Financial Accounting I Final Exam
Course Introduction
Financial Accounting I introduces students to the fundamental principles and concepts of financial accounting. The course covers the accounting cycle, from analyzing and recording transactions to preparing financial statements such as the balance sheet, income statement, and statement of cash flows. Emphasis is placed on generally accepted accounting principles (GAAP), the double-entry system, and the role of accounting information in decision-making. Students gain practical skills in journalizing transactions, adjusting entries, and interpreting financial data, laying the groundwork for more advanced studies in accounting and finance.
Recommended Textbook
Accounting 9th Canadian Edition Volume I by Charles T. Horngren
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11 Chapters
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Page 2
Chapter 1: Accounting and the Business Environment
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161 Verified Questions
161 Flashcards
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Sample Questions
Q1) An American business records transactions using the U.S.dollar and disregards fluctuation in the buying power of the dollar over time.This represents the:
A) entity concept.
B) going-concern concept.
C) faithful representation principle.
D) stable monetary unit principle.
Answer: D
Q2) Tate Corporation purchased a building for its grocery store for $30,000 in 1970.Based on inflation estimates,the amount of this asset has been adjusted in the accounting records.The building is now reported at $75,000.Which of the following concepts or principles of accounting is being violated?
A) Going-concern concept
B) Stable monetary unit concept
C) Entity concept
D) None of the above
Answer: B
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Chapter 2: Recording Business Transactions
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Sample Questions
Q1) Which of the following accounts is an owner's equity account?
A) Accrued liability
B) Accounts payable
C) Prepaid expense
D) Capital
Answer: D
Q2) A business renders services for $16,000 and collects cash from the customer.Which account is debited?
A) Cash
B) Accounts receivable
C) Service revenue
D) Accounts payable
Answer: A
Q3) A trial balance summarizes a ledger by listing all the accounts with their ending balances.
A)True
B)False Answer: True
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Chapter 3: The Adjusting Process
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160 Flashcards
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Sample Questions
Q1) At January 1,Smith has $1,200 of supplies on hand.During January,Smith purchases $3,000 worth of new supplies.At the end of the month,a count reveals $500 worth of supplies remaining on the shelves.The adjustment entry needed will include a debit to Supply expense of $3,700.
A)True
B)False
Answer: True
Q2) Pattie's Event Planning Service records prepaid expenses as expenses when cash is paid out,and records unearned revenues as revenues when cash is collected.She then makes adjusting entries as needed to bring her books up to the full accrual basis once a year at the end of the year.This year on December 15,she collected $1,000 from a customer in advance for a series of events that will start in late December and finish in mid-March.At the end of the year,she has finished approximately 10% of the services for her customer.Her adjusting entry at December 31 will include a debit to Service revenue of $900.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Completing the Accounting Cycle
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Sample Questions
Q1) Under which of the following categories would Accounts payable appear?
A) Current liabilities
B) Current assets
C) Long-term liabilities
D) Long-term assets
Q2) Which of the following statements is FALSE about reversing entries?
A) They are not required by GAAP.
B) They are used for convenience and to save time.
C) The reversing entry is exactly the opposite of a prior adjusting entry.
D) The reversing entry is posted on the last day of the month.
Q3) A balance sheet that has the assets listed above the liabilities and equity sections is a(n):
A) report form balance sheet.
B) classified form balance sheet.
C) account form balance sheet.
D) audited form balance sheet.
Q4) Capital is a permanent account.
A)True
B)False
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Chapter 5: Merchandising Operations
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168 Flashcards
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Sample Questions
Q1) Which of the following are the normal balances of Sales,Sales discounts,and Sales returns and allowances,respectively?
A) Debit, credit, and credit
B) Debit, debit, and credit
C) Credit, debit, and debit
D) Credit, credit, and debit
Q2) FOB shipping point means that the:
A) seller normally pays the transportation costs.
B) buyer normally pays the transportation costs.
C) buyer and the seller split the shipping costs.
D) shipping costs are billed to the seller.
Q3) Both purchase discounts and sales discounts appear on the income statement of a company that uses the perpetual inventory method.
A)True
B)False
Q4) Operating income is Gross profit minus Operating expenses.
A)True
B)False
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Chapter 6: Merchandising Inventory
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Sample Questions
Q1) Estimated ending inventory can be computed by subtracting Estimated cost of goods sold from Cost of goods available for sale.
A)True
B)False
Q2) The sum of the Cost of goods sold and the Ending inventory equals the Cost of goods available.
