1,560
Q2) On January 1, Year 1, Zero Company obtained a $52,000, 4-year, 6.5% installment note from Regional Bank. The note requires annual payments consisting of principal and interest of $15,179, beginning on December 31 of the current year. The December 31, Year 1 carrying amount in the allocation of periodic payments table for this installment note will be equal to:
A) $27,635
B) $40,201
C) $36,821
D) $39,000
Q3) List five internal controls that relate directly to payroll.
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Chapter 11: Liabilities: Bonds Payable
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Sample Questions
Q1) On June 30, Jamison Company issued $2,500,000 of 10-year, 8% bonds, dated June 30, for $2,580,000. Present entries to record the following transactions.
(a) Issuance of bonds.
(b) Payment of first semiannual interest on December 31 (record separate entry from premium amortization).
(c) Amortization by straight-line method of bond premium on December 31.
Q2) The present value of the periodic bond interest payments is the value today of the amount of interest to be received at the end of each interest period.
A)True
B)False
Q3) Callable bonds are redeemable by the issuing corporation within the period of time and at the price stated in the bond indenture.
A)True
B)False
Q4) A $500,000 bond issue on which there is an unamortized discount of $35,000 is redeemed for $475,000. Journalize the redemption of the bonds.
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Page 13
Chapter 12: Corporations: Organization, Stock Transactions, and Dividends
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190 Verified Questions
190 Flashcards
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Sample Questions
Q1) The Sneed Corporation issues 10,000 shares of $50 par preferred stock for cash at $75 per share. Journalize the entry to record the sale.
Q2) The Sneed Corporation issues 10,000 shares of $50 par preferred stock for cash at $75 per share. The entry to record the transaction will consist of a debit to Cash for $750,000 and a credit or credits to
A) Preferred Stock for $750,000
B) Preferred Stock for $500,000 and Paid-In Capital in Excess of Par-Preferred Stock for $250,000
C) Preferred Stock for $500,000 and Retained Earnings for $250,000
D) Paid-In Capital from Preferred Stock for $750,000
Q3) The retained earnings statement may be combined with the income statement. A)True B)False
Q4) 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
Page 14
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Chapter 13: Statement of Cash Flows
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186 Verified Questions
186 Flashcards
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Sample Questions
Q1) A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash flows under
A) investing activities
B) financing activities
C) noncash investing and financing activities
D) operating activities
Q2) If land costing $145,000 was sold for $205,000, the $60,000 gain on the sale would be added to net income in the operating activities section of the statement of cash flows (prepared by the indirect method).
A)True
B)False
Q3) On the statement of cash flows, the cash flows from financing activities section would include
A) receipts from the sale of investments
B) payments for the acquisition of investments
C) receipts from a note receivable
D) receipts from the issuance of common stock
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Chapter 14: Financial Statement Analysis
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206 Flashcards
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Sample Questions
Q1) quick ratio
A)assess the profitability of the assets
B)assess how effectively assets are used
C)indicate the ability to pay current liabilities
D)indicate how much of the company is financed by debt and equity
E)indicate instant debt-paying ability
F)assess the profitability of the investment by common stockholders
G)indicate future earnings prospects
H)indicate the extent to which earnings are being distributed to common stockholders
Q2) In a common-sized income statement, each item is expressed as a percentage of net income.
A)True
B)False
Q3) The relationship of each asset item as a percent of total assets is an example of vertical analysis.
A)True
B)False
Q4) The following data are available for Martin
Q5) Define solvency and profitability. How are they alike?
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Chapter 15:Investments
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119 Verified Questions
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Sample Questions
Q1) Yankton Company began the year without an investment portfolio. During the year, it purchased investments classified as trading securities at a cost of $13,000. At the end of the year, the market value of the securities was $11,000. Yankton Company's financial statements for the current year should show
A) an unrealized loss of $2,000 on the income statement and net trading securities of $13,000 on the balance sheet
B) no unrealized loss on the income statement and net trading securities of $13,000 on the balance sheet
C) no unrealized loss on the income statement; net trading securities of $11,000 and an unrealized loss of $2,000 as a stockholders' equity adjustment on the balance sheet
D) an unrealized loss of $2,000 on the income statement and temporary investments of $11,000 on the balance sheet
Q2) Changes in the value of available-for-sale securities
A) are reported as part of stockholders' equity
B) are recognized on the income statement
C) are not recognized
D) are recognized on the income statement and as part of stockholders' equity
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Page 17