Financial Accounting Practice Exam

Course Introduction

Financial Accounting is a foundational course that introduces students to the principles, concepts, and practices involved in recording, summarizing, and reporting the financial transactions of an organization. Through this course, students learn how to prepare and interpret financial statements such as the income statement, balance sheet, and cash flow statement, and gain an understanding of the regulatory frameworks and standards governing financial reporting. Emphasis is placed on the analysis and communication of financial information to support decision-making by various stakeholders, including investors, creditors, and management.

Recommended Textbook

Survey of Accounting 7th Edition by Carl Warren

Available Study Resources on Quizplus

15 Chapters

1730 Verified Questions

1730 Flashcards

Source URL: https://quizplus.com/study-set/3322

Page 2

Chapter 1: The Role of Accounting in Business

Available Study Resources on Quizplus for this Chatper

100 Verified Questions

100 Flashcards

Source URL: https://quizplus.com/quiz/65972

Sample Questions

Q1) A liability is a legal obligation to repay the amount borrowed according to the terms of the borrowing agreement.

A)True

B)False

Answer: True

Q2) Manufacturing businesses change basic inputs into products that are sold to individual customers.

A)True

B)False

Answer: True

Q3) Which of the following is the correct order for preparing financial statements?

A)Income statement,Statement of cash flows,Retained earnings statement,Balance sheet

B)Retained earnings statement,Income statement,Statement of cash flows,Balance sheet

C)Statement of cash flows,Retained earnings statement,Balance sheet,Income statement

D)Income statement,Retained earnings statement,Balance sheet,Statement of cash flows

Answer: D

To view all questions and flashcards with answers, click on the resource link above. Page 3

Chapter 2: Basic Accounting Concepts

Available Study Resources on Quizplus for this Chatper

91 Verified Questions

91 Flashcards

Source URL: https://quizplus.com/quiz/65965

Sample Questions

Q1) The payment of $20,000 for expenses was incorrectly recorded by Elite Co.as an increase in cash of $20,000 and a decrease in retained earnings of $20,000.What is the effect of this error on the accounting equation?

A)Total assets will exceed total liabilities and stockholders' equity by $20,000.

B)Total assets will exceed total liabilities and stockholders' equity by $40,000.

C)Total assets will be less than total liabilities and stockholders' equity by $40,000.

D)The error will not affect the accounting equation.

Answer: B

Q2) Declaring and paying cash dividends affects which account/ accounts?

A)Cash only

B)Capital stock only

C)Cash and retained earnings

D)Cash and capital stock

Answer: C

Q3) How can a company earn a large net income and have a small balance in retained earnings?

Answer: The company may pay out most of its earnings in dividends.

To view all questions and flashcards with answers, click on the resource link above. Page 4

Chapter 3: Accrual Accounting Concepts

Available Study Resources on Quizplus for this Chatper

115 Verified Questions

115 Flashcards

Source URL: https://quizplus.com/quiz/65964

Sample Questions

Q1) Three measures useful in assessing liquidity and the ability of a company to pay its current liabilities are ,the current ratio,and the quick ratio.

A)working capital

B)debt equity ratio

C)net profit

D)interest coverage

Answer: A

Q2) Identify the type of adjustment necessary (the type of item involved)and record the transaction for the event.Make sure to include the ending balances after adjustment.

Answer: Item: Accrued Expense Assets = Liabilities + Stockholders' Equity Cash Office Equipment Accumulated Depreciation Interest Payable Common Stock Retained Earnings Adjustment 180 -180- Interest expense End.Bal. 180 -180

Q3) Fees receivable would appear on the balance sheet as a(n): A)asset.

B)liability.

C)fixed asset.

D)unearned revenue.

Answer: A

To view all questions and flashcards with answers, click on the resource link above.

Chapter 4: Accounting for Merchandising Businesses

Available Study Resources on Quizplus for this Chatper

145 Verified Questions

145 Flashcards

Source URL: https://quizplus.com/quiz/65963

Sample Questions

Q1) Merchandise is ordered on November 12; the merchandise is shipped by the seller and the invoice is prepared,dated,and mailed by the seller on November 15; the merchandise is received by the buyer on November 17; the transaction is recorded in the seller's accounts on November 15.If the credit terms are 1/10,n/30,the discount period begins with what date?

A)November 12

B)November 15

C)November 17

D)November 22

Q2) Refer to Surist,Inc.If Surist,Inc.had $30,000 in beginning inventory,and sold goods costing $180,000,what is the ending inventory balance?

A)$150,000

B)$162,000

C)$90,000

D)$137,000

Q3) Net sales is equal to sales plus cost of merchandise sold.

A)True

B)False

Q4) Based on the following data,determine the cost of merchandise sold for October.

To view all questions and flashcards with answers, click on the resource link above. Page 6

Chapter 5: Sarbanes-Oxley, internal Control, and Cash

Available Study Resources on Quizplus for this Chatper

112 Verified Questions

112 Flashcards

Source URL: https://quizplus.com/quiz/65962

Sample Questions

Q1) A check for $456 was erroneously charged by the bank as $654.In order for the bank reconciliation to balance,you must subtract $198 from the bank statement balance.

A)True

B)False

Q2) Receipts from cash sales of $7,500 were recorded incorrectly by the depositor as $5,700.What adjustment is required in the bank's accounts?

A)Decrease Sales; decrease Cash

B)Increase Cash; decrease Accounts Receivable

C)Increase Cash; increase Sales

D)No adjustment needed

Q3) The bank reconciliation:

A)should be prepared by an employee who records cash transactions.

B)is part of the internal control system.

C)is for information purposes only.

D)is sent to the bank for verification.

Q4) Money market funds,commercial paper,and U.S.Treasury Bills are examples of cash equivalents.

A)True

B)False

To view all questions and flashcards with answers, click on the resource link above. Page 7

Chapter 6: Receivables and Inventories

Available Study Resources on Quizplus for this Chatper

105 Verified Questions

105 Flashcards

Source URL: https://quizplus.com/quiz/65961

Sample Questions

Q1) Lower-of-cost-or-market is a method of inventory valuation.

A)True

B)False

Q2) Other than accounts receivable and notes receivable,name other receivables that might be included on the balance sheet.

Q3) A 60-day,12% note for $15,000 dated May 1 is received from a customer on account.The maturity value of the note is (Assume 360 days in a year):

A)$15,300.

B)$15,000.

C)$14,700.

D)$16,800.

Q4) Beginning inventory,purchases,and sales for Product XCX are as follows:

Q5) A note receivable due in 90 days is listed on the balance sheet under:

A)long-term liabilities.

B)fixed assets.

C)current liabilities.

D)current assets.

Q6) Using the lower-of-cost-or-market method of inventory valuation,what should the total inventory value be for the following items:

Page 8

To view all questions and flashcards with answers, click on the resource link above.

Chapter 7: Fixed Assets and Intangible Assets

Available Study Resources on Quizplus for this Chatper

90 Verified Questions

90 Flashcards

Source URL: https://quizplus.com/quiz/65960

Sample Questions

Q1) A computer equipment was acquired at the beginning of the year at a cost of $56,000 with an estimated residual value of $5,000,and an estimated useful life of 5 years.Determine the second year's depreciation expense using the straight-line method.

A)$10,200

B)$22,400

C)$11,200

D)$12,200

Q2) All amounts paid to get an asset in place and ready for use are referred to as:

A)deferred expenditures.

B)revenue expenditures.

C)residual value.

D)cost of an asset.

Q3) Physical depreciation occurs when changes in customer needs causes a fixed asset to no longer provide services for which it was intended.

A)True

B)False

Q4) Intangible assets do not exist physically.

A)True

B)False

To view all questions and flashcards with answers, click on the resource link above. Page 9

Chapter 8: Liabilities and Stockholders Equity

Available Study Resources on Quizplus for this Chatper

133 Verified Questions

133 Flashcards

Source URL: https://quizplus.com/quiz/65959

Sample Questions

Q1) The primary purpose of a stock split is to:

A)increase paid-in capital.

B)reduce the market price of the stock per share.

C)increase the market price of the stock per share.

D)increase retained earnings.

Q2) If prior to the last weekly payroll period of the calendar year,the cumulative earnings for an employee are $75,200,earnings subject to social security tax are $106,800,and the tax rate is 7.5%,the employer's social security tax on the $800 gross earnings paid on the last day of the year is $60.

A)True

B)False

Q3) Three dates included in a dividend announcement are date of declaration,date of record,and .

A)date of acceptance

B)date of payment

C)date of order

D)date of liquidation

Q4) Illustrate the effects on the accounts and the financial statements of each of the following transactions:

To view all questions and flashcards with answers, click on the resource link above. Page 10

Chapter 9: Financial Statement Analysis

Available Study Resources on Quizplus for this Chatper

69 Verified Questions

69 Flashcards

Source URL: https://quizplus.com/quiz/65958

Sample Questions

Q1) The comparison of the financial data of a single company for two or more years is called horizontal analysis.

A)True

B)False

Q2) In computing the rate earned on total assets,interest expense is added to net income before dividing by average total assets.

A)True

B)False

Q3) The following items are reported on a company's balance sheet:

Q4) The rate earned on total assets is one of the measures of profitability.

A)True

B)False

Q5) Which of the following measures the liquidity position of a corporation?

A)Earnings per share

B)Inventory turnover

C)Current ratio

D)Number of times interest charges earned

Q6) "Working capital" is another term for the current ratio.

A)True

B)False

To view all questions and flashcards with answers, click on the resource link above. Page 11

Chapter 10: Accounting Systems for Manufacturing Businesses

Available Study Resources on Quizplus for this Chatper

119 Verified Questions

119 Flashcards

Source URL: https://quizplus.com/quiz/65971

Sample Questions

Q1) Which of the following statements is true of lead time?

A)Total lead time can be divided into acceptable and non-acceptable lead time.

B)Lead time is a measure of time that elapses between the sale of a product and delivery to the customer.

C)Reducing nonvalue-added lead time reduces costs and improves the speed of production.

D)Reducing nonacceptable lead time improves the speed of production,but will not affect product cost.

Q2) In a job order cost accounting system,when goods that have been ordered are received,the receiving department personnel inspects the goods and completes the:

A)purchase order.

B)sales invoice.

C)receiving report.

D)purchase requisition.

Q3) Calculate direct labor cost for Brandt,Inc.

A)$226,000

B)$206,000

C)$231,000

D)$218,000

Page 12

To view all questions and flashcards with answers, click on the resource link above.

Chapter 11: Cost Behavior and Cost-Volume-Profit Analysis

Available Study Resources on Quizplus for this Chatper

140 Verified Questions

140 Flashcards

Source URL: https://quizplus.com/quiz/65970

Sample Questions

Q1) The unit contribution margin is the dollars available from each unit of sales to cover fixed cost and provide income from operations.

A)True

B)False

Q2) Break-even analysis is a type of cost-volume-profit analysis.

A)True

B)False

Q3) Currently,fixed costs are $540,000,the unit selling price is $95,and the unit variable cost is $60.What would be the break-even sales (in units),if the unit selling price is increased by $10?

A)5,294 units

B)9,000 units

C)12,857 units

D)12,000 units

Q4) If direct materials cost per unit increases,the break-even point will increase. A)True B)False

Q5) Tops Company sells Products D and E and has made the following estimates for the coming year:

To view all questions and flashcards with answers, click on the resource link above. Page 13

Chapter 12: Differential Analysis and Product Pricing

Available Study Resources on Quizplus for this Chatper

102 Verified Questions

102 Flashcards

Source URL: https://quizplus.com/quiz/65969

Sample Questions

Q1) Target cost is computed by:

A)adding desired profit and expected selling price.

B)subtracting desired profit from expected selling price.

C)subtracting net income from expected selling price.

D)adding net income and expected selling price.

Q2) Based on the information provided for Venus Co.,what is the differential revenue of producing Product Y?

A)$14 per pound

B)$8.75 per pound

C)$7 per pound

D)$5.25 per pound

Q3) When evaluating whether to lease or sell equipment,the book value of the equipment is considered to be a sunk cost and not a differential cost.

A)True

B)False

Q4) Brickman's Pharmacy sells a variety of products.The business is divided into four segments or departments for reporting purposes.The departments and their operating results are shown below:

To view all questions and flashcards with answers, click on the resource link above. Page 14

Chapter 13: Budgeting and Standard Cost Systems

Available Study Resources on Quizplus for this Chatper

169 Verified Questions

169 Flashcards

Source URL: https://quizplus.com/quiz/65968

Sample Questions

Q1) The cost of available but unused productive capacity is indicated by the:

A)fixed factory overhead volume variance.

B)direct labor cost time variance.

C)direct labor cost rate variance.

D)variable factory overhead controllable variance.

Q2) If the wage rate paid per hour differs from the standard wage rate per hour for direct labor,the variance is termed:

A)variable variance.

B)rate variance.

C)quantity variance.

D)volume variance.

Q3) Standards are more widely used for nonmanufacturing expenses than for manufacturing costs.

A)True

B)False

Q4) The sales budget is the starting point for preparation of the direct labor cost budget.

A)True

B)False

To view all questions and flashcards with answers, click on the resource link above. Page 15

Chapter 14: Performance Evaluation for Decentralized Operations

Available Study Resources on Quizplus for this Chatper

137 Verified Questions

137 Flashcards

Source URL: https://quizplus.com/quiz/65967

Sample Questions

Q1) A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called a(n):

A)profit center.

B)investment center.

C)volume center.

D)cost center.

Q2) The major advantage of using the rate of return on investment over income from operations as a divisional performance measure is that,divisional investment is directly considered and thus comparability of divisions is facilitated.

A)True

B)False

Q3) The process of measuring and reporting operating data by areas of responsibility is termed responsibility accounting.

A)True

B)False

Q4) The sales,income from operations,and invested assets for each division of Salem Company are as follows:

To view all questions and flashcards with answers, click on the resource link above. Page 16

Chapter 15: Capital Investment Analysis

Available Study Resources on Quizplus for this Chatper

103 Verified Questions

103 Flashcards

Source URL: https://quizplus.com/quiz/65966

Sample Questions

Q1) The average rate of return for this investment is:

A)5%.

B)10%.

C)25%.

D)15%.

Q2) Qualitative considerations are best evaluated using present value methods such as internal rate of return.

A)True

B)False

Q3) The methods of evaluating capital investment proposals can be grouped into two general categories: (1)methods that ignore present values and (2)methods that use present values.

A)True

B)False

Q4) The net present value for this investment is:

A)positive $150,000.

B)negative $24,170.

C)positive $24,170.

D)negative $150,000.

To view all questions and flashcards with answers, click on the resource link above. Page 17