Financial Accounting
Final Exam Questions
Course Introduction
Financial Accounting is a foundational course that introduces students to the principles and practices of accounting used for external reporting. The course covers key concepts such as the accounting cycle, preparation of financial statements, and the interpretation of financial information in accordance with generally accepted accounting principles (GAAP). Students will learn to analyze and record business transactions, measure an organizations financial performance, and communicate financial data to stakeholders. Through practical examples and case studies, the course also emphasizes the ethical considerations and regulatory framework underpinning financial reporting in modern organizations.
Recommended Textbook
Survey of Accounting 5th Edition by Carl S. Warren
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15 Chapters
1711 Verified Questions
1711 Flashcards
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Page 2
Chapter 1: The Role of Accounting in Business
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94 Verified Questions
94 Flashcards
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Sample Questions
Q1) Browning,Inc.had revenues of $234,000,expenses of $175,000,and dividends of $30,000 during 2010.Which of the following statements is correct?
A)Net income for 2010 totaled $29,000.
B)Net income for 2010 totaled $59,000.
C)Total retained earnings increased by $59,000 during 2010.
D)Total retained earnings decreased by $30,000 during 2010.
Answer: B
Q2) A note payable requires payment of the amount borrowed plus A)interest.
B)cash.
C)accounts payable.
D)investments.
Answer: A
Q3) Recording revenue when a sale is made most directly relates to which concept?
A)Going concern concept
B)Periodicity concept
C)Matching concept
D)Adequate disclosure concept
Answer: C
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Page 3
Chapter 2: Basic Accounting Concepts
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88 Flashcards
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Sample Questions
Q1) DAF Company paid a utility bill of $300 and paid rent of $700 in December.By how much would these events reduce stockholders' equity?
A)$300
B)$1,000
C)$400
D)$700
Answer: B
Q2) The first month of operation showed the net cash from operating activities to be $3,760,the net cash from investing activities to be ($5,415),and the ending cash balance to be $3,425.The net cash from financing activities must be
A)$1,770.
B)$5,080.
C)$5,750.
D)$12,600.
Answer: B
Q3) The accounting equation can be expressed: Assets - Liabilities = Revenues. A)True
B)False
Answer: False
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Page 4
Chapter 3: Accrual Accounting Concepts
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) Which of the following is an example of an intangible asset?
A)Goodwill
B)Patents
C)Copyrights
D)All of these
Answer: D
Q2) Deferred expenses (prepaid expenses)are items initially recorded as assets but are expected to become __________ over time.
A)liabilities
B)assets
C)stockholders' equity
D)expenses
Answer: D
Q3) Rights that are short-term in nature are called intangible assets.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Accounting for Merchandising Businesses
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142 Flashcards
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Sample Questions
Q1) If merchandise costing $2,500,terms FOB destination,2/10,n/30,with transportation costs of $100,is paid within 10 days,the amount of the purchases discount is $52.
A)True
B)False
Q2) Where are selling and administrative expenses found on the multi-step income statement?
A)Before gross profit
B)After sales and before gross profit
C)After net income and before expenses
D)After gross profit
Q3) Under the indirect method for preparing the statement of cash flows,increases in current liabilities are __________ net income in the cash flows from operating activities section.
A)subtracted from
B)added to
C)not used when calculating
D)cannot tell from the information given
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Chapter 5: Sarbanes-Oxley,internal Control,and Cash
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109 Flashcards
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Sample Questions
Q1) A voucher system is an example of an internal control procedure over cash payments.
A)True
B)False
Q2) A credit memorandum from the bank
A)decreases a bank customer's account.
B)Is used to show a bank service charge.
C)shows that a company has deposited a customer's NSF check.
D)shows the bank has collected a note receivable for the customer.
Q3) Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for the depositor.This item is a(n)
A)deduction from the balance per depositor's records.
B)addition to the balance per bank statement.
C)deduction from the balance per bank statement.
D)addition to the balance per depositor's records.
Q4) All bank memorandums reported on the bank reconciliation require entries in the depositor's accounts.
A)True
B)False
Q5) What is a special-purpose cash fund? What is its purpose? Give two examples.
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Chapter 6: Receivables and Inventories
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Sample Questions
Q1) When companies sell their receivables to other companies,the transaction is called factoring.
A)True
B)False
Q2) Merchandise Inventory is presented on the balance sheet in the current assets section.
A)True
B)False
Q3) After the accounts are adjusted and closed at the end of the fiscal year,Accounts Receivable has a balance of $500,000 and Allowance for Doubtful Accounts has a balance of $25,000.What is the net realizable value of the accounts receivable?
A)$25,000
B)$525,000
C)$500,000
D)$475,000
Q4) The interest on a 6%,60-day note for $5,000 is $50.
A)True
B)False
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Chapter 7: Fixed Assets and Intangible Assets
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Sample Questions
Q1) Recording depreciation
A)decreases net income and cash flows.
B)decreases net income and has no effect on cash flows.
C)decreases net income,assets,and cash flows.
D)decreases net income and has no effect on assets and cash flows.
Q2) Expenditures for research and development are generally recorded as
A)current operating expenses.
B)assets and amortized over their estimated useful life.
C)assets and amortized over 40 years.
D)current assets.
Q3) Land improvements include A)fences.
B)trees and shrubs.
C)outdoor lighting.
D)All of the above.
Q4) Fixed assets may be shown at book value on the balance sheet.
A)True
B)False
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Chapter 8: Liabilities and Stockholders Equity
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132 Flashcards
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Sample Questions
Q1) The interest rate specified in the bond indenture is called the A)discount rate.
B)contract rate.
