Financial Accounting I Test
Preparation
Course Introduction
Financial Accounting I introduces students to the fundamental principles and concepts of accounting, emphasizing the preparation, analysis, and interpretation of financial statements. The course covers the accounting cycle, the recording and reporting of transactions, and the application of generally accepted accounting principles (GAAP) to various types of business organizations. Students learn to analyze financial information for decision-making purposes, understand the ethical standards in accounting, and gain an appreciation for the role of accounting in business.
Recommended Textbook
Introduction to Financial Accounting 11th Edition by Charles T. Horngren
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12 Chapters
1592 Verified Questions
1592 Flashcards
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Chapter 1: Accounting: the Language of Business
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127 Verified Questions
127 Flashcards
Source URL: https://quizplus.com/quiz/67924
Sample Questions
Q1) Buying on credit creates an account receivable.
A)True
B)False Answer: False
Q2) Examples of assets include cash,inventory,and capital stock.
A)True
B)False Answer: False
Q3) An owner's investment into a business will increase assets and decrease liabilities.
A)True
B)False Answer: False
Q4) The auditor's opinion is also called an independent opinion.
A)True
B)False Answer: True
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Page 3
Chapter 2: Measuring Income to Assess Performance
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136 Verified Questions
136 Flashcards
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Sample Questions
Q1) Which of the following costs are linked to the revenues earned during a period?
A)Product costs
B)Period costs
C)Both product and period costs
D)Neither product nor period costs
E)Product costs as long as the goods remain in inventory
Answer: A
Q2) The process of allocating the cost of long-lived or fixed assets to expense is referred to as depreciation.
A)True
B)False
Answer: True
Q3) The dividend-payout ratio is computed as common dividends per share divided by earnings per share.
A)True
B)False Answer: True
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Chapter 3: Recording Transactions
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126 Verified Questions
126 Flashcards
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Sample Questions
Q1) Which of the following accounts are expected to have a debit normal balance?
1.Merchandise Inventory
2)Rent Expense
3)Paid-in Capital
4)Accumulated Depreciation
5)Sales
6)Prepaid Rent
7)Accounts Payable
A)Merchandise Inventory,Rent Expense,Prepaid Rent
B)Merchandise Inventory,Paid-in Capital,Sales,Prepaid Rent
C)Paid-in Capital,Accumulated Depreciation,Sales,Accounts Payable
D)Rent Expense,Accumulated Depreciation,Accounts Payable
E)Merchandise Inventory,Paid-in Capital,Accumulated Depreciation,Accounts Payable
Answer: A
Q2) The purchase of office supplies on account would include a debit to accounts payable and a credit to office supplies.
A)True
B)False
Answer: False
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5
Chapter 4: Accrual Accounting and Financial Statements
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126 Verified Questions
126 Flashcards
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Sample Questions
Q1) Which of the following is the correct order in the recording process?
A)Journalize and post adjustments,unadjusted trial balance,adjusted trial balance,ledger,financial statements
B)Ledger,journalize and post adjustments,unadjusted trial balance,adjusted trial balance,financial statements
C)Ledger,unadjusted trial balance,journalize and post adjustments,adjusted trial balance,and financial statements
D)Unadjusted trial balance,journalize and post adjustments,ledger,adjusted trial balance,financial statements
E)Journalize and post adjustments,adjusted trial balance,ledger,unadjusted trial balance,financial statements
Q2) An example of a current asset is
A)paid-in capital.
B)equipment.
C)accounts receivable.
D)retained earnings.
E)accounts payable.
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Chapter 5: Statement of Cash Flows
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128 Verified Questions
128 Flashcards
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Sample Questions
Q1) Which of the following would be classified as an operating activity on a statement of cash flows?
A)Purchase of a building
B)Sale of another company's stock
C)Borrowing money through a promissory note
D)Payment of dividends
E)Purchase of inventory for cash
Q2) Which of the following transactions increase cash?
1)Sales of goods and services for cash
2)Receiving cash dividends
3)Collection of accounts receivable
4)Reclassifying long-term debt to short-term debt
5)Accruing interest revenue
A)1 and 2
B)1 and 3
C)1,2,and 3
D)1,2,3,and 4
E)1,2,3,and 5
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Chapter 6: Accounting for Sales
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132 Verified Questions
132 Flashcards
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Sample Questions
Q1) Accounting controls include the methods and procedures for authorizing transactions,safeguarding assets,and ensuring the accuracy of the financial records.
A)True
B)False
Q2) The allowance method has two basic elements: (1)an estimate of the amount of accounts receivable that will ultimately be uncollectible and (2)a contra account that contains the estimate and is deducted from the accounts receivable.
A)True
B)False
Q3) Typically,the more credit sales a company has
A)the lower the days to collect accounts receivable
B)the higher the days to collect accounts receivable
C)the lower the accounts receivable turnover rate
D)the higher the accounts receivable yield
E)none of the above
Q4) Revenue is generally recognized at the point of sale.