A)True
B)False
Q3) What would the Cost of goods sold be as reported on the income statement at December 31,2014 if the perpetual average-costing method is used? (Answers are rounded to the nearest dollar.)
A) $13,900
B) $14,600
C) $15,600
D) $17,750
Q4) In a period of rising costs,FIFO produces lower cost of goods sold and higher gross profit than LIFO.
A)True B)False
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Chapter 7: Internal Control and Cash
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Sample Questions
Q1) Which of the following describes the internal control procedure documents?
A) Mandatory vacations will improve internal control.
B) Separate the custody of assets from accounting.
C) Prenumber invoices and other documents.
D) A company should purchase a fireproof vault.
Q2) A check was written by a business for $329,but was recorded erroneously in the cash ledger as $239.How would this error be included on the bank reconciliation?
A) An addition on the book side
B) A deduction on the bank side
C) A deduction on the book side
D) An addition on the bank side
Q3) External auditors monitor company controls to safeguard assets and ensure that employees are following company policies.
A)True
B)False
Q4) An outstanding check is a check issued by the company and recorded on its books,but not yet paid by its bank.
A)True
B)False
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Chapter 8: Receivables
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Sample Questions
Q1) Archer Company has significant amounts of accounts receivable,and experiences uncollectible accounts from time to time.Archer uses the aging method to account for uncollectible accounts.When Archer Company writes off an uncollectible receivable,what is the effect of that single transaction?
A) It will reduce net income.
B) It will have no effect on net income.
C) It will increase total assets of the company.
D) It will generate negative cash flow.
Q2) The two major types of receivables are accounts receivable and notes receivable.
A)True
B)False
Q3) The direct write-off method would be considered acceptable if uncollectible receivables are very low.
A)True
B)False
Q4) A note is dishonored when the maker of the note fails to pay the note at maturity.
A)True
B)False
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Chapter 9: Plant Assets and Intangibles
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Sample Questions
Q1) In 2013,Azimuth Company purchased a small business for $500,000.The market value of the business's assets were $850,000,and the market value of the liabilities were $400,000.Azimuth recorded goodwill of $50,000 at time of acquisition.At the end of 2014,they measured the goodwill and found it had a remaining value of only $20,000.Please provide the entry needed at year-end 2014.
\[\begin{array} { | l | r | r | }
\hline \text { Loss on goodwill } & 30,000 & \\
\hline \text { Goodwill } & & 30,000 \\
\hline
\end{array}\]
Q2) If the sales price of a plant asset is lower than the book value,there will be a loss on sale.
A)True
B)False
Q3) Which would NOT be accounted for by the depletion method?
A) Oil reserves
B) Timber reserves
C) Land
D) Coal reserves
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Page 11
Chapter 10: Current Liabilities and Payroll
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Sample Questions
Q1) Which of the following would be included in the journal entry to record the payment of accrued sales tax?
A) A debit to Sales tax payable
B) A credit to Sales tax expense
C) A debit to Sales tax expense
D) A credit to Sales tax payable
Q2) Which of the following is a major control risk in the payroll area?
A) Theft of inventory by staff
B) Fictitious persons cashing paychecks
C) Expenses being recorded as assets in order to manipulate earnings
D) Contracts being awarded to relatives of employees
Q3) Barnaby Sales made total cash sales in January of $500,000,and they are subject to a 6% sales tax.Please provide the summary entry to record sales revenues and sales tax payable.
\[\begin{array} { | l | l | l | }
\hline \quad\quad& \quad&\quad \\
\hline & & \\\hline & & \\
\hline
\end{array}\]
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Page 12
Chapter 11: Long-Term Liabilities, bonds Payable, and
Classification of Liabilities on the Balance Sheet
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Sample Questions
Q1) Installment payments for mortgages are normally paid once per year.
A)True
B)False
Q2) How will the note be shown on the balance sheet dated December 31,2012?
A) $48,000 shown as current liability only
B) $4,800 shown as current liability, $48,000 shown as long-term liability
C) $4,800 shown as current liability, $43,200 shown as long-term liability
D) Entire $48,000 shown as long-term liability
Q3) Using the present value tables,please compute the present value of $20,000 discounted back 5 periods at 4%.
A) $16,400
B) $19,240
C) $18,180
D) $16,440
Q4) The balance in the Bonds payable account is a credit of $50,000.The balance in the Premium on bonds payable account is a credit of $900.The bond carrying amount is $50,900.
A)True
B)False
Page 13
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