C)market rate.
D)effective rate.
Q2) A corporation has 10,000 shares of $100 par value stock outstanding.If the corporation issues a 4-for-1 stock split,the number of shares outstanding after the split will be 40,000.
A)True
B)False
Q3) If $4,000,000 of 12% bonds are issued at 103 1/4,the amount of cash received from the sale is
A)$4,040,000.
B)$4,000,000.
C)$4,130,000.
D)$3,520,000.
Q4) A bond is simply a form of an interest-bearing note.
A)True
B)False
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Chapter 9: Financial Statement Analysis
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Sample Questions
Q1) A balance sheet shows cash,$75,000;marketable securities,$110,000;receivables,$90,000;and $225,000 of inventories.Current liabilities are $200,000.The current ratio is 1.375 to 1.
A)True
B)False
Q2) The relationship of 120 to 100 can be expressed as 1.2,1.2:1,or 120%.
A)True
B)False
Q3) The number of days' sales in inventory is one means of expressing the relationship between net sales and accounts receivable.
A)True
B)False
Q4) The independent auditor's report does which of the following?
A)Describes which financial statements are covered by the audit
B)Gives the auditor's opinion regarding the fairness of the financial statements
C)Summarizes what the auditor did
D)States that the financial statements are truthful
Q5) Solvency analysis focuses on the ability of a business to make a profit.
A)True
B)False
Page 11
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Chapter 10: Accounting Systems for Manufacturing
Businesses
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116 Flashcards
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Sample Questions
Q1) Indirect labor would be included in factory overhead.
A)True
B)False
Q2) Increases in the Work in Process account occur when
A)materials are received into the storeroom.
B)factory overhead costs are incurred.
C)direct labor is recorded from the time sheets.
D)All of these increase work in process.
Q3) A job order cost accounting system provides for a separate record of the cost of each particular quantity of product that passes through the factory.
A)True
B)False
Q4) The document authorizing the issuance of materials from the storeroom is the A)materials requisition.
B)purchase requisition.
C)receiving report.
D)purchase order.
Q5) Factory overhead is an example of a product cost. A)True
B)False
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Chapter 11: Cost Behavior and Cost-Volume-Profit Analysis
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139 Verified Questions
139 Flashcards
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Sample Questions
Q1) What was Kennedy Co.'s sales mix last year?
A)40% Arks,60% Bins
B)57% Arks,43% Bins
C)54% Arks,46% Bins
D)64% Arks,36% Bins
Q2) If variable costs per unit decreased because of a decrease in utility rates,the break-even Point would
A)decrease.
B)increase.
C)remain the same.
D)increase or decrease,depending upon the percentage increase in utility rates.
Q3) The systematic examination of the relationships among selling prices,volume of sales and production,costs,expenses,and profits is termed
A)contribution margin analysis.
B)cost-volume-profit analysis.
C)budgetary analysis.
D)gross profit analysis.
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Chapter 12: Differential Analysis and Product Pricing
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102 Flashcards
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Sample Questions
Q1) Which of the following is NOT a cost concept commonly used in applying the cost-plus approach to product pricing?
A)Total cost concept
B)Product cost concept
C)Variable cost concept
D)Fixed cost concept
Q2) If the total unit cost of manufacturing Product Y is currently $40 and the total unit cost after modifying the style is estimated to be $48,the differential cost for this situation is $48.
A)True
B)False
Q3) A business is considering a cash outlay of $200,000 for the purchase of land,which it could lease for $35,000 per year.If alternative investments are available that yield an 18% return,the opportunity cost of the purchase of the land is
A)$35,000.
B)$36,000.
C)$1,000.
D)$37,000.
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14
Chapter 13: Budgeting and Standard Cost Systems
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170 Flashcards
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Sample Questions
Q1) The budgeted direct materials purchases are based on the sum of (1)the materials needed for production and (2)the desired ending materials inventory,less (3)the estimated beginning materials inventory.
A)True
B)False
Q2) Which of the following would NOT lend itself to applying direct labor variances?
A)Help desk
B)Administrative assistant
C)Customer service personnel
D)Telemarketer
Q3) The direct labor time variance measures the efficiency of the direct labor force.
A)True
B)False
Q4) If the actual direct labor hours spent producing a commodity differ from the standard hours,the variance is termed
A)time variance.
B)price variance.
C)quantity variance.
D)rate variance.
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Chapter 14: Performance Evaluation for Decentralized Operations
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137 Flashcards
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Sample Questions
Q1) The rate of return on investment may be computed by dividing investment turnover by the profit margin.
A)True
B)False
Q2) The excess of divisional income from operations over a minimum amount of desired income from operations is termed the residual income.
A)True
B)False
Q3) The profit margin for Division K is 9% and the investment turnover is 1.20.What is the rate of return on investment for Division K?
A)10.8%
B)6.7%
C)7.5%
D)9.6%
Q4) How much would Boone's total income from operations increase?
A)$180,000
B)$240,000
C)$120,000
D)$300,000
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Chapter 15: Capital Investment Analysis
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Sample Questions
Q1) The payback period is determined using which of the following formulas?
A)Amount to be invested/Annual average net income
B)Annual net cash flow/Amount to be invested
C)Annual average net income/Amount to be invested
D)Amount to be invested/Equal annual net cash flows
Q2) The process by which management allocates available investment funds among competing capital investment proposals is termed present value analysis.
A)True
B)False
Q3) A qualitative characteristic that may impact upon capital investment analysis is manufacturing productivity.
A)True
B)False
Q4) In net present value analysis for a proposed capital investment,the expected future net cash flows are reduced to their present values.
A)True
B)False
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