A)True
B)False
Q5) Name four internal controls specific to the cash account.
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Chapter 7: Inventories and Cost of Goods Sold
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120 Verified Questions
120 Flashcards
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Sample Questions
Q1) Which of the following statements is FALSE?
A)Historically,the periodic system has been associated with low volume,high value items.
B)Historically,the perpetual system has been considered more expensive and cumbersome to maintain.
C)The perpetual system is better able to aid management in pricing and ordering inventory.
D)Computerized inventory systems and optical scanning equipment are examples of ways to implement a perpetual inventory system.
E)The perpetual inventory system is more likely than the periodic inventory system to isolate inventory shrinkage due to breakage,loss,or theft.
Q2) FIFO tends to decrease taxes when
A)costs are increasing.
B)costs are decreasing.
C)costs are constant.
D)FIFO will always yield the lowest possible taxes.
E)Impossible to determine without specific cost data
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Chapter 8: Long-Lived Assets
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) Which statement is FALSE?
A)An example of a leasehold improvement would be the installation of new paneling,walls,and a window air conditioner.
B)The lessee must select the shorter of either the useful life of the leasehold improvement or the remaining life of the lease to amortize the leasehold improvement.
C)Although they are technically intangible assets,leaseholds are frequently classified with plant assets on the balance sheet.
D)A leasehold is a right to use a fixed asset for a specified period of time beyond one year.
E)Leasehold improvements are subject to depletion.
Q2) To determine depreciation expense for a plant asset,all of the following must be known except:
A)estimated useful life.
B)current market value.
C)estimated residual value.
D)historical cost.
E)All of the above must be known to determine depreciation expense for a plant asset.
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Page 10
Chapter 9: Liabilities and Interest
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196 Verified Questions
196 Flashcards
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Sample Questions
Q1) Revenues that are collected before services or goods are delivered are called unearned revenue under accrual accounting.
A)True
B)False
Q2) The U.S.tax law provides incentives for companies to make payments into a postretirement benefit fund that is separate from the company's assets and controlled by a trustee.
A)True
B)False
Q3) Which of the following is false? The discount on bonds payable is
A)amortized over the life of the bond.
B)deducted from bonds payable.
C)a contra account to bonds payable.
D)reported in liabilities section of the balance sheet.
E)an adjunct account to bonds payable.
Q4) The spreading of the discount over the life of the bonds as interest expense is called discount amortization.
A)True
B)False
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Chapter 10: Stockholders Equity
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Sample Questions
Q1) Halton Real Estate has decided to split its common stock two-for-one,but is unsure whether they would like to reduce or retain the par value of the common stock.Currently,Halton Real Estate has 10,000 shares of $10 par value common stock outstanding with a market value of $60 per share.Under option A,Halton Real Estate would retain par value at $10 per share and under option B,Halton Real Estate would reduce par value.Under each option,determine the following:
Option A
1.________ How much is the common stock account increased by?
2.________ How much is the retained earnings account increased by?
3.________ How much is the total stockholders' equity increased by?
4.________ What is the new expected market value of the common stock?
5.What is the journal entry to account for the stock split under option A?
Option B
1.________ How much is the common stock account increased by?
2.________ How much is the retained earnings account increased by?
3.________ How much is the total stockholders' equity increased by?
4.________ What is the new expected market value of the common stock?
5.What is the journal entry to account for the stock split under option B?
Q2) In general,what are the principal rights of shareholders?
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Chapter 11: Intercorporate Investments and Consolidations
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) As the market value of trading securities changes,companies report the gains from increases in market value and losses from decreases in market value on the income statement.
A)True
B)False
Q2) GAAP allow investments under the equity method to be carried at adjusted cost or current market value on the balance sheet.
A)True
B)False
Q3) The key to classifying a marketable security as short-term is
A)whether or not it is a government issued security.
B)whether or not management has a written contract to sell the asset within the next 3 months.
C)the type of security held (i.e.,Is it a note,bond,or stock?).
D)whether or not management expects to convert it into cash within a year after the date on the balance sheet (or operating cycle if longer).
E)the small dollar amount.
Q4) Describe reasons and benefits to corporate mergers.
Q5) Describe spin-offs including the benefits to spinning off a segment.
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Chapter 12: Financial Statement Analysis
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122 Verified Questions
122 Flashcards
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Sample Questions
Q1) Ramirez Company has a weighted-average after-tax cost of capital of 12%; $320,000 in long term assets; $80,000 in current assets; and $400,000 in capital.In order to create Economic Value Added,net operating profit after taxes must exceed
A)$26,400.
B)$38,400.
C)$ 7,200.
D)$16,800.
E)$48,000.
Q2) Investors purchase capital stock expecting to receive dividends and an increase in the value of the stock.
A)True
B)False
Q3) Trend analysis and common-size financial statements are important analytical techniques used to evaluate the strength of published financial statements.
a.Define:
1. trend analysis
2. common-size financial statements b.How is each of these techniques helpful in the analysis of financial statements?